Nokian Tyres Plc

Good afternoon from Helsinki and welcome to Nokian Tyres Q3 2026 results call. I am Annukka Angeria from Nokian Tyres Investor Relations and joining me today are our President and CEO Paolo Pompei and CFO Timo Koponen. As usual, Paolo and Timo will first present the results and after that we are happy to take your questions. With that, I think we are ready to begin. Paolo, over to you.

Thank you Annukka and good afternoon and good evening for those who are connected from Europe and Asia and good morning for those who are connected from North America. Let's start with the headline, strong profitability improvement continued in the third quarter. We are once again delivering a strong quarter that is well reflecting our strategic plan journey and in line or even a bit above our own original plan. Moving to slide number two, let's see the agenda of today. We will focus on the quarterly highlights, then we will briefly analyze the financial performance, and then Timo will guide us through the business unit performance, our cash flow and financial position, and of course we will close the call with the assumptions and guidance, and after that we will have obviously the Q&A. Let's move directly to slide number 4 and let's start with the market. The market is still pretty negative when we look at the development of passenger car tyre and light truck in Europe as well as in North America. We see a gradual recovery of the market in Q3 while still negative, while in Europe we see obviously still the market down compared to previously at level. The truck tire business at the opposite is growing two digits up to 11%. and the agri and forest tire segment is pretty flat, plus 2%, a different trend between agri, that is slightly growing, and forestry, that is at the moment presenting a stable or negative outlook in some cases. Moving to slide number 5, let's look at the highlights of the quarter 3. Operating profit, as we said, improved significantly and that was driven by price repositioning and lower manufacturing costs. The good news is also that sales grew across all regions despite the price repositioning and this is reflecting really the high customer trust in our brand in a declining market. We are also very pleased to see the development of the new flagship winter tyres that are now available to the consumer both in Nordics, in Canada, as well as in Central and South Europe. The Acapelita 01 for the Nordic market and the Snowproof 3 Pre for the Central and South European market. We also had this quarter a record high share of larger rims and this is supporting a higher value product mix that was reaching 54%. And our group-wide efficiency improvement plans are progressing in line with our plan and they are contributing significantly to our bottom line. Moving to slide number six, we are extremely proud of achievements that we were able to see in the market with our Acapelita 01 and also our product release for the Central and South European market as well as North America. were actually indicated to be in the top ranking of several magazines, several specialists of the segment, but in particular the Cappellita 01 was rewarded as the best studded tyres, both in Finland, Norway, as well as in Sweden. So we are really pleased to see that our innovation capabilities are also well reflected in the testing performance results. We also had good improvements when we talk about a Cappellita R5 Stadler Tyres that was also indicated to be number one out of six in tests in Finland as well as in Sweden. Snowproof 3 Pre, our new winter tyre available for the Central and South European market also was evaluated to be in Germany in particular number 2 out of 9 finalists, one of the best winter tyre and then also other success in the all weather segment in North America as well as in the all season business in Central and South Europe. So we are really pleased about The development of our product performance and at the same time we are very pleased to see that our innovation capabilities are well recognized by specialists of the segment. Moving directly to slide number 8, let's look at the key metrics of quarter 3. Net sales grew by 4.4% or 2.9% in comparable currency. We were able to grow in all regions and of course we were well supported by pricing and mix. Segment EBITDA grew by 22% to 80.1 million euros. And this is now today 22.3% of net sales, very close to our long-term target of 24%. And it is a great improvement compared to previous year where we were at 19%. Segment operating profit, and this is also the extremely good development, increased by 45% to 47 million euros. and this is corresponding to 13.1% of net sales. A strong improvement again compared to previous year. And once again, the improvement was driven by price repositioning and lower manufacturing cost in particular. And then, last but not least, operating profit improved to 37.9 million. This is an improvement of 74% compared to previous year. And we are very pleased to see the development of the operating profit as well. Moving to slide number nine, as you can see from the slide that we were able to grow sales in all the region where we operate. Obviously, we had an higher growth in the Nordics and in North America, where the winter tyre season is developing better than Central and Southern Europe, where winter is still coming, has to come in the probably in quarter, quarter four. but generally we had also a very good improvement in all the regions of the price as well as the mix. Passenger guard tyre grew by 5.6% or 4.3% in comparable currency. Heavy tyre also delivered an excellent performance in term of profitability, remained growing moderately by 2.4% or 1.7% in comparable currency but we will see later on improving significantly in term of profitability. Viano remained pretty stable in Comparable Currency and overall was growing by 3%. Moving to slide number 10. This is also a great development, I would say, because Winter Tire in Quarter 3 is representing 76% of our total sales, very coherent with our own strategy. Tommi Heinonen, Annukka Angeria, Timo Koponen, Elisa Erkkila, Timo Koponen, Elisa Erkkila We were able to reach 54% of our sales in this segment of 18+. So this is also a good development improving obviously our price and mix positioning. Moving to slide number 11, we can focus on the year-to-date performance here, starting from the segment operating profit that was up to 8.6% versus 4.2% the same period of last year, and the segment EBITDA at 18.4% versus 14.1% compared to last year. The operating profit as a consequence is today 5.4%, Thank you very much. Excellent development also of the operating cash flow. Moving to slide number 12, CAPEX significantly below last year at this stage. This was obviously planned. We invested significantly, as you know very well, in the last four years. And now, obviously, we can leverage the existing investments and leverage a new status of the art manufacturing platform, in particular when we talk about Central and Southern Europe as well as North America. I will now pass the word to Timo for the comment about the business units.

