CONTINUING TO DELIVER PROFITABLE GROWTH

Transcription

1 CONTINUING TO DELIVER PROFITABLE GROWTH - AHEAD OF THE MARKET NOVEMBER 13, 2018 TEEMU KANGAS- KÄRKI CFO

2 CONTINUING TO DELIVER PROFITABLE GROWTH - AHEAD OF THE MARKET AGENDA: LOOKING BACK Strong track record of delivery LOOKING TOWARD 2021 Decomposition of currency impact and raw material input cost Growth and profitability components Impact of North American Initiative on our financial performance FINANCIAL TARGETS FOR D elivering sustainable shareholder value 2

3 WE HAVE A LONG TRACK RECORD OF COMBINING GROWTH WITH HIGH PROFITABILITY Net sales, Meur +8.1% EBIT % % 26% 25% % 23% 23% 25 22% 21% 22% 22% % 18% % 15% 13% Net Sales CAGR EBIT % Net sales 3

4 ALLOWING US TO RETAIN FINANCIAL FLEXIBILITY DESPITE INCREASING CAPEX Ø 22 23% 20% 27% 24% 22% 19% 20% 20% 22% Ø % Net debt Gearing % Ø EBIT % Return on capital employed, % Capital expenditure Gearing, % Interest-bearing net debt 4 NOTE: IFRS 16- The new standard will be effective from 1 January The currently reported lease commitments at the end of Q amounted to 157 million euros.

5 AS WELL AS STEADY OR GROWING ABSOLUTE DPS DPS, EUR Pay out ratio, % 2,00 Pay out ratio, % 150 1,50 DPS, EUR 1,20 1,45 1,45 1,45 1,50 1,53 1, ,00 0,50 0,40 0,40 0, , Dividend policy: minimum 50% of net earnings 5

6 TOTALLING DIVIDENDS OF EUR 1.5 BN IN 10 YEARS AND INVESTING EUR 1.2 BN IN GROWTH EUR 1.2 bn EUR 2.7 bn Capital Expenditure Net Cash from Operating Activities EUR 1.5 bn Dividends EUR 0.3 bn Deleveraging, Proceeds from issue of share capital 6 Use of funds, cumulative cash flow

7 LOOKING TOWARD 2021

8 NOKIAN TYRES BENEFITS FROM A STRONG RUB, SEK, NOK, CAD AND A WEAK USD Main currencies RUB USD Translation exposure: We benefit from a strong RUB, SEK, NOK, CAD, USD Benefit from strong currency Transaction exposure: We benefit from a weak RUB and USD Approximately 40% of the Group s net sales in 2018 are estimated to be generated from Euro-denominated sales. Benefit from weak currency Net Sales by market North America = Translation exposure 11% = Transaction exposure = Net impact Other Europe 28% % Nordics 21% Russia & CIS 8

9 HEADWIND FROM CURRENCIES IN PASSENGER CAR TYRES 1 9/2018 Net Sales EBIT CC Δ +4.2% +10.0% Meur Meur % 1.3% -5.8% 1-9/2017 Volume Price/Mix Currency 1-9/ /2017 Volume Price/Mix Raw Materials Production/ Other Cost Fixed Cost Currency 1-9/2018 9

10 RAW MATERIAL COST EXPECTED TO INCREASE IN Index 100 = Incl. currency impact Fillers 13% Natural Rubber Chemicals 14% % Value of raw material consumption (%) Reinforcement Material 19% 24% Synthetic Polymers 10

11 WE ARE GROWING FASTER THAN THE MARKET ABOVE CAGR OF 5% VOLUME PRICE MIX Doubling our market share in NA to ~ 2% Increasing our sales in CE by 50% Growing in Russia faster than market Maintaining strong market position in the Nordics Growing with Heavy Tyres market and gaining market share Price leader position in the Nordics Winter price leader position in Russia Developing both summer & winter price position in CE Premium price position in NA snow belt area Ensuring premium price position in NA all season market Premium winter tire sales at least the level of today Increasing share of premium summer tire Maintaining high share of CUV/SUV sales Developing sales of premium van tires Ensuring growth with Light Truck products 11

12 WE WILL MAINTAIN HIGH PROFITABILITY IN PASSENGER CAR TYRES Relative Gross Margin % levels ASP* Gross Margin % Gross Margin % Nordics North America Group, CE Nordics Group, Russia, CE Winter Group Russia North America All Season / Summer Current Region ASP levels Current Region profitability Current Product category profitability 12 * Gross ASP (Average Selling Price) per tire

13 SUMMER AND ALL SEASON SHOWING STRONGER %- GROWTH, ABSOLUTE VOLUME GROWTH STILL DRIVEN BY WINTER AND RUSSIA Share of net sales SKU development All Season Summer # of SKU s Winter

14 THEREFORE PRODUCT MIX CHANGE IMPACT ON PASSENGER CAR TYRES GM% IS LIMITED Share of Net Sales 100% Strongholds 40% - 1% 39% Winter tires in the Nordics Summer tires in the Nordics Winter tires in Russia Strongholds and Core markets continue to grow Core 44% - 1% 43% Summer tires in Russia Winter tires in CE Winter tires in NA New Focus Markets gain relative share New focus 16% +2% 18% Summer tires in CE All Season tires in NA Others Product mix change impact on Passenger Car Tyres GM% is limited Directional Mix Development in Passenger Car Tyres in

15 HOWEVER, NORTH AMERICA RAMP UP IMPACTS ON EBIT% IN High Factory Productivity US is the biggest tire market of the world, Nokian Tyres has a long presence with only limited core offering US Committed to serving US customers with local production Russia US production will offset the Russian risk Finland Negative impact on Passenger Car Tyre EBIT % Low High Cost base Low In 2019 approx. 1ppt-2ppt In 2020 approx. 2ppt 3ppt when production is starting In 2021 approx. 1ppt-2ppt Factory impact on profitability in Size of bubble indicates production volume

16 WE ARE INVESTING TO SUPPORT OUR NEXT PHASE OF GROWTH US FACTORY IN DAYTON 360 MUSD TEST CENTER IN SPAIN 60 MEUR HEAVY TYRES MANUFACTURING IN FINLAND 70 MEUR ACCELERATED PRODUCT PIPELINE MAINTENANCE INVESTMENTS > 125 MEUR Meur Capital expenditure 16 Directional Capex level

17 AND CONTINUE TO DELIVER SUSTAINABLE SHAREHOLDER VALUE PROFITABLE TOP LINE GROWTH - VALUATION MULTIPLE GROWING ABSOLUTE NET PROFIT - EPS STABLE OR GROWING DIVIDEND - DPS SUSTAINABLE HIGH RETURN ON INVESTMENT - ROCE 17

18 FINANCIAL TARGETS FOR Growing faster than the market: Above 5% CAGR with comparable currencies Good returns for our shareholders: Dividend above 50% of net earnings Healthy profitability: EBIT at the level of 22% FINANCIAL TARGETS (at stable currency exchange rates) 18 Growing faster than the market: Average annual sales growth o f 4-5% at a minimum Good returns for our shareholders: Dividend of at least 50% of net earnings Healthy profitability: The best operating profit level in the industry, a minimum of 22%

19 CONTINUING TO DELIVER PROFITABLE GROWTH - AHEAD OF THE MARKET NOVEMBER 13, 2018 TEEMU KANGAS- KÄRKI CFO