Nokian Tyres Plc

Good afternoon and welcome to Nokian Tire's Q4 and full year 2025 results webcast. I am Annukka Angaria from Nokian Tire's investor relations. Joining me today are Nokian Tire's president and CEO Paolo Pompei and interim CFO Jari Vuhtanen. As usual, we will begin with the results presentation. And after that, we will open the line for questions. You may have noticed that in the connection with the results, we published also Nokian Tire's updated strategy and financial targets. These topics will be discussed in detail tomorrow at our Capital Markets Day. And in today's call, we will focus on Q4 and 2025 financial performance and the key drivers behind the results. And with that, Paolo, please go ahead.

Thank you, Anoukka, and good afternoon also from my side. Thank you for participating in our quarter four release as well as year-end release. And what we will do now in the next few minutes, moving to the agenda, we are moving to the highlights. discuss about our financial performance. Yari will present the business unit performance and we will close the presentation together with the assumptions as well as the guidance. let's move to the highlights moving directly to page number four it was quite a good year in terms of improvement we have been improving a lot our performance and this was possible to due to strong price and mix improvement in particular in the passenger car tires We've been also very active in releasing new products, mainly related to Central Europe and North American market as a new growing areas for our business area. And we've been strengthening a lot our premium positioning through pricing, but also through very effective communication and through dedicated marketing and communication activities. We've also completed a major investment in Oradea. We will discuss about that later on. And we had also a strong improvement of the cash flow, supported mainly by improved working capital, but also by the reduced capex that are now gradually getting back to normal level. Every tire was performing, remained pretty soft actually due to the market decline in particular in the agricultural and forest tires industry. Moving to slide number five, we completed the first important step of our expansion in Romania with reaching one million pieces produced in our facility in December 2025. So this was actually an important milestone for us because now we clearly move from the investment phase to stabilizing our manufacturing platform at the moment Our team is extremely busy implementing new sizes and developing new products for the Central European market. We also obtained at the end of December the first installment of 32.6 million from the Romanian government as a state aid. As you may remember, we are entitled up to 100 million euros to be supported by the Romanian government at the end of the full process. Moving to slide number 6, this is also an important highlight when we think about the 2025 We have been investing heavily in our brand, we have been investing heavily on our product development. We signed different partnerships. I would like to highlight the one we signed with our brand ambassador, Kimi Raikkonen, that is well reflecting our brand values. And he will be with us also in 2026, supporting our development, being with us during the launch of new products and supporting us in the development of the new products. We also signed an important agreement with the IHF organization since we will support the World Cup of ice hockey that will take place in May in Switzerland. As I mentioned before, we were very active in delivering new products. We have developed more than 150 new products in 2025 that will support our future growth in 2026-2028 and of course we've been focusing a lot in releasing new product in our growing market like Central Europe as well as North America to support the demand coming from those markets. Moving to slide number seven, we did also important progress when we talk about our sustainability journey. We are pretty proud about that because we have clearly set a direction that is getting closer to our long-term financial targets. We achieved 28% renewable and recyclable material within our products, moving up from 25% that we had in 2024, so a significant improvement that is supporting us towards our target of 50% by 2040. Then we reduce by 38% our CO2 emissions. I remind you the baseline is 2022. This was possible for scope 1 and 2 also due to the startup of our operational Aurora DEA as you remember very well, are reflecting 0.2 emissions in the current setup. We also reduce significantly our accident frequency from 4.6 last year to 3.7 this year. There is still a lot to do. Obviously, having new operations, we are improving day by day also on the new site, but I think also when we look at this kind of KPIs, we are improving significantly compared to previous years. And now let's move to the financial performance. So moving to slide number nine. Well, we have been navigating in a pretty stable market in 2025. The passenger car tire market was pretty stable. both in europe as well as in north america we are less exposed to the tractor market who remains stable as well we are more exposed to the agricultural and forestry tire market that was down five percent in the replacement channel and ten percent in the original equipment segment so the market was not really supporting our journey but we have been obviously navigating well in these market conditions I think we will see that quarter four 2025 was our best quarter of the last three years, while sales remain pretty flat. And this is also driven by the fact that in quarter four 2024 we were heavily pushing for higher sales, this year we fully dedicated our attention to improving term of profitability. And this is quite visible when we look at our EBITDA improvement in quarter four, we were up by 30% up to 87.1 million euros or 20.9% in relation to sales. Our segment operating profit also increased significantly by 43%, up to €51.5 million, all 12.3% of net sales. This was mainly driven by strong price repositioning in the passenger car tyre, and of course in Q4 we had also some support from lower raw material costs. We had also, I would say, a strong improvement in terms of operating profit, up to 35.1 million euros, this is 128% more than previous year, or 8.4% of net sales. Looking at the same numbers for the full year, moving to slide number 11, we were able to increase sales by 7.2% with comparable currency. And we were able to grow actually in all the regions. Our segment EBITDA was 222.2 million or plus 20% compared to previous year. It was 16.2% of net sales. Segment operating profit increased by 28% up to 91.3 million euros or 6.6% of net sales. And again, same as in quarter four, strong price increases or price repositioning. And of course, in the full year, positive effect obviously coming from the sales volume. The operating profit was €35.8 million at the end, a significant improvement compared to previous year, or 2.6% of net sales. The Board of Directors has just proposed a dividend of €0.25 per share to be paid in April 2026. Moving to slide number 12, as I mentioned before, we were able to grow actually in all the geographical areas where we operate. We were able to grow in the Nordics, in Central and Southern Europe, as well as in North America. I would say the growth in North America of 16.6% was really a good performance in terms of growth, in particular when we talk about price repositioning in the North American market. Moving to slide number 13, I would like to highlight when we talk about this slide about two things, very, very important development. The first one is the interest-bearing net debt. That was $664 million at the end of 2025. This was actually much better than what we were also estimating at the end of, previously at the end of quarter four, ourself, but that was turning really in the right direction. As well as the capital expenditure was of $106 billion. 26.9 million almost 127 million we need to remind you obviously this included 32.6 million state aid from the Romanian government so we were approximately at 160 million in total so moving significantly down from previous year cash flow also was improving both in the quarter as well as year to date But let's look at the cash flow in more details in the following slide, in slide number 14. As you can see, we were able to improve the change in cash flow by over 200 million. This was obviously driven by an improvement of the EBITDA, but also an important improvement of the working capital despite the growing sales. And of course, we were investing significantly less than previous year. Financial cost has gone up clearly by $16 million and then of course we paid a dividend of $0.25 during 2000-2025 and our debt has gone up compared to previous years. So I would say also in terms of cash development we are improving significantly our position and we see actually a better outlook for 2020-2026. Moving to slide number 15, you can clearly see that we have now completed a strong investment phase that was approximately 800 million euros between 2023 to 2025. CAPEX now is returning to a normal level in line with the depreciation. We are estimating and anticipating approximately 130 million euros to be invested in 2026. And now stop here and I would like to ask Yari to comment the business unit performance.