Okay, let's look at the different business unit performance and we switch to page number 14, starting with the passenger car tires. prevailed its very strong performance also in Q3 and was once again the biggest contributor in Nokia Tyres entire Q3 profit improvement. Net sales was up by 4.3% on comparable currencies and 8.8% on year-to-date basis. And this, as already mentioned, was supported and driven by the Higher average sales prices or improvement there and also then as mentioned record high 18 plus inches product share. On segment operating profit, we reached 50.8 million or 20.5% in Q3, 96.5 million or 14.4% on a year-to-date basis. And once again, this was driven by price repositioning, lower manufacturing and lower material costs. New products, as mentioned, Hakkapelitta 01 and Snowproof P3 were the ones supporting the pricing development. Looking at the passenger car tyre bridge, net sales growth was almost entirely driven by the price mix for the quarter. Whereas the sales volume development was slightly negative versus a year ago, but that has to be said was happening on a rather challenging market. On sales segment operating profit, the price mix and the continuously lower material costs were the main contributors, which is once again reflecting our strong focus on value over volume strategy. Switching to page number 16 and looking at it on the quarterly time series view, there we can see once again that the sales volumes were leveled on a quarter three, all being slightly negative, minus 0.9. On the other hand, the price mix effect accelerated with 5.2% on a quarter, and once again, I have to Highlight that this is now the sixth consecutive quarter with a significant positive price mix. Currencies were also having a small tailwind in this quarter. Going to page 17 and looking at heavy tires. Heavy tires, we gained a moderate growth on a quarter by 1.7% on comparable currencies or 3.6%. On a year-to-date basis, agri-segment was continuously the driver for the growth there. On the contrary, segment operating profit grew significantly, being once again more than 15% on this quarter and also the same 15.3% on a year-to-date basis. And as in the earlier quarters, Discipline pricing and very tight cost management were the main factors here. And then on our business units, finally, Vianor. We had a flat quarter this year for quarter three in net sales on comparable currencies. And as in the previous quarters, we are suffering from the cost inflation, which is having a negative effect on the profitability. Segment operating profit being minus 6.8 million on this quarter. On a year-to-date basis, we are also behind the previous year number at minus 18.1. In this occasion, it has to be also reminded that for Vianor, we are at the start of the highest season of the market, the winter tyre season starting now in October. Then looking at the cash flow and financial position and going all the way to the page 20. As mentioned, the cash flow continued its improving trend. On a year-on-year basis, free cash flow was improving by 138 million. Working capital increased in line with the sales growth, but also including the measures we have taken to optimize the working capital management in the company. And as already mentioned, investments or capital expenditure remained on a significantly lower level than on a previous year, contributing strongly to the improved cash flow. And then finally, looking at the net debt, net debt decreased by 86 million on year on year on a quarter. And once again, it has to be reminded that the quarter three represents the deepest point in the cycle in terms of the business and funding needs. And then when looking at the maturities, we had no changes in the quarter. And then going back to Paolo.