Nokian Tyres Plc

Good afternoon everyone from sunny Helsinki and welcome to Nokian Tyres second quarter 2026 results call. I am Annukka Angeria from Nokian Tyres investor relations and joining me today are president and CEO Paolo Pompei and CFO Timo Koponen. Paolo will begin with an overview of the second quarter group level results and after that Timo will take us through the business unit financials. And as usual after the presentation we will be happy to take your questions.

And with that Paolo please. Thank you Annukka and thank you everyone for joining this quarterly call this afternoon. We start with the headline, Strong Profitability Improvement Driven by Higher Sales, Volumes, and Announced Pricing. We are going to comment a very good quarter, I would say, both dimensions, sales development as well as profitability. Moving to the agenda, we will start obviously with the quarterly highlights and the financial performance. Then Timo will comment the business units performance as well as the cash flow and the financial position. and now we will close the call with the assumption and guidance and then finally we will have our Q&A. Moving to slide number three, quarterly highlights and moving to slide number four. Before to start, we would like to highlight two important recognitions that we received during the quarter. The first one is about our sustainability, both of them are about our sustainability journey and the first one is about the financial time, who was ranking Nokian Tyres as the first tyre company in the sustainability, in the climate change leadership. And we were the highest scoring tyre company in this ranking and we were ranked globally 39 among 600 companies that were selected. The second recognition came from the Time Magazine and also identifying Nokian Tyres, one of the best sustainable companies. We were ranked 100 among the top 750 companies around the world. These two recognitions are very important to us because they highlight the strong effort of our team and our board in delivering sustainable operations. and in improving our performance in the sustainability area day by day and year after year. Moving to slide number five, let's comment together the highlights of quarter two. Operating profit improved significantly by over 130%, supported by higher sales volume, price increases, as well as lower manufacturing and raw material costs. We were able to grow sales in all the regions and in all the businesses and reflecting the high consumer trust on our brand. We had also good pre-sales in June, in particular when we talk about winter tires in the Nordic with the pre-sales of the Nokian Tire Acapulita 01. So we are very pleased about the development of this new flagship that is now part of our product portfolio. and then of course we keep improving our operation through efficiency improvement plans and we are progressing with our own initiative in line with our own plan. Moving to slide number six and slide number seven, let's first look at the market performance. The market in Europe was the replacement market quite stable in the first half of the year. While in North America, we experience a negative market trend, minus 5% in the replacement channel. Passenger car tire business is in some way recovering, when we talk about the Western producer, and there is some decline coming in particular due to the Tariff imposed by the European authorities to the Chinese production. Tractile business is also developing well in Europe in the aftermarket. We understand the market was up by 10%, and we see a slight recovery of the agricultural and forestry business, plus 5% both-year replacement in the first half of 2026. Moving to slide number eight, Going deeply in the numbers, we had quite a good growth in terms of sales in quarter two with a 10.6% sales increase or 9.7% in comparable currency. We were able to grow in all our regions, outperforming the market, and this was obviously driven by higher sales volumes and also price increases. But also good improvement of the segment EBITDA, plus 34%, reaching 76.8 million euros in the quarter. And this is representing 20.2% of net sales. That is not far away from our medium-term target of 24%. Segment operating profit increased significantly by 71%, over $45 million reach compared to $26.3 million in 2025 Q2, and this corresponds to 11.8% of net sales compared to last year of 7.7%. As we said at the beginning, improvement was driven by higher sales volume, price increases, and lower manufacturing as well as material costs. Finally, operating profit, we more than doubled our operating profit in the period, reaching 34.8 million compared to 14.8 million in 2025. Moving to slide number nine, we are very pleased to highlight the sales growth of the passenger car tire business, overall reaching almost 14% in comparable currency, but also every tire. was able to reach two-digit growth with 10.1% compared to the same quarter of 2025, while Vianor remained pretty stable in terms of sales. I want to drive your attention to the significant growth we had in Central Europe. We're very pleased about this growth because it's also supported by the good improvement and improved output of our new factory in Romania. So everything is developing in this area according to plan. Moving to slide number 10, we are improving in terms of mixed development. We were able to grow in many segments where we operate. However, we've been able to grow significantly in the all seasonal weather segments. But as you know very well, it's growing significantly in Europe in particular, and we were able to increase Our sales also supported by our new product range of Season Proof II. Winter Tire was able to grow as well but at a lower speed compared to the all-season business in particular in Central Europe and this is why the percentage is likely lower in terms of total sales compared to the same period in previous year. Mix is improving also in terms of dimensions. We reach 50% of our sales in the segment 18 inches plus. This is also an important achievement that is highlighting how Nokian Tire is able to focus on the premium range and obviously in the more demanding applications. Moving to slide number 11, more or less there are some numbers we have been already analyzing, analyzed together. What we want to align the attention to is probably the net sales here to date are now up by 7.6%. and the segment EBITDA is now up by 54%. Operating profit turned positive from a negative level of previous year, year-to-date. Last but not least, in the bottom of the slide, you will see that in terms of capital expenditure, we were very disciplined. Of course, we have a lower level compared to previous year when we were still ramping up our operations in Romania, reaching at year-to-date 24.5 million which is significantly lower than the level of previous year that was 90 million at this stage. Timo will comment shortly about the cash flow development. Moving to slide number 12, we are expecting for the full year capex to be significantly lower than the previous year, reaching in some way a level between 100 or even below the 100 million at this stage. This is our estimate. as of today. Then I hand it over to Timo for the comments about the business units.