44.1 million and net sales increased by 3.9%. Average sales price with comparable currencies improved and the share of higher than 18 inches tires increased significantly. Segment operating profit was 32.3 million or 13.2% of the net sales comparing to last year 13.6 million or 5.7%. Segment operating profit improved due to price increases, favorable product mix, and lower material costs. In the next page, we can see passenger car tires, net sales, and segment operating profit bridges. Net sales in the last quarter increased by 6 million. And again, we can see very positive improvement coming from price mix, plus 20 million. On the other hand, sales volume was down by 11 million. And then some headwind made from the US dollar minus 3 million. In the segment operating profit bridge, the same positive price mix plus 20 million. And now first time in 2025, we had positive contribution coming from the material costs plus 6 million. Sales volume in operating profit was slightly down, as well as SGA, otherwise quite neutral changes compared to the last year. In page 19, we have Passage Card Tires net sales components and quarterly changes. In price mix, we can see that this was now third quarter in a row that we reported quite significant positive change comparing to the last year numbers. In the fourth quarter, price mix positive impact was 8.5%. Volume change was minus 4.6% and currency minus 1.4%. Moving to page 20, heavy tires. In the last quarter, lower volume affected net sales. Net sales was 60 million and the change in comparable currencies minus 2.8%. And net sales decreased caused by lower volume of forestry tires. Segment operating profit was 6 million or 10% of the sales and profitability declined mainly due to lower volume, weaker product mix and inventory valuation, which had a positive impact on last year numbers. And Vianor in the last quarter operating profit was stable, Net sales was 132.4 million and net sales with comparable currencies decreased by 2.7%. And sales was impacted by the mild winter in the last quarter. Segment operating profit was 11.2 million or 8.5% of the net sales and segment operating profit was exactly at last year level 11.2 million. Then handing over back to you, Paolo, with assumptions and the guidance.