F I N A N C I A L R E V I E W 2 0 1 9
Contents
1
CONT ENTS
Nokian Tyres in brief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Key figures 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Highlights of the year 2019 . . . . . . . . . . . . . . . . . . . . . . . . 4
President & CEO’s review . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Report by the Board of Directors . . . . . . . . . . . . . . . . . . 9
Financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Consolidated income statement . . . . . . . . . . . . . . . . . . 22
Consolidated statement of financial position . . . . . . 23
Consolidated statement of cash flows . . . . . . . . . . . . 24
Consolidated statement of changes in equity . . . . . 25
Accounting policies for the consolidated
financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Notes to the consolidated financial statements . . . . 31
Parent company income statement
and balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Parent company statement of cash flows . . . . . . . . . 62
Accounting policies for the parent company . . . . . . . 63
Notes to the financial statement of
the parent company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Key financial indicators . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Information on Nokian Tyres’ share . . . . . . . . . . . . . . . . 71
Nokian Tyres Group structure . . . . . . . . . . . . . . . . . . . . 73
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Corporate Governance Statement . . . . . . . . . . . . . . . . 78
Salaries and remunerations 2019 . . . . . . . . . . . . . . . . . 87
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Management Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Investor information and investor relations . . . . . . . . 94
Nokian Tyres in brief
2
NO KIAN TYRES IN B RI EF
Nokian Tyres develops and manufactures
premium tires for people who value safety,
sustainability, and innovative products . We
offer peace of mind in all conditions and
instill our Scandinavian heritage in every tire
we make for passenger cars, trucks, and
heavy machinery .
Our business is divided into three units:
Passenger Car Tyres, Heavy Tyres and Vianor,
which is our chain of tire and car service
centers .
We are headquartered in Nokia, Finland,
and our factories are located in Finland,
Russia and the US . The North American
factory started commercial tire production in
January 2020 .
Intensive tire testing is a vital part of our
product development . Therefore, we own and
operate two tire testing centers in Finland
and are building a new one in Spain .
We instill our
Scandinavian
heritage in every tire
we make for passenger
cars, trucks and heavy
machinery.
Nokian Tyres is the inventor of the winter
tire . With our professional and innovative
team, we can take safety to a new level in
summer, all-season, and all-weather tires as
well . We are the market leader in premium
tires in the Nordic countries and Russia and
are strengthening our position in North
America and Central Europe .
Sustainability is an essential part of our
business . We aim for sustainable safety and
eco-friendliness throughout the product
life cycle . Taking care of people and the
environment is in our very DNA .
In 2019, the company’s net sales were
approximately EUR 1,6 billion and it employed
some 4,700 people . Nokian Tyres is listed on
Nasdaq Helsinki .
Net sales
1,596
EUR million
–51%
Lost Time Injury
Frequency (LTIF)
Products
sold in
61
countries
Winter tires
71%
of total sales
4,700
employees
Safe,
sustainable
and innovative
products
Key figures 2019
KEY FIGURES 2019
3
2019
2018
Change
%
CC 1)
Change
%
NET SALES, OPERATING PROFIT
AND OPERATING PROFIT %
EARNINGS PER SHARE AND
DIVIDEND PER SHARE
EUR million
Net sales
Operating profit
Operating profit %
Profit before tax
Profit for the period
Earnings per share 2), EUR
ROCE, %
Equity ratio, %
Cash flow from operating activities
Gearing, %
Interest-bearing net debt
Capital expenditure
Personnel (at the end of year)
LTIF 3)
Rolling resistance 4), %
1) Comparable currencies
1,595.8
1,595 .6
0 .0%
–0 .3%
316.5
19.8%
336.7
399.9
2.89
17.6%
75.9%
219.8
2.3%
41.1
299.6
4,730
4.3
8.3%
372 .4
23 .3%
361 .7
295 .2
2 .15
23 .3%
71 .0%
536 .9
–21 .2%
–315 .2
226 .5
4,719
8 .3
8 .2%
2) EPS 2019 excl . the impact of the rulings on the tax disputes of EUR 1 .08 were
EUR 1 .81
3) Lost Time Injury Frequency: the number of lost time injuries occurring in a workplace per
1 million hours worked . Levypyörä (acquired in August 2019) will be included in the safety
figures as of 2020 .
4) Reduction of rolling resistance since 2013 . Rolling resistance refers to the energy lost when
a tire rolls against the road surface .
EUR million
2,000
Operating profit %
50
1,600
1,200
800
400
0
40
30
20
10
0
2015
2016
2017
2018
2019
Net sales
Operating
profit
Operating
profit %
EUR
3.0
3,0
2.5
2,5
2.0
2,0
1.5
1,5
1.0
1,0
0.5
0,5
0.0
0,0
2015
2016
2017
2018
2019
Earnings
per share
Dividend
per share
2015
2016
2017
2018
2019
2015 2016 2017 2018 2019
Net sales, EUR
1,360 .1 1,391 .2 1,572 .5 1,595 .6 1,595.8
Earnings per share, EUR
1 .80
1 .87
1 .63
2 .15 2.89*
Operating profit, EUR
296 .0
310 .5
365 .4
372 .4 316.5
Dividend per share, EUR
1 .50
1 .53
1 .56
1 .58 1.58**
Operating profit %
21 .8
22 .3
23 .2
23 .3
19.8
* EPS 2019 excl . the impact of the rulings on the tax disputes of
EUR 1 .08 were EUR 1 .81
** The Board’s proposal to the Annual General Meeting
RETURN ON CAPITAL EMPLOYED, %
NET SALES BY GEOGRAPHICAL AREA, %
%
25
20
15
10
5
0
2015
2016
2017
2018
2019
2015 2016 2017 2018 2019
Return on Capital
Employed, ROCE, % 20 .3
19 .9
22 .4
23 .3
17.6
Nordic countries
Russia
Other Europe
North America
Other Countries
2019
2018
40
19
26
13
2
39
19
27
12
2
NET SALES BY BUSINESS UNIT*, %
Passenger Car Tyres
Heavy Tyres
Vianor
2019
2018
71
13
21
72
12
21
* Including internal sales
Highlights of the year 2019
4
HIGHLIGH TS OF T HE YEAR
WE WERE
AGAIN
INCLUDED IN
DJSI WORLD
AND DJSI EUROPE
SUSTAINABILITY
INDICES
THE FIRST
TEST TIRE
WAS MANUFACTURED
IN NEW US FACTORY
VIANOR
CONTINUED TO
IMPROVE ITS
PROFITABILITY
NOKIAN TYRES
INTUITU BROUGHT
DIGITAL
CONNECTIVITY
TO TIRES
WE RETAINED
OUR STRONG MARKET POSITION
IN RUSSIA AND THE NORDIC COUNTRIES
WE REDUCED ROLLING
RESISTANCE BY 8%
ON AVERAGE IN 2013–2019
NEW SUMMER TIRES
FOR CENTRAL EUROPEAN DRIVERS
SHOWED GOOD COMMERCIAL SUCCESS
HEAVY TYRES REACHED
A FULL YEAR WITH
ZERO LOST-TIME INJURIES
OVER 10 TEST TRACKS
IN OUR NEW TESTING CENTER IN SPAIN
STARTED TO TAKE SHAPE
5
President & CEO’s review
STR ATEGIC PROJECTS ARE
BUILDI NG A FOUNDATIO N
FOR OUR LONG-TERM
COM PETITIVENESS
In 2019, we made good progress on our strategic journey and took
important steps to deliver future growth, despite the weak market
conditions. Our key projects – the new US factory, the testing center in
Spain, and the Heavy Tyres capacity expansion – proceeded according
to plan. We, once again, received recognition for our important work
on sustainability and reached new levels in occupational safety. These
achievements lay an important basis for our future.
In 2019, the car and tire markets continued
to be soft in Europe, which resulted in
tightening competition . During the year,
the Russian market declined against the
expectations . In spite of this, our net sales
in 2019 were on the previous year’s level .