Thank you, Paolo. Let's start with the passenger car tyres, which obviously was one of the main drivers behind the strong performance. Passenger car tyres continued very strong performance also in Q2. Net sales was up by 13.7% in comparable currencies. Prices were further improved as well as the transfer to the bigger rim sizes as already commented by Paolo. In segment operating profit the percentage was 15.1 for a quarter which is almost then Money-wise, more than doubling the profit from previous year same quarter. In H1, the net sales grew by 11.6% and the segment operating profits stood at 45.7 million. Then when breaking the performance on page 15 to various components, In the net sales, the volume component contributed 22 million or 10.5%, which of course is the main driver there. But that combined with the continued positive price mix, 6 million or 3.1%, we saw a very good volume on net sales development for the quarter. Then in segment operating profit the lower material cost as already highlighted was the biggest lever by 10 million and the other significant elements is the positive price mix and the lower materials. some negative development in terms of the supply chain and as SG&A but the main picture in this picture remains very very very green. Then looking at quarter by quarter we can see now that the volume indeed increased by 10.5 percent and the volume price mix we saw a fifth actually sixth consecutive The positive development, which we are extremely proud of. Currency is neutral for this quarter. Some negative development in North America, but that was offset by positive development in the Nordics. Moving to heavy tires on page 17. Heavy tires, as mentioned, already returned to growth in the quarter. going up by 10.1 percent and that was driven basically by ACRI but we saw positive development across all the end user segments. Segment operating profit improved to 10.1 million representing 15.0 percent driving also the H1 to be still above 15, which has been the target level. And this has been supported, as we already commented in Q1, on a very disciplined pricing as well as tight cost management. And then we are on our top line, more or less flat, but then in terms of the profitability, we were suffering Still of the cost inflation and somewhat the quarter was impacted by the early start of the spring season meaning that the season started already the March which then ate a little bit the volumes from Q2 as we have commented in the report. Then moving on to cash flow and financial position. Cash flow very strong, two main elements there of course the improved EBTA as well as then the significantly lower CAPEX and when looking at the free cash flow the improvement was roughly 97 million which then also enabled us to decrease the debt levels. The only area where we saw basically growth on a wrong direction was the working capital where the strong top line growth resulted in the increased receivables. Other than that, the initiatives that we have had ongoing in terms of capital efficiency in inventories or on a liability payable side are progressing as planned. and then finally on a net debt there the net debt decreased by 49 million in a quarter liquidity remaining on a very healthy stable level and then at the end still a reminder on the maturities during the quarter we made arrangements and executed the extension on a Revolving cash facility 100 million as well as another extension on a 300 million bilater of term loan facility. And then back to Paolo.