Delayed start of the winter tyre sales in Central Europe and Russia as well as deeper retail slump in Russia weakened volumes – clear improvement in mix

April-June 2015

Net sales decreased by 6.5% to EUR 345.5 million (EUR 369.5 million in 4-6/2014). Currency rate changes cut Net sales by EUR 8.9 million compared with the rates in 4-6/2014.
Operating profit was down by 11.2% to EUR 80.6 million (90.7). Operating profit percentage was 23.3% (24.5%).
Profit for the period decreased by 2.4% amounting to EUR 64.5 million (66.1).
Earnings per share were down by 2.4% to EUR 0.48 (EUR 0.50).

January-June 2015

Net sales decreased by 8.0% to EUR 626.8 million (EUR 681.5 million in 1-6/2014). Currency rate changes cut Net sales by EUR 38.0 million compared with the rates in 1-6/2014.
Operating profit was down by 19.0% to EUR 128.8 million (159.1). Operating profit percentage was 20.6% (23.3%).
Profit for the period increased by 90.6% amounting to EUR 199.8 million (104.8). In Q1 the company returned the 2007-2010 total additional taxes and punitive interests of EUR 100.3 million to the financial result based on the annulment decision made by the Board of Adjustment of Finnish Tax Administration.
Earnings per share were up by 90.6% to EUR 1.50 (EUR 0.79).

Full year financial guidance (updated)

In 2015, with current exchange rates, Net sales is to decline slightly compared to 2014 and Operating profit is estimated to be approximately EUR 270-295 million. (Previous guidance on 8 May 2015: In 2015, with current exchange rates, Net sales and Operating profit are to decline slightly compared to 2014.)

Ari Lehtoranta, President and CEO:

“Russia has been able to avoid the worst case economic scenarios and the confidence in the market is gradually returning. However, the situation is very volatile and in most retail segments the volumes and ASPs have been very low, especially in the second quarter. In new car and tyre sales, Russian market has been lower than we expected, and the tyre purchasing has moved more towards lower B and C segments.

This year we have seen a clear timing shift in winter tyre pre-sales start compared to earlier years, not only in Russia but also in most of the Europe. The whole tyre market has grown this year in Europe +2%, but winter tyre deliveries are 11% below H1/2014 levels. We believe this will balance in second half, but the sell-in market volumes are now more dependent on a good winter season.

In Central Europe our sales declined due to the delay of the winter tyre pre-sales and also due to lower deliveries to few bigger customers with higher inventories. We estimate our market share growth to continue in coming quarters.

In North America our performance has been excellent. We have gained market share in our core segments and exceeded market growth now already for several quarters, achieving sales increase of 26.8% versus the first half-year of 2014.

Currency rate changes cut our Net sales by EUR 38.0 million compared with the rates in H1/2014. This and the negative impact of lower volumes in Russia/CIS and Central Europe were partially compensated by productivity improvements, continued growth of premium summer tyres sales, better product mix, raw material cost decline, growth in North America and good performance in Heavy Tyres. All this lead to an Operating profit level of 20.6% (23.3%) in the first half-year.

Vianor has proceeded as planned this year. Our distribution network growth continued as planned. We added 213 new outlets to our branded distribution network and the current number of Vianor stores is 1,390 and the NAD/N-Tyre network has already grown to over 1,000 stores.

Our Heavy Tyres business unit continued on its track to increase the sales and profitability, and reached already a good Operating profit level of 18.9% in the review period.

Since our estimate of the Russian market in 2015 has changed, the risk level of our forecast has increased. We therefore update our guidance: Net sales for the full year is to decline slightly compared to 2014 and Operating profit is estimated to be approximately EUR 270-295 million.

The competitiveness of our product portfolio is very strong and improving, the performance of the organisation is on a very good level, the productivity increases, and the distribution network keeps growing. After stabilization of the Russian/CIS markets, we are confident that we will be able to deliver sales growth in coming years maintaining our excellent profitability levels, good cash flow and solid dividends.”

Read the whole stock exchange release here.