Operating profit, however, decreased due to
the weaker markets and expansion costs in
Passenger Car Tyres . Heavy Tyres made good
progress and delivered a strong result, driven
by new products and healthy demand for
agricultural and forestry tires, in particular .
Vianor also delivered further positive
financial performance .
We are making good
progress on our strategy
During 2019, we retained our strong position
as the market leader in premium tires in the
Nordic countries and Russia, and continued
to strengthen our distribution network and
product portfolio both in Central Europe
and North America . Along with winter tires
that represent approximately 70% of our
Passenger Car Tyres business, we continued
to develop competitive products in the
summer and all-season segments for market
specific needs . I am especially proud of the
great performance and commercial success
of our new range of Central European
summer tires . In our product offering, we
have a specific focus on the most profitable
tire segments, which are winter tires and
larger sizes in all product categories .
Our new testing center under
construction in Spain enables us to test
tires all year round in various tracks and
conditions, complementing our existing
winter tire testing facilities in the Northern
Finland . The foundation work for the test
tracks was completed during 2019, and the
center is scheduled to open at the end of
Nokian Tyres has a
valued brand and
competitive advantages
to build on.
6
and new customers both in the summer and
all-season segments in addition to our core
business in winter products . In Russia, we will
focus on sell-out activities in order to reduce
high carry-over stocks of B segment winter
tires in the distribution channel .
All in all, in 2020, we continue to build a
more balanced portfolio across the Nordics,
Russia, Central Europe, and North America,
which will lead to a sustainable, positive
impact on our long-term performance .
I want to warmly thank all our customers,
personnel, shareholders, and other
stakeholders for their good cooperation and
trust .
Hille Korhonen
President & CEO
Read also Hille Korhonen’s greetings in the
Corporate Sustainability Report:
www .nokiantyres .com/company/
sustainability/
In 2020, we
continue to
build a more balanced
portfolio across
the Nordics, Russia,
Central Europe, and
North America.
2020 . Rigorous and continuous testing
is a fundamental part of our product
development . We want all our products to be
safe, durable, and sustainably manufactured .
This allows us – as our mission implies – to
offer peace of mind in all conditions .
Global production platform
increases flexibility
In line with our strategy announced in 2018,
we are pursuing growth also in North America
supported by the capacity investment
in Dayton, Tennessee . We completed the
factory building project in 2019 – on time and
on budget . This was a major achievement .
The new production facility is the largest
single investment in our company’s history
and the most advanced tire factory in the
world . It will substantially improve our service
capabilities in North America . Commercial
production started earlier this year in
January, and our aim is to gradually ramp
up production to 4 million tires per year by
2023, leveraging the same technology and
competence as already tested in our Russian
factory . This makes us a truly global tire
supplier and increases the flexibility of our
production, as we can manufacture all sizes
and models in all our three passenger car tire
factories .
Heavy Tyres delivers strong
growth and record results
2019 was a record year for Heavy Tyres,
delivering the best-ever net sales and
operating profit supported by the highest
ever production volume . With the ongoing
capacity expansion, we will increase Heavy
Tyres’ capacity by 50% . At the same time, we
will more than double the number of products
launched per year, which supports the growth
in our core product groups of agricultural and
forestry tires . Last year, we also opened our
Heavy Tyres’ R&D center, which will speed up
the development and launch of new products .
Significant advances in occupational
safety and sustainability
As a responsible employer, we want to ensure
the competence, well-being and occupational
safety of our employees . In 2019, we reached
new levels in occupational safety, as our LTIF
dropped to 4 .3 . At Heavy Tyres, we had no
lost-time injuries for an entire year, which is a
truly great achievement .
Our work on sustainability again received
recognition last year, with Nokian Tyres being
selected for inclusion in the Dow Jones’
DJSI World and DJSI Europe sustainability
indices . Our sustainability initiatives focus on
producing safe and high-quality products,
reducing our environmental impact, and
ensuring transparent and ethical supply chain .
Our Corporate Sustainability Report contains
more information on our goals and progress in
sustainability .
Strategic journey continues
Nokian Tyres has a valued brand and
competitive advantages to build on . In 2020,
growth in Central Europe and North America
will be supported by several new product
launches and related go-to-market activities .
We have actions in place to grow with existing
Strategy
PROF ITABLE GROWTH AT TH E
CORE OF OUR STRATEGY
OUR DI FFERENTIATORS
OUR AMBITION
7
SAFEST TIRES
FOR ALL
CONDITIONS
CONSUMER-
TRUSTED
PREMIUM BRAND
PREFERRED
PARTNER FOR
CUSTOMERS
LEADER IN
SUSTAINABILITY
RESPONSIVE AND
EFFICIENT
SUPPLY CHAIN
HIGH-PERFORMING
ENGAGED TEAM
We are the market leader in selected segments
in the Nordic countries and in Russia.
We increase our sales by 50% in Central Europe in five years.
We double our sales in North America in five years.
Our tires are available on all major winter tire markets.
Targeting +3% EBITDA of Nokian Tyres owned Vianor
by the end of 2019. This target was reached in 2018.
We increase the sales of Heavy Tyres by 50% in four years.
F IN A N CIA L TA RG ETS 2019–202 1
(Set in November 2018)
GROWING FASTER THAN THE MARKET:
HEALTHY PROFITABILITY:
GOOD RETURNS FOR OUR SHAREHOLDERS:
Above 5% CAGR with comparable currencies
EBIT at the level of 22%
Dividend above 50% of net earnings
OUR DIFF ERENT IATO RS
8
SAF EST TIRES FOR
ALL CON DITION S
CONSU M ER-TR USTE D
P RE MI U M BRA ND
PR EFERRE D PARTNE R
FOR CUSTO MER S
We operate within the premium passenger car
tire segment and focus on the replacement tire
market . We offer the world’s best winter tires
on all major winter tire markets . As pioneers in
demanding conditions, our competitive summer,
all-season, and all-weather tires take safety to a
new level in all conditions .
Our tires are made for people, who value the
promise of the Nordic premium: high-tech
products that are manufactured sustainably .
We make good on our promise on the road,
as our tires offer reliability, performance, and
peace of mind from winter snowfall to heavy
summer rain .
Our partners have higher earnings potential
selling our products and our customer
satisfaction is high . Nokian Tyres offers
premium end-to-end digital customer and
consumer experiences . Our branded retail
concepts support strong sell-out and provide
data, which enables us to serve our consumers
better .
LEADER IN
SUSTAINABIL ITY
RE SP ONSIV E A ND
E FF IC IE NT SU P PLY C HA IN
H IGH -P ERFORMI NG
ENGAG ED T EA M
Offering peace of mind means not only
safety on the road, but doing business in
an environmentally and socially responsible
way . We have a long-term commitment to
sustainability and making a difference within
the whole tire industry .
We have some of the most efficient tire
factories in the world . The high level of
automation ensures superior productivity and
product quality . Our customer-oriented supply
chain ensures excellent customer service
capability even during high season .
Our open and participatory company and
leadership culture ensures that we work,
develop, and achieve great results together .
We are committed to ambitious goals and
continuous development .
Report by the Board of Directors
9
REP ORT BY THE B OARD
OF DIRECTORS 2019
In 2019, the car and tire markets continued to be soft in Europe, which resulted in tightening
competition . During the year, the Russian market declined against the expectations, driven by low new
car sales and consumer spending .
Raw material unit costs (EUR/kg) in manufacturing increased by 5 .4% year-over-year, negatively impacted
by currencies .
Operating profit amounted to EUR 316 .5 million (2018: 372 .4; 2017: 365 .4), negatively impacted by the
Despite the challenging markets, Nokian Tyres continued with the strategic projects to support the
company’s long-term growth: ramping up the new US factory, continuing the construction of the new
testing center in Spain, and proceeding with the Heavy Tyres capacity increase .
In 2019, Nokian Tyres received recognition for its sustainability achievements when the company
was again selected in the DJSI World index and also in the more strictly defined DJSI Europe index . The
occupational safety development was very strong, especially in the Heavy Tyres business, which reached
one year with no occupational accidents leading to absence .
