Nokian Tyres Plc

Good afternoon from Helsinki and welcome to Nokian Tire's Q3 2025 Results webcast. My name is Anu Kangeria and I'm working at Nokian Tire's Investor Relations. Together with me in this call, I have Nokian Tire's President and CEO Paolo Forte and Interim CEO Jari Huuhtanen. As usual, Paolo and Jari will start by presenting the results, and after that there will be time for questions. With these words, I will hand over to you, Paolo. Please go ahead.

Thank you, Anouk, and good afternoon also from my side. Let's start this presentation with our headline, which is a stronger operating profit improvement in quarter three. Dear UN, by announced pricing in passenger car tire, actions ongoing to further strengthen our financial performance. We are closing an important quarter and I have to say that I'm very pleased to tell that we are really moving in the right direction. As we said in the headline, our operating profit increased significantly and obviously this is very encouraging for the future journey that we have ahead of us. But what we are going to do this afternoon, we are going to talk about our quarterly highlights, the financial performance. Yari will comment on the business unit performance. And then, of course, we will close the presentation with assumptions and guidance. But let's go to the quarterly highlights. In slide number four, we had double-digit sales growth. We were able to grow in all the region. The sales growth was 10.8% in comparable currency. The operating profit improved significantly, plus 427%, and this was mainly driven by our effort in improving our pricing in the passenger car tires. We still have a lot to do, there are still a lot of actions going on in order to improve our financial performance. We are also very pleased about our ramp up of the operation in Romania that are progressing extremely well and we are now actually running 24-7. In the month of September we were also expanding our product offering and brand partnership. We will tell something more in a minute. And of course there is also starting from the 1st of September a favorable tariff development in North America for Nokian tires. Moving to slide number five, let's talk about our new factory in Romania. We are very pleased to say that we are in line with our plan. We will reach one million pieces by the end of this year and we started now operating four shifts 24-7. We have now all the people we need to carry on our journey and to make sure we will be able to achieve the target of this year of one million pieces. We also released a few weeks ago a new product line that is completing the summer product range at this stage, after the all-season range that we released only a few months ago with the start-up of the operation in Oradea. moving to slide number six this is also an important step forward for the factory but also for nokia entire in particular for our business in central south europe we released our power proof two a few days ago this is our premium offering in the ultra high performance segment summertime this range is performing extremely well, has been certified in terms of performance and tested by the TUV Sud, and we were able to launch this new product in the beautiful scenario of our test center in Spain, Acaring, together with more than 160 customers and journalists coming from Central and Southern Europe. This obviously will support our growth in the central European market together obviously with our winter tyre range as well as our all-season tyre range. Moving to slide number 7, we are also pleased to tell you that we received once again several testimonials of our premium performance in the winter tire segment, in particular in the Nordics, where we were able to be tested in several magazines or by several associations, being scored as number one tire. or on the podium when we talk about studded and non-studded winter tires. So we keep our leadership and we still have new projects coming up in the next few months that will actually reinforce our leadership in the winter tire segment. But we have also some good news related to the heavy tire business. We will receive in a few days the silver medal for our Intuito 2.0 Smart Tire technology that is going to be fitted in our agricultural tires. This is a very important step forward in terms of connecting the tire to the machine and the operator of the machine. measuring the load of the machine or the pressure and optimizing the operating performance of the machine at the right pressure. moving to slide number eight we are also reinforcing our effort in terms of communication we sign an important agreement for two years with the iihs association which is actually a federation sorry that is which is actually going to uh support the world competition in the high-soccy segment in Switzerland in 2026 and in Germany in 2027. We are very pleased to be partners of this important sport because it reflects our value and also it is giving the possibility to Nokian Tire to be visible to millions of high-soccy fans that are obviously happy to view and to support this nice competition. Moving to slide number 10, we are going to look at our performance. Quarter 3 was in some way stable in Europe, a little bit down in North America. When we look at the performance now here today, we have the market pretty stable in Europe and we see the market gradually declining in North America. when we talk about passenger car tires. The market in truck tires or in the agri-tire has been stable in truck tires while in the agricultural segment is still down compared to previous year both in the replacement market as well as in the original equipment market. Moving to slide number 11. Despite the, I would say, difficult market condition or stable market condition when we talk about Europe, we are very pleased to say that we were able to grow by 10.8% with comparable currency in the quarter. And we were able to grow in all the region. But we did really an exceptional good performance in the North American market in a declining market environment. So we are finally doing extremely well in North America. We are very pleased about the journey that we have done so far. Our EBITDA as well has been increasing up to 65.4 million. This is actually now 19% in percentage of sales. And our segment operating profit has been growing by over 6% to 32.4 million. It's very important to remember that the comparability when we talk about segment operating profit is heavily affected by 13.3 million exclusions or write-downs related to the write-down of the contract manufacturing product that we did last year in Q3 2024 that are in some way impacting the comparability. This is why we are very pleased about the extremely important growth of over 427% in the operating profit performance that is reflecting really the performance of the company at 360 degrees. Moving to slide number 12. As I mentioned before, we are growing in terms of net sales in all the regions, in Europe by 4.6%, in Central Europe and Southern Europe by 9.2%, and we are growing by 27% in North America, supported by good pricing and mix. Moving to slide number 13, we move to the cash flow in particular. We were able to improve our cash flow performance. This was mainly driven by lower investments, but also by improved working capital, as we will see in the next slide. Overall year to date we are growing in terms of sales by more than 9.4% and of course we are improving our segment bid up as well as our operating segment operating profit. Looking a little bit deeper to the cash flow, you will see that obviously the improvement of cash flow was coming obviously from the EBITDA improvement of 33 million, then of course by an improvement of the working capital we've been able to grow, reducing our inventory level. uh in our operations we are also obviously investing less we are getting step by step to a normal level of investments and of course we have higher financial expenses and obviously we had a lower dividend but obviously higher higher debt so overall So year to date we are improving and obviously our target is to become cash positive, meaning generating positive operating cash flow already next year. As we mentioned, we are now guiding 180 million investment level at the end of 2025. This will basically close a long cycle of approximately three years that was necessary to reinforce our operations and to build our new manufacturing footprint, in particular with the latest investment we did in Romania in Oradea. The CAPEX are expected to return them next year to a normal level. And of course, as you know, we are entitled to get state aid from the Romanian government up to 100 million euros. We are expecting to receive the first part of this incentive by the end of the year or in quarter one next year. Moving to slide number 16, I would like to pass the stage to Jari for the performance of the business units.

