• Revenue: EUR 1.3 billion for the full year 2024, with a growth of 10.5% in comparable currencies.
• Segment EBITDA: EUR 185 million, representing 14.4% of sales.
• Segment Operating Profit: EUR 71.4 million for the full year.
• Dividend Proposal: EUR 0.24 per share.
• Q4 Net Sales Growth: Over 13%, primarily driven by Central Europe.
• Q4 EBITDA: EUR 67 million.
• Q4 Operating Profit: EUR 36 million.
• Equity Ratio: 52.5%.
• Interest-Bearing Net Debt: EUR 613 million.
• Heavy Tires Operating Profit Margin: 14% in Q4.
• Guidance for 2025: Net sales expected to grow, and segment operating profit as a percentage of net sales to improve compared to 2024.

• Warning! GuruFocus has detected 9 Warning Signs with NKRKF.

Release Date: February 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Nokian Tyres PLC (NKRKF) reported solid growth driven by Central Europe in 2024, with a 10.5% increase in sales in comparable currencies.
• The company is focusing on accelerating the startup of its new manufacturing platform in Romania, which is expected to significantly contribute to future growth.
• Nokian Tyres PLC (NKRKF) has a strong focus on sustainability, achieving a platinum medal for its Ecovadis certification, placing it in the top 1% of companies assessed.
• The company is expanding its operations in North America and Central Europe, with a strong emphasis on high-value segments like winter tires.
• Nokian Tyres PLC (NKRKF) is implementing a new organizational structure to enhance focus on strategic markets and operational excellence, aiming to drive growth and efficiency.

Negative Points

• The North American market faced challenges, delivering a soft quarter despite overall growth in other regions.
• The company experienced higher operating expenses in Q4, impacting the passenger car margin negatively.
• There was a negative impact on price and mix, particularly in the passenger car tire segment, affecting profitability.
• Nokian Tyres PLC (NKRKF) is still in the ramp-up phase for its new manufacturing facilities, which may continue to incur additional costs.
• The company's net debt to segment EBITDA ratio was more than 3 times at the end of the year, indicating a need for improved cash flow management.

Q & A Highlights

Q: Can you clarify the dividend policy for 2025? Is the EUR 0.25 per share the final consideration, or could there be additional payments later in the year? A: The Board is proposing a dividend of EUR 0.25 per share, to be paid in one installment in May. There is no additional dividend proposed for 2025.

Q: What were the higher operating expenses in Q4 related to, and can you quantify any one-off costs? A: The higher operating expenses were primarily due to rebuilding the organization after exiting Russia, particularly in Central Europe. These are investments in our future, and no specific one-off costs were quantified.

Q: What is the expected CapEx for 2025, and what are your expectations for free cash flow? A: The estimated CapEx for 2025 is roughly EUR 200 million, concluding our investment phase by the end of the year. We did not provide specific guidance on free cash flow.

Q: How did contract manufacturing impact operating profits in 2024, and what are the expectations for 2025? A: Contract manufacturing supports segments like summer tires and affects the product mix. It does not significantly change the profitability picture, as winter tires drive profitability.

Q: What are the prospects for volume development and Romanian production in 2025? A: While specific numbers are confidential, the Romanian factory will significantly contribute to global manufacturing volumes in 2025. We are awaiting the final commercial permit to start deliveries.

Q: Can you explain the flat sales performance in the Nordics and North America despite good momentum? A: The Nordics performed as expected, but North America was a disappointment. We are taking steps to improve performance in that region.

Q: What are the key drivers for the expected margin improvement in 2025? A: Key drivers include improved efficiency at factories, better raw material procurement, and leveraging our new organizational structure to enhance operational excellence.

Q: What is the expected impact of the Romanian factory ramp-up on margins in 2025 and 2026? A: We aim for high single-digit segment EBIT margins during the Romanian ramp-up phase, consistent with our longer-term strategic goals.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.