Net sales and operating profit in 2019
Net sales in 2019 were on the previous year’s level and amounted to EUR 1,595 .8 million (2018: 1,595 .6;
2017: 1,572 .5) . With comparable currencies, net sales decreased by 0 .3%, reflecting soft demand for
passenger car tires especially in Central Europe and Russia . Currency exchange rates affected net sales
positively by EUR 4 .9 million .
Net sales by geographical area
Nordic countries
Russia
Other Europe
North America
Other countries
M€
2019
645.0
303.0
414.6
205.4
27.9
M€
2018
629 .3
305 .5
436 .9
194 .5
29 .5
Total
* Comparable currencies
1,595.8
1,595 .6
Net sales by business unit
Change
%
CC*
Change
%
% of total
net sales
in 2019
% of total
net sales
in 2018
2 .5
–0 .8
–5 .1
5 .6
–5 .4
0 .0
4 .5
–2 .8
–5 .9
1 .5
–3 .4
–0 .3
40.4
19.0
26.0
12.9
1.7
39 .4
19 .1
27 .4
12 .2
1 .8
100.0
100 .0
M€
2019
M€
2018
Change
%
CC*
Change
%
% of total
net sales
in 2019
% of total
net sales
in 2018
Passenger Car Tyres
1,134.2
1,150 .8
Heavy Tyres
Vianor
Other operations and
eliminations
Total
* Comparable currencies
202.7
336.5
187 .7
337 .2
–77.6
–80 .1
1,595.8
1,595 .6
–1 .4
8 .0
–0 .2
3 .1
0 .0
–2 .2
8 .0
1 .5
–0 .3
71.1
12.7
21.1
72 .1
11 .8
21 .1
US factory ramp-up costs of approximately EUR 20 million as well as currencies by approximately EUR 7
million . Operating profit percentage was 19 .8% (2018: 23 .3%; 2017: 23 .2%) .
Operating profit by business unit
Passenger Car Tyres
Heavy Tyres
Vianor
Other operations and eliminations
Total
* Including EUR 2 .0 million profit from sale of real estate
M€
2019
287.7
35.7
7.7*
–14.7
316.5
M€
2018
356 .5
28 .6
1 .6
–14 .3
372 .4
Net financial income was EUR 20 .3 million (net financial expenses 10 .7), including net interest income of
EUR 29 .4 million (net interest expenses 3 .0) . Net financial income includes a return of EUR 35 .9 million
related to the rulings on the tax disputes . Net financial income includes an expense of EUR 9 .1 million
(expenses 7 .7) due to exchange rate differences . Profit before tax was EUR 336 .7 million (361 .7) and taxes
were EUR 63 .1 million (–66 .5) . Profit for the period amounted to EUR 399 .9 million (295 .2), which was
positively impacted by EUR 149 .6 million related to the final rulings on the tax disputes . Earnings per share
were EUR 2 .89 (2 .15), positively impacted by EUR 1 .08 related to the tax disputes .
Return on equity was 24 .6% (2018: 20 .0%; 2017: 15 .1%), positively impacted by the tax disputes .
Guidance given for 2019
In Nokian Tyres’ financial statement release for 2018 published in February 2019, the company published
the following outlook for the year:
In 2019, net sales with comparable currencies are expected to grow and operating profit to be
approximately at the level of 2018 . In line with Nokian Tyres updated 2018 strategy, the company is
targeting further growth in Russia, Central Europe and North America . As a result of ongoing investment
programs to support the growth, operating profit in 2019 will include significant additional operating
costs .
In June 2019, the guidance was updated as follows:
In 2019, net sales with comparable currencies are expected to be slightly higher and operating profit
to be lower compared to 2018 . In line with Nokian Tyres’ updated 2018 strategy, the company is targeting
further growth in Russia, Central Europe, and North America . As a result of ongoing investment programs
to support the growth, operating profit in 2019 will include significant additional operating costs .
In October 2019, the guidance was updated as follows:
In 2019, net sales with comparable currencies are expected to be approximately at the level of 2018
and operating profit margin to be approximately at the level of 20% . In line with Nokian Tyres’ updated
2018 strategy, the company is targeting further growth in Russia, Central Europe, and North America .
As a result of ongoing investment programs to support the growth, operating profit in 2019 will include
significant additional operating costs .
Cash flow
In 2019, cash flow from operating activities was EUR 219 .8 million (536 .9) . Working capital increased by
EUR 235 .7 million (decreased by 132 .4) . Inventories decreased by EUR 6 .1 million (increased by 41 .8) and
receivables increased by EUR 68 .0 million (11 .0) . Payables decreased by EUR 173 .8 million (increased by
185 .3; impacted by EUR 148 million related to the rulings on the tax disputes) .
Research & Development
In 2019, Nokian Tyres introduced several new tire models . Approximately 50% of R&D investments are
allocated to product testing . Nokian Tyres’ R&D costs in 2019 totaled approximately EUR 22 .7 million (2018:
20 .8; 2017: 21 .8), which is 6 .1% (2018: 5 .8%; 2017: 5 .8%) of the operating expenses .
To support the testing of new tires, Nokian Tyres is building a new testing center in Spain . The testing
10
Investments
Investments in 2019 amounted to EUR 299 .6 million (226 .5) . This comprises the construction of
the new US factory, the testing center in Spain, production investments in the Russian and Finnish
factories, molds for new products, and ICT and process development projects . All strategic projects are
proceeding in line with the plan . Depreciations totaled EUR 125 .2 million (93 .4) . The increase is mainly due
to the new IFRS 16 standard .
Financial position on December 31, 2019
Cash and cash equivalents, M€
Interest-bearing liabilities, M€
of which current interest-bearing liabilities, M€
Interest-bearing net debt, M€
Unused credit limits*, M€
of which committed, M€
Gearing ratio, %
December 31,
2019
December 31,
2018
218.8
259.9
30.9
41.1
561.0
205.5
2.3
447 .5
132 .3
126 .0
–315 .2
558 .8
205 .5
–21 .2
Equity ratio, %
* The current credit limits and the commercial paper program are used to finance inventories, trade receivables,
and subsidiaries in distribution chains, thereby controlling the typical seasonality in the Group’s cash flow .
75.9
71 .0
Tax rate
Tax rate in 2019 was –18 .7% (18 .4%) . The adjusted tax rate excluding a tax refund of EUR 113 .7 million
concerning the tax disputes from 2007−2011 was 15 .0% . The tax rate is positively affected by tax
incentives in Russia, which are valid until approximately 2022 . The estimated operational tax rate is
expected to be at the level of 18% for 2020 .
Tax audits in the Group companies globally may impact the estimated tax rate . For further
information regarding ongoing and finalized tax disputes, please see page 15 .
Personnel
In 2019, the key focus areas in People and Culture were the development of global people processes and
way of working as well as organizational development .
2019
2018
2017
Group employees
on average
at the end of the review period
in Finland, at the end of the review period
in Russia, at the end of the review period
in North America, at the end of the review period
Vianor (own) employees, at the end of the review period
Nokian Tyres’ headcount reporting systems have been unified globally as of January 2019, 2018 and 2017
headcount figures have not been restated .
4,942
4,730
1,727
1,554
297
1,515
4,790
4,719
1,769
1,574
191
1,563
4,630
4,635
1,724
1,503
196
1,660
Salaries, incentives, and other related costs in 2019 totaled EUR 235 .3 million (2018: 228 .9; 2017: 224 .7) .
center is expected to be in full operation at the end of 2020 .
Sales and distribution
Good availability and precise, quick deliveries especially during season are increasingly important parts of a
successful tire retail experience . Nokian Tyres is continuously developing the logistics systems and retailer
network in order to ensure efficient distribution .