Okay. Thank you, Paolo, and good afternoon. I'm moving to page Väsintsekaa tires. In third quarter, we continued sales and profit growth. Net sales was 234 million. and the increase in comparable currencies plus 13.2%. Our average sales price with comparable currencies improved and the share of higher than 18 inches tires increased significantly. Segment operating profit was 38.9 million or 16.6% of the net sales. And the segment operating profit improved due to price increases and favorable product mix. Moving to page 18, here we can see Passy Checkout Tires net sales and segment operating profit breaches in third quarter. Net sales improved from 210 million to 234 million. And clearly the biggest positive contribution is coming from the price mix plus 35 million. Sales volume was slightly down comparing to last year, minus 7 million. And in addition, we had some currency headwind coming maybe from US and Canadian dollars. In segment operating profit, you can see that there are two components which are clearly coming visible. First of all, this positive price makes 35 million. On the other hand, in supply chain, we have a negative impact of 25 million. Here, the reasons are mostly related to non-IFRS exclusions, what we had in last year, third quarter. Contract manufacturing inventory write-downs and Dayton ramp-up related exclusions. In material cost, we still have a slightly negative impact, minus 3 million. However, we can say that we are very close to previous year cost level at the moment. Sales volume minus 3 million, but otherwise it's very stable performance comparing to prior year. Moving to page 19, Basitsekar-Tarjo's net sales components, quarterly changes. In price mix, we can see a significant improvement comparing to last year, plus 16.5%. This is due to implemented price increases and better product mix comparing to last year. In sales volume, minus 3.3%, and in currency, minus 1.7% in the third quarter. Moving to heavy tires, in third quarter, we had lower volumes, which affected the net sales and profitability. Net sales was 55.4 million, and the changing in comparable currencies, minus 4.4%. Net sales decreased mainly due to lower volumes in truck and acrylic tires. Segment operating profit was 5 million or 9% of the net sales. Profitability declined in heavy tires mainly due to lower volumes and inventory revaluations, which had a positive impact in last year's third quarter numbers. And in Vianor, in third quarter, we reported improved sales and operating profit. Net sales was 74.9 million and the increase in comparable currencies plus 7%. Second operating profit seasonally negative minus 6.4 million or minus 9% of the net sales. However, we can see an improvement both in operating and business profitability. Then I'm handing over back to you, Paolo.