Nokian Tyres’ distribution network consists of Nokian Tyres’ own Vianor service centers and service
centers run by partners, the Nokian Tyres Authorized Dealer (NAD) partners, the N-Tyre retailers, and other
tire and vehicle retailers as well as online stores . At the end of 2019, the number of stores was as follows:
• Vianor: 1,170 (1,318) service centers in total, of which 981 (1,130) partners
• NAD: 2,182 (2,162) stores
• N-Tyre: 133 (127) stores
BUSINESS UNIT REVIEWS
Passenger Car Tyres
Net sales, M€
Operating profit, M€
Operating profit, %
* Comparable currencies
2019
1,134.2
287.7
25.4
2018
Change %
CC*
Change %
1,150 .8
356 .5
31 .0
–1 .4
–2 .2
In 2019, net sales of Passenger Car Tyres totaled EUR 1,134 .2 million (1,150 .8) . With comparable currencies,
net sales decreased by 2 .2% due to lower volumes . Average Sales Price with comparable currencies
increased due to improved price/mix in all markets except for Central Europe .
Car tire sell-in in Europe declined due to softness in the car and tire market . In Russia, summer tire
inventories have decreased compared to the previous year, but their level after the season is still higher
than normal . Winter tire inventories in the distribution channel in Russia are clearly higher than in the
previous year due to a combination of increased sell-in and decreased sell-out . Sell-out of Nokian Tyres’ B
segment winter products in Russia decreased due to overall weakness in demand and exceptionally good
availability of tires as well as aggressive pricing and sell-out support from competing brands .
In 2019, the share of winter tires of sales was 71% (69%), the share of summer tires was 19% (21%), and
the share of all-season tires was 10% (10%) .
Operating profit was EUR 287 .7 million (356 .5) . Operating profit decreased due to lower volumes, higher
material and expansion costs and pricing pressure in Central Europe and Russia . The US ramp-up costs
were approximately EUR 20 million .
Capacity utilization was adjusted to be in line with the market demand . Production output (pcs)
decreased by 7% year-over-year . In 2019, 85% (84%) of passenger car tires (pcs) were manufactured in
Russia .
The Nokian Hakkapeliitta LT3 winter tire for the Nordic, North American, Russian, and Central European
markets was introduced in January 2019 . In February, Nokian Tyres launched its Nokian Hakka summer tire
range on the Japanese market . For Central European markets, Nokian Tyres introduced during 2019 the
Nokian WR Snowproof winter tire and two new premium SUV summer tires, Nokian Powerproof SUV and
Nokian Wetproof SUV . Nokian ONE HT, launched in October, is a premium all-season tire tailored to the
needs of light truck and SUV drivers in North America . Nokian Tyres’ products achieved success in several
car magazine tests . For more information, see: www .nokiantyres .com/test-success/ .
Market situation in Russia
In 2020, the sales of new cars in Russia are expected to slightly decline compared to 2019, driven by
sluggish economy and low consumer purchasing power . The total replacement tire market sell-in in
Russia in 2020 is expected to slightly decline compared to 2019, driven by weak demand and high
carry-over stocks, especially in B segment winter tires .
Heavy Tyres
Net sales, M€
Operating profit, M€
Operating profit, %
* Comparable currencies
2019
202.7
35.7
17.6
2018
187 .7
28 .6
15 .2
Change %
8 .0
CC*
Change %
8 .0
In 2019, net sales of Heavy Tyres totaled EUR 202 .7 million (187 .7) . With comparable currencies, net sales
increased by 8 .0%, driven by improved availability due to the production capacity increase . Demand was
good in Heavy Tyres’ core product groups .
Operating profit was EUR 35 .7 million (28 .6) . Operating profit increased as a result of the sales
growth and previous year’s negative inventory valuation impact .
Production output (metric tons) increased compared to the previous year .
In August, Nokian Heavy Tyres Ltd . acquired Levypyörä Oy, a Finnish heavy equipment wheel
company, with annual net sales of approximately EUR 18 million, of which approximately 30% has been
sales to Nokian Tyres . The acquisition had no material impact on Nokian Tyres operating profit in 2019 .
A flow of product launches with new innovations continued in 2019 . For example, a new retreading
material, Nokian Noktop 75 Super, was added to the Nokian Noktop range in March, a special excavator
tire, Nokian Ground Kare, was introduced in May and in September the company launched the Nokian
Ground King, a new multi-purpose contracting tire . The latest addition to the forestry tire line is Nokian
Forest King TRS 2+ . Several new tire sizes were added to the existing ranges for tractors, trucks, trailers,
mining as well as port and terminal tires during the year . Nokian Tyres Intuitu, the digital tire monitoring
system to provide drivers with real-time data on their tires, was launched in September .
Vianor, own operations
Net sales, M€
Operating profit, M€
2019
336.5
7.7**
Operating profit, %
Number of own service centers
at period end
* Comparable currencies
** Including EUR 2 .0 million profit from sale of real estate
2.3
189
Change %
–0 .2
CC*
Change %
1 .5
2018
337 .2
1 .6
0 .5
188
In 2019, net sales totaled EUR 336 .5 million (337 .2) . With comparable currencies, net sales increased by
1 .5% .
Operating profit was EUR 7 .7 million (1 .6) . The improvement was driven by increased operational
efficiency and better sales management .
At the end of the year, Vianor had 189 (188) own service centers in Finland, Sweden, Norway, and the
USA .
11
CORPORATE GOVERNANCE
In its decision-making and administration, Nokian Tyres adheres to the Finnish Limited Liability
Companies Act, the Finnish Securities Markets Act and the rules issued by Nasdaq Helsinki Ltd, Nokian
Tyres’ Articles of Association, and the Finnish Corporate Governance Code 2020 for listed companies .
Nokian Tyres complies with the code without exceptions . The code is published at www .cgfinland .fi/en/ .
The Corporate Governance Statement has been prepared pursuant to the Finnish Corporate
Governance Code 2020 for listed companies and the Securities Markets Act (Chapter 7, Section 7) and
it is issued separately from the Board of Directors’ report . The Board of Directors has reviewed the
Corporate Governance Statement, and the auditor KPMG has verified that the Statement has been
issued and that the description of the main features of the internal control and risk management
systems relating to the financial reporting process is consistent with the financial statements .
SHARES AND SHAREHOLDERS
At the end of 2019, the number of shares was 138,921,750 .
In May, Nokian Tyres changed its trading code (stock symbol) on Nasdaq Helsinki to TYRES . The
change became effective at the start of trading on May 20, 2019 .
Authorizations
In 2019, the Annual General Meeting authorized the Board of Directors to resolve to repurchase a
maximum of 5,000,000 shares in the company by using funds in the unrestricted shareholders’ equity .
The proposed number of shares corresponded to 3 .6% of all shares in the company at the time of the
proposal . The authorization will be effective until the next Annual General Meeting of Shareholders,
however at most until June 30, 2020 .
In 2018, the Annual General Meeting authorized the Board of Directors to make a decision to offer
no more than 25,000,000 shares through a share issue or by granting special rights under chapter 10,
section 1 of the Finnish Limited Liability Companies Act that entitle to shares (including convertible
bonds), on one or more occasions . The authorization was effective until the Annual General Meeting of
2019 .
In 2018, the Annual General Meeting authorized the Board of Directors to resolve to repurchase a
maximum of 5,000,000 shares in the company by using funds in the unrestricted shareholders’ equity .
The authorization was effective until the Annual General Meeting of 2019 .
The Board did not utilize the authorizations in 2019 .
Stock options on the Nasdaq Helsinki Stock Exchange and shares subscribed with option rights
The share subscription period for stock option 2013C ended in May 2019 . The total number of stock
options 2013C was 1,150,000 . Each stock option 2013C entitled its holder to subscribe to one share in
Nokian Tyres plc . The shares with the stock options 2013C were subscribed during the period from May 1,
2017 to May 31, 2019 .
On February 19, 2019, Nokian Tyres announced that, following the registration of new shares on
November 13, 2018, a total of 1,180 shares in Nokian Tyres plc had been subscribed with the 2013C stock
option rights . As a result of the share subscriptions, the number of Nokian Tyres plc shares increased to
138,066,899 shares .
On May 22, 2019, Nokian Tyres announced that, following the registration of new shares on
February 19, 2019, a total of 32,536 shares in Nokian Tyres plc had been subscribed with the 2013C stock
option rights . As a result of the share subscriptions, the number of Nokian Tyres plc shares increased to
138,099,435 shares .
On August 20, 2019, Nokian Tyres announced that, following the registration of new shares on
May 22, 2019, a total of 822,315 shares in Nokian Tyres plc had been subscribed with the 2013C stock
option rights . As a result of the share subscriptions, the number of Nokian Tyres plc shares increased to
138,921,750 shares .
Own shares
No share repurchases were made during the review period, and the company did not possess any own
shares on December 31, 2019 .
Nokian Tyres has an agreement from 2017 with a third-party
service provider concerning the share-based incentive program for
key personnel . The third party owns Nokian Tyres’ shares related to
the incentive program until the shares are given to the participants
of the program . In accordance with IFRS, these repurchased
shares, 480,000 in 2017, have been reported as treasury shares in
the Consolidated Statement of Financial Position . On December
31, 2019, the number of these shares was 197,947 . This number of
shares corresponded to 0 .14% of the total shares and voting rights
in the company .
Trading in shares
A total of 175,964,982 (137,669,465) Nokian Tyres’ shares were
traded in Nasdaq Helsinki in 2019, representing 127% (100%) of the
company’s overall share capital . The average daily volume in 2019
was 703,860 shares (550,678) . Nokian Tyres’ shares are also traded
on alternative exchanges, such as BATS CXE, Turquoise, and BATS
BXE . The total trading volume on these alternative exchanges was
109,439,468 (106,076,128) shares in 2019 .
Nokian Tyres’ share price was EUR 25 .63 (26 .82) at the end
of 2019 . The volume weighted average share price in 2019 was
EUR 27 .63 (33 .79), the highest was EUR 32 .44 (41 .26) and the lowest
was EUR 23 .71 (26 .35) . The company’s market capitalization at the
end of 2019 was EUR 3 .6 billion (3 .7 billion) .
At the end of the year, the company had 54,067 (47,007)
registered shareholders . The percentage of Finnish shareholders
was 34 .9% (28 .7%), and 65 .1% (71 .3%) were non-Finnish holders
and foreign shareholders registered in the nominee register .
Public sector entities owned 10 .1% (6 .4%), financial and insurance
corporations 4 .6% (4 .6%), households 13 .7% (12 .1%), non-profit
institutions 3 .6% (3 .3%), and private companies 2 .8% (2 .3%) .
Major shareholders, December 31, 2019
(does not include nominee registrations)
Number of
shares
% of share
capital
1 . Solidium Oy
2 . Ilmarinen Mutual Pension Insurance
Company
3 . Varma Mutual Pension Insurance
Company
4 . Elo Mutual Pension Insurance
Company
5 . Mandatum Life Insurance Company
Limited
6 . Nordea
7 . The State Pension Fund
8 . Evli Europe Fund
9 . Föreningen Konstsamfundet rf
10 . Schweizer Nationalbank
7,000,000
3,700,678
1,160,889
1,129,000
915,954
835,290
750,000
622,196
600,000
571,383
5 .04
2 .66
0 .84
0 .81
0 .66
0 .60
0 .54
0 .45
0 .43
0 .41
Changes in ownership
Nokian Tyres received notifications from BlackRock, Inc . on January
7, January 11, February 8, February 15, April 24, May 7, May 9, May 10,
May 20, May 29, May 31, June 13, June 19, July 25, July 29, August 23,
September 6, September 13, September 23, October 4, November 4,
November 27, and December 16 according to which the holdings of
the mutual funds managed by BlackRock, Inc ., or indirect holding in
Nokian Tyres shares, exceeded the level of 5% of the share capital
in Nokian Tyres plc, as a result of share transactions concluded
on January 4, January 10, February 7, February 14, April 23, May 6,
May 8, May 9, May 17, May 28, May 30, June 12, June 18, July 24,
July 26, August 22, September 5, September 12, September 20,
October 3, October 30, November 26, and December 13 .
Nokian Tyres received notifications from BlackRock, Inc . on
January 2, January 8, January 22, January 29, March 18, April 25,
May 8, May 17, May 27, May 30, June 3, June 11, June 27, July 18,
August 1, August 9, August 26, September 18, September 20,
October 9, November 1, and December 3 according to which
the holdings of the mutual funds managed by BlackRock, Inc .,
or indirect holding in Nokian Tyres shares, fell below the level of
5% of the share capital in Nokian Tyres plc, as a result of share
transactions concluded on December 31, January 7, January 21,
January 28, March 15, April 24, May 7, May 16, May 24, May 29, May 31,
June 10, June 25, July 17, July 31, August 8, August 23, September 17,
September 19, October 8, October 31, and December 2 .
Nokian Tyres received a notification from Janus Henderson
Group plc on January 17, according to which the indirect holding in
Nokian Tyres shares fell below the level of 5% of the share capital
in Nokian Tyres plc, as a result of share transactions concluded on
January 16 .
Nokian Tyres received a notification from The Income Fund of
America (“IFA”) on February 7, according to which the direct holding
in Nokian Tyres shares fell below the level of 5% of the share capital
in Nokian Tyres plc, as a result of share transactions concluded on
February 6 .
19, according to which the direct holding in Nokian Tyres shares
exceeded the level of 5% of the share capital in Nokian Tyres plc, as
a result of share transactions concluded on March 18 .
Nokian Tyres received a notification from The Capital Group
Companies, Inc . on July 25, according to which the holdings of the
mutual funds managed by The Capital Group Companies, Inc . fell
below the level of 5% of the share capital in Nokian Tyres plc, as a
result of share transactions concluded on July 23 .
Nokian Tyres received a notification from Bridgestone
Corporation on December 13, according to which Bridgestone
Corporation’s direct holding in Nokian Tyres shares fell below the
level of 5% of the share capital in Nokian Tyres plc, as a result of
share transactions concluded on December 12 .
Detailed information on notifications of change in shareholding
can be found at www .nokiantyres .com/company/investors/share/
flagging-notifications/ .
12
Shareholdings of the Board of Directors, President and
CEO, and Management Team on December 31, 2019
Board of Directors
Petteri Walldén, chairman
Kari Jordan, deputy chairman
Heikki Allonen, member
Raimo Lind, member
Veronica Lindholm, member
Inka Mero, member
George Rietbergen, member
Pekka Vauramo, member
Total
President and CEO
Hille Korhonen, President & CEO
Management Team
Päivi Antola, Corporate Communications & IR
Tytti Bergman, People & Culture
Mark Earl, Americas Business Area
Esa Eronen, Supply Chain & Sustainability
Anna Hyvönen, Nordics & Vianor
Teemu Kangas-Kärki, Finance
Jukka Kasi, Products & Marketing
Bahri Kurter, Central Europe Business Area
Andrei Pantioukhov, Russia & Asia Business Area
Timo Tervolin, Strategy and M&A
Susanna Tusa, Legal & Compliance
Frans Westerlund, IT & Processes
Total
Number of
shares
22,322
2,104
2,595
4,955
2,595
3,988
1,932
1,402
41,893
Number of
shares
47,279
Number of
shares
1,264
2,996
5,180
19,139
21,715
7,014
4,420
0
69,359
26,601
6,385
6,546
4,042
174,661
On December 31, 2019, Nokian Tyres’ Board members and the
President and CEO held a total of 89,172 Nokian Tyres shares . The
shares represent 0,06% of the total number of votes .
Nokian Tyres received a notification from Solidium Oy on March
Manu Salmi, Nokian Heavy Tyres Business Unit
Managers’ transactions
Nokian Tyres announced managers’ transactions on February 22,
March 4, March 7, March 8, April 1, April 8, April 16, and September
4 . Read more at www .nokiantyres .com/company/publications/
releases/2019/managementTransactions/ .
DECISIONS MADE AT THE ANNUAL
GENERAL MEETING
On April 9, 2019, the Annual General Meeting of Nokian Tyres
approved the Financial Statements for 2018 and discharged the
members of the Board of Directors and the President and CEO from
liability for the 2018 financial year .
Dividend
The meeting decided that a dividend of EUR 1 .58 per share shall
be paid for the period ending on December 31, 2018 . The dividend
payment date was April 24, 2019, and the dividend was paid
to shareholders included in the shareholder list maintained by
Euroclear Finland Ltd on the record date of April 11, 2019 .
Members of the Board of Directors and Auditors
The meeting decided that the Board of Directors has eight
members . The current members Heikki Allonen, Kari Jordan,
Raimo Lind, Veronica Lindholm, Inka Mero, George Rietbergen,
Pekka Vauramo, and Petteri Walldén will continue on the Board of
Directors .
The audit firm KPMG Oy Ab will continue as auditors .
Remuneration of the Members of the Board of Directors
The meeting decided that the monthly fee paid to the Chairman of
the Board shall be EUR 7,500 (or EUR 90,000 per year), the monthly
fee paid to the Deputy Chairman of the Board and to the Chairman
of the Audit Committee shall be EUR 5,625 (or EUR 67,500 per year),
and the monthly fee paid to Members of the Board shall be EUR
3,750 (or EUR 45,000 per year) .
50% of the annual fee is to be paid in cash and 50% in
company shares, to the effect that in the period from April 10
to April 30, 2019, EUR 45,000 worth of shares in Nokian Tyres plc
were purchased on the stock exchange on behalf of the Chairman
of the Board, EUR 33,750 worth of shares in Nokian Tyres plc
were purchased on the stock exchange on behalf of the Deputy
Chairman of the Board and Chairman of the Audit committee, and
EUR 22,500 worth of shares were purchased on behalf of other
members of the Board .
The company is liable to pay any asset transfer taxes which may
arise from the acquisition of the company shares . Furthermore,
each member of the Board will receive EUR 600 for meetings held
in their home country and EUR 1,200 for meetings held outside
their home country . If a member participates in a meeting via
telephone or a video connection, the remuneration will be EUR
600 . Travel expenses will be compensated in accordance with the
company’s travel policy .
Authorizations
In 2019, the Annual General Meeting authorized the Board of
Directors to resolve to repurchase a maximum of 5,000,000 shares
in the company by using funds in the unrestricted shareholders’
equity . The proposed number of shares corresponded to 3 .6%
of all shares in the company at the time of the proposal . The
authorization will be effective until the next Annual General Meeting
of Shareholders, however at most until June 30, 2020 .
Amendments of the articles of association
In 2019, the Annual General Meeting resolved to amend Articles 8, 9,
and 11 of the articles of association as follows:
§8 Auditor
The company shall have one auditor which must be an auditing
firm authorized by the Finnish Patent and Registration Office .
The auditor’s term of office expires at the end of the first Annual
General Meeting following the election .
§9 Notice of General Meeting
The notice of a General Meeting shall be published on the
company’s website, no earlier than three months before the record
date referred to in the Finnish Limited Liability Companies Act and
no later than three weeks before the General Meeting . The notice
must, however, be delivered no later than nine days before the
record date of the General Meeting .
§11 Annual General Meeting
The Annual General Meeting shall be held annually on a day fixed by
the Board of Directors, by the end of May . The Meeting shall be held
either at the company’s registered place of business or in either the
city of Tampere or Helsinki, as decided by the Board of Directors .
The Annual General Meeting
shall review:
1 . the financial statements, which include the consolidated
financial statements, and annual report;
2 . the auditor’s report;
shall resolve:
3 . the adoption of the financial statements;
4 . the use of the profit shown on the balance sheet;
5 . granting discharge from personal liability to the members of the
Board of Directors and the Managing Director;
6 . the remuneration payable to the members of the Board of
Directors and the auditor;
7 . the number of the members of the Board of Directors;
shall elect:
8 . the members of the Board of Directors;
9 . an auditor; and
shall deal with:
10 . any other matters mentioned in the notice of the meeting .
13
BOARD OF DIRECTORS’ WORKING
ARRANGEMENTS
In the Board meeting on April 9, 2019, Petteri Walldén was elected
Chairman of the Board and Kari Jordan was elected Deputy
Chairman of the Board . The Board elected Kari Jordan (Chairman),
Veronica Lindholm, and Petteri Walldén as members of the
Personnel and Remuneration Committee . The Board elected Raimo
Lind (Chairman), Heikki Allonen, Inka Mero, and Pekka Vauramo as
members of the Audit Committee .
CHANGES IN MANAGEMENT
In May 2019, Nokian Tyres announced that Mr . Bahri Kurter had been
appointed to the Nokian Tyres management team in the position of
SVP, Central Europe . He started in June 2019 . Kurter reports to the
President and CEO Hille Korhonen .
Detailed information on management can be found at
www .nokiantyres .com/company/investors/corporate-governance/
the-groups-management-team/ .
CORPORATE SUSTAINABILITY
In February 2019, Nokian Tyres received a Silver Class distinction in
the RobecoSAM Sustainability Yearbook 2019 .
In March 2019, Nokian Tyres joined the Global Platform for
Sustainable Natural Rubber . GPSNR is an independent platform
designed to improve the socio-economic and environmental
performance of the natural rubber value chain .
In September 2019, Nokian Tyres was selected in Dow Jones’
DJSI World sustainability index for the third year in a row . The
company was also selected in the more strictly defined DJSI
Europe index . In 20 out of the 21 criteria of the 2019 assessment,
the company scored higher than the average of the global Auto
Components sector .
Nokian Tyres will publish a Corporate Sustainability Report 2019
during the first quarter of 2020 .
OTHER MATTERS
PERFORMANCE SHARE PLAN:
PERFORMANCE SHARE PLAN 2019,
RESTRICTED SHARE PLAN 2019 AND
REALIZATION OF PERFORMANCE PERIOD 2018
On February 5, 2019, Nokian Tyres announced that the Board of
Directors of Nokian Tyres plc had decided on a new share-based
long-term incentive scheme for the Company’s management and
selected key employees . The decision included a Performance
Share Plan (hereinafter also referred to as “PSP 2019”) as the
main structure, and a Restricted Share Plan (“RSP 2019”) as a
complementary structure for specific situations . The purpose of
the share-based incentive scheme is to harmonize the goals of the
Company’s shareholders and key personnel in order to increase
the value of the Company in the long term and to commit key
personnel to the Company and its strategic targets .
Performance Share Plan 2019
The Performance Share Plan consists of annually commencing
individual three-year Performance Periods, followed by the
payment of the potential share reward to the participants . The
commencement of each individual Performance Period is subject to
a separate Board approval .
The first Performance Period (PSP 2019–2021) commenced
as of the beginning of 2019, and the potential share rewards
thereunder will be paid in the first half of 2022, provided that the
performance criteria set by the Board of Directors are achieved .
The potential reward will be paid partly in shares in Nokian Tyres plc
and partly in cash . The cash portion of the reward is intended to
cover the taxes arising from the paid reward . Approximately 200
individuals are eligible to participate in PSP 2019–2021, including the
members of Nokian Tyres’ Management Team . The possible rewards
paid based on the Performance Period of 2019–2021 correspond
approximately to a maximum of 535,000 gross shares .
In addition to the 3-year performance period (PSP 2019–2021), a
separate one-time, two-year performance period (PSP 2019–2020)
commenced in 2019 in order to bridge the previous two-year
PSP 2018 and the three-year PSP 2019–2021 . The potential share
rewards thereunder will be paid in the first half of 2021, provided
that the performance criteria set by the Board of Directors are
achieved . Approximately 210 individuals are eligible to participate
in PSP 2019–2020, including the members of Nokian Tyres’
Management Team . The possible rewards paid based on the
Performance Period of 2019–2020 correspond approximately to a
maximum of 580,000 gross shares .
The potential share rewards payable under the PSP 2019–2020
and PSP 2019–2021 are based on the Company’s Earnings Per Share
(EPS) growth % and Return on Capital Employed (ROCE) .
Restricted Share Plan 2019
The purpose of the Restricted Share Plan (RSP 2019–2021) is
to serve as a complementary tool for individually selected key
employees of Nokian Tyres in specific situations . It consists of
annually commencing individual Restricted Share Plans, each with a
three-year retention period after which the share rewards granted
within the plan will be paid to the participants .
The commencement of each individual plan is subject to a
separate Board approval .
A precondition for the payment of the share reward based
on the Restricted Share Plan is that the employment relationship
of the individual participant with Nokian Tyres continues until the
payment date of the reward . The potential reward will be paid partly
in shares in Nokian Tyres plc and partly in cash . Cash portion of the
reward is intended to cover the taxes arising from the paid reward .
The first plan (RSP 2019–2021) within the Restricted Share
Plan structure commenced as of the beginning of 2019, and the
potential share reward thereunder will be paid in the first half
of 2022 . The possible rewards paid based on RSP 2019–2021
correspond approximately to a maximum of 70,000 gross shares .
Other terms
Nokian Tyres applies a share ownership policy to the members of
Nokian Tyres’ Management Team . According to this policy, each
member of the Management Team is expected to retain in his/her
ownership at least 25% of the shares received under the share-
based incentive programs of the Company until the value of his/
her share ownership in the Company corresponds to at least his/her
annual gross base salary .
The Board of Directors anticipates that no new shares will be
issued based on the share-based incentive scheme and that the
scheme will, therefore, have no dilutive effect on the registered
number of the Company’s shares .
Realization of Performance Period 2018
The rewards paid in 2019, on the basis of the achievement of
the previous share-incentive plan’s performance period 2018,
corresponded to a total of 146,000 Nokian Tyres plc shares
including also the proportion paid in cash . The rewards were paid in
March 2019 . For the key employees who have joined the Plan during
the performance period 2018, including 5 members of the Group’s
Management Team, the rewards were paid in September 2019 . The
plan was directed to 233 key employees, including the members of
the Group’s Management Team . The shares paid as reward may not
be transferred during an approximately one-year restriction period
established for the shares . For shares paid on the basis of the
performance period 2018, the restriction period will end on March
31, 2020 .
CHANGES IN GROUP STRUCTURE
In August 2019, Nokian Heavy Tyres acquired Levypyörä Oy, a
Finnish heavy equipment wheel company, with annual net sales
of approximately EUR 18 million, of which approximately 30% has
been sales to Nokian Tyres . With its two business lines, wheels
and steel structures, Levypyörä serves several original equipment
(OE) manufacturers and aftermarket customers (AM) in forestry,
agriculture and earthmoving applications . Levypyörä has been
integrated into Nokian Heavy Tyres Ltd . The acquisition had no
material impact on Nokian Tyres’ financial results in 2019 .
More information at www .nokiantyres .com/company/news-
article/nokian-heavy-tyres-ltd-acquires-a-finnish-heavy-equipment-
wheel-company-levypyora-oy/ .
SIGNIFICANT RISKS AND UNCERTAINTIES,
AND ONGOING DISPUTES
Nokian Tyres’ business and financial performance may be
affected by several uncertainties . The Group has adopted a risk
management policy, approved by the Board of Directors, which
supports the achievement of strategic goals and ensures business
continuity . The Group’s risk management policy focuses on
managing both the risks pertaining to business opportunities and
the risks affecting the achievement of the Group’s goals in the
changing operating environment . The risk management process
aims to identify and evaluate the risks and to plan and implement
the practical measures for each risk . Nokian Tyres has detailed the
14
overall business risks and risk management in the 2019 Corporate
Governance Statement .
For example, the following risks could potentially have an
impact on Nokian Tyres’ business:
• Nokian Tyres is subject to risks related to consumer confidence
and macroeconomic and geopolitical conditions . Political
uncertainties may cause serious disruption and additional trade
barriers and affect the company’s sales and credit risk . Economic
downturns may increase trade customers’ payment problems
and Nokian Tyres may need to recognize impairment of trade
receivables .
• The tire wholesale and retail landscape is evolving to meet
changing consumer needs . New technologies are fueling this
with increasing digitalization . Failure to adapt to the changes in
the sales channel could have an adverse effect on Nokian Tyres’
financial performance .
• Nokian Tyres’ success is dependent on its ability to innovate
and develop new products and services that appeal to its
customers and consumers . Despite extensive testing of its
products, product quality issues and failure to meet demands of
performance and safety could harm Nokian Tyres’ reputation and
have an adverse effect on its financial performance .
• Nokian Tyres’ production facilities are located in Finland, Russia
and the US . Any unexpected production or delivery breaks at
these facilities would have a negative impact on the company’s
business . Interruptions in logistics could have a significant impact
on peak season sales .
• Significant fluctuations in raw material prices may impact
margins . Nokian Tyres sources natural rubber from producers
in countries such as Indonesia and Malaysia . Although Nokian
Tyres has policies such as the Supplier Code of Conduct and
established processes to monitor the working conditions, it
cannot fully control the actions of its suppliers . The violation of
laws, regulations or standards by raw material producers, or their
divergence from practices generally accepted as ethical in the
European Union or the international community, could have a
material adverse effect on Nokian Tyres’ reputation .
• Tire industry can be subject to risks caused by climate change,
such as changes in consumer tire preferences, regulatory
changes or impact of extreme weather events on natural rubber
producers . Nokian Tyres is committed to reducing GHG emissions
from its operations in order to combat climate change . Nokian
Tyres calculates the GHG emissions from its operations annually
and reduces them systematically . More detailed analysis on
Nokian Tyres’ climate change related risks and opportunities
has been provided in Nokian Tyres’ Non-Financial Reporting
Statement for 2019 .
• Foreign exchange risk consists of transaction risk and translation
risk . The most significant currency risks arise from the Russian
ruble, the Swedish and Norwegian krona, and the US and
Canadian dollar . Approximately 60% of the Group’s sales are
generated outside of the euro-zone .
15
• In May 2017, the Finnish Financial Supervisory Authority filed a
request for investigation with the National Bureau of Investigation
regarding possible securities market offences . In March 2019,
the police moved the suspicions of securities markets offences
to consideration of charges . The suspects have denied any
involvement in criminal activity .
Nokian Tyres’ risk analysis also pays special attention on
corporate social responsibility risks, the most significant of which are
related to the company’s brand image and product quality . Analyses
and projects related to information security, data protection, and
customer information are continuously a special focus area .
Transfer pricing tax disputes
The Large Taxpayers’ Office carried out a transfer pricing tax audit
regarding the tax years 2007–2010 during 2012–2013 . The company
paid in total EUR 89 .2 million as additional taxes and punitive tax
based on tax reassessment decisions . Nokian Tyres’ appeal to the
tax audit report was approved and tax adjustments abolished in May
2018 .
In October 2017, Nokian Tyres received a reassessment decision
from the Tax Administration concerning the tax year 2011, according
to which the company was obliged to pay a total of EUR 59 million,
of which EUR 39 million were additional taxes and EUR 20 million
were tax increases and interest . The company considered the
reassessment decision of the Tax Administration unfounded . Appeal
to the tax audit report was approved and tax adjustments abolished
by the Administrative Board of Tax Authorities in June 2018 .
In March 2019, the Supreme Administrative Court rejected an
application for leave to appeal from the Tax Recipients’ Legal Services
Unit in Nokian Tyres’ 2007–2010 tax dispute . The decision of the
Administrative Court in May 2018 is thus final and the tax dispute for
the tax years 2007–2010 is completed . As a result of the decision of the
Supreme Administrative Court, the Tax Recipients’ Legal Services Unit
withdrew their appeal concerning Nokian Tyres’ tax year 2011 and the
positive decision taken by the Tax Administration in 2018 is thus final .
Adjustments to the financial reporting concerning tax years
2007–2010 and 2011 were done during the first quarter of 2019 .
The decision of the Supreme Administrative Court had no cash flow
impact in 2019, as the Tax Administration returned the additional
taxes paid by the company already in 2018 .
Other tax disputes
In May 2019, Nokian Tyres U .S . Finance Oy, a subsidiary of Nokian
Tyres plc (ownership: 100% of the shares), received a negative ruling
from the Hämeenlinna Administrative Court regarding the company’s
appeal against a reassessment of EUR 18 .5 million concerning the
years 2007–2013 . Of this amount, EUR 11 .0 million were additional
taxes and EUR 7 .5 million were tax increases and interest . The
company has paid and recorded them in full in the financial
statements and results for 2013, 2014, and 2017 . The company
considers the decision unfounded and has appealed against it by
filing a claim with the Supreme Administrative Court in July 2019 .
NON-FINANCIAL REPORTING STATEMENT
Nokian Tyres develops and manufactures premium tires for
consumers and customers who value safety, sustainability and
innovative products . Sustainability is at the core of Nokian Tyres’
business and the company was honored to be included in the
prestigious DJSI World for a third consecutive year, as well as in the
more strictly defined DJSI Europe . In RobecoSAM’s Sustainability
Yearbook 2019 the company rose to the Silver Class . In 2019, “Leader
in sustainability” was added as a new differentiator in the company’s
strategy .
Nokian Tyres is a supporting member of the United Nations
Global Compact (UNGC) initiative and is committed to the
Sustainable Development Goals (SDG’s) set by the UN . Nokian Tyres
is committed to setting Science Based Targets in order to further
reduce greenhouse gas emissions . These SBT’s were set and sent for
validation in February 2020 .
MANAGING NON-FINANCIAL MATTERS
The company’s sustainability activities are led by a member of the
Group’s management team . All supervisors’ duties include day-to-day
leadership of sustainability . Targets, milestones, development items
and other key topics are discussed by the Management Team at least
twice a year, and at least annually by the Board of Directors .
Nokian Tyres’ business is guided by the ethical principles
presented in the Board-approved Code of Conduct . The document
specifies the principles for Nokian Tyres’ business, including
instructions for various ethical issues and anti-bribery guidelines .
When reporting a suspected misuse or violation, an employee is
advised to contact either his/her supervisor, Internal Audit, Legal
& Compliance or the HR unit . Misconducts can also be reported by
sending an email to whistleblow@nokiantyres .com or via regular mail .
Nokian Tyres requires that all of its raw material suppliers adhere
to Nokian Tyres’ Supplier Code of Conduct . All raw material suppliers
must, at a minimum, have an ISO 9001 certified quality management
system in place . Nokian Tyres prefers suppliers with an ISO 14001
certified environmental management system .
The risk management policy adopted by Nokian Tyres’ Board
of Directors supports achieving the company’s strategic goals and
ensuring business continuity . Read more about the company’s risk
management in the section ”Significant risks and uncertainties and
ongoing disputes” and in the Corporate Governance Statement .
Nokian Tyres as a part of society
Nokian Tyres’ objective is to create value for its various stakeholders,
such as shareholders, customers, consumers, and personnel . The
company wants to meet the stakeholders’ expectations . Through
sustainable business practices and financial success, Nokian
Tyres can offer security, work and well-being for its personnel and
contribute to the well-being of local communities .
In May 2019, Nokian Tyres signed a loan agreement linked to
sustainability with the Finnish OP Corporate Bank . The margin of the
EUR 100 million loan will increase or decrease depending on Nokian
Tyres meeting three sustainability key performance indicators: the
Science Based Targets initiative, auditing of human and labor rights
in natural rubber processing plants, and reduction of workplace
accidents .
Nokian Tyres wants to be a good corporate citizen wherever it
operates . The company offers resources to projects based on the
following three categories: road safety, supporting local communities,
and encouraging inventiveness & entrepreneurship . In the US,
the company has donations committees in Dayton, Nashville and
Colchester . In 2019, the Nashville committee made a donation to,
among other things, Tennessee State University’s scholarship fund, in
order to support educational efforts at the Nashville-based school .
In early 2019, the Dayton factory’s launch team performed over 800
combined hours of community service during the first month of its
training program .
CLIMATE AND THE ENVIRONMENT
At Nokian Tyres, environmental and chemical safety and the
coordination of sustainability are the responsibility of the Quality and
Sustainability department . The company promotes environmental and
chemical safety through risk management, continuous improvement
of processes, and new investments .
The factories in Finland and Russia and the Swedish sales
company Nokian Däck AB are certified pursuant to the international
ISO 14001 environmental management system standard and the ISO
9001 quality system standard . The company has held IATF 16949
approval for the automotive industry since 2013 .
In 2019, the company defined its climate-change related risks and
opportunities . The mapping of risks and opportunities was conducted
according to the recommendations of Task Force on Climate-change
Related Financial Disclosures (TCFD) .
When developing activities, the company applies best practices
and advanced solutions while taking into account human factors and
financial circumstances .
The company is a shareholder in Suomen Rengaskierrätys Oy,
which centrally manages the collection and reuse of used tires
in Finland . In Finland, nearly 100% of decommissioned tires are
recycled, and in Europe, the degree of recycling is approximately 95% .
Together with some other major tire manufacturers, Nokian Tyres
has established the Eco Tire Association in Russia . In the beginning
of 2019, Nokian Tyres organized an Eco Challenge in Russia and
emptied illegal tire dumps in a joint effort with the Foundation of
Environmental Management . With the project, Nokian Tyres wanted
to increase public awareness of tire disposal as the recycling rate in
Russia is still low .
In 2019, VOC (volatile organic compounds, or solvents) emissions
in relation to production increased by approximately 51% compared to
the previous year in Nokia, Finland, and they are thus above the level
required by the EC directive . The increase is partially due to moving
the retreading unit away from Nokia to Sastamala, which changed the
balance in the calculations . In internal analysis, however, the increase
was still found to be larger than expected, and a new measurement
will be organized in March 2020 to confirm the result . In 2019, all the
received environmental complaints concerned odor .
Special attention has been paid to improvements in energy
efficiency, as well as chemicals safety and sustainability work
across different fields of business . In 2019, Nokian Tyres did
not meet its target of reducing the yearly energy consumption
by 1% per production ton, and there was a 0 .4% increase from
the previous year . However, the target of reducing energy
consumption by 3% was already exceeded in 2018, and the total
reduction was 8 .2% between 2015 and 2018 . At the production
facilities, emphasis remained on reusing waste, and the utilization
degree of waste was 100% at the Finnish factory and 90% at the
Russian factory .
PEOPLE
The company’s principles in all operations are fair treatment and
respect of human rights when dealing with its personnel or other
stakeholders . This principle of equality and non-discrimination
is an essential part of the company’s operations, and the
management of diversity is based on the concept of equality and
equal prerequisites for work .
Internal job rotation, on-the-job learning, and training
solutions are used to support personnel development . Personal
People Reviews have a key role in personnel development . The
People Reviews focus on managing performance and personal
goals and development . In 2019, a total of 92 .2% of Nokian Tyres’
personnel took part in a People Review (82 .2% in 2018) and
documented the goals . The personnel satisfaction survey allows
the company to actively receive feedback from the personnel
concerning areas for improvement . In the survey performed in
2019, 87 .5% responded (86 .2% in 2018) .
The data privacy work (GDPR) continued by specifying and
further developing the required documentation and processes,
for example by updating the Nokian Tyres’ privacy statements
and further increasing the awareness within the company .
S USTA INABIL IT Y M ANAGE ME N T AT N O K IAN T YRES
Sustainability is a part of our company’s culture, strategy and goals. The management of sustainability is based on our values of
team spirit, entrepreneurship and inventiveness.
Our Sustainability Management is guided by Nokian Tyres Code of Conduct, Whistleblowing and policies such as Environment, Safety
and Quality Policy, Group Treasury Policy, Group Credit Policy, Procurement Policy, Disclosure Policy, Data Protection Policy, and
equality- and diversity policies based on local regulations.
AREAS OF SUSTAINABILITY MANAGEMENT
16
Products / R&D
People
Economy
Environment
Procurement
We develop and
manufacture ecofriendly,
safe and high-quality
tires that reach their
destination safely
even under demanding
conditions.
We are committed to
acting in the manner
required by the UN’s
Guiding Principles for
Business and Human
Rights, and to following
the International
Labour Organization’s
(ILO) Declaration on
Fundamental Principles
and Rights at Work. We
respect human rights
and treat all individuals
equally.
Through profitable
growth, we enable the
further development
of our operations and
ensure financial security,
work and well-being for
our stakeholders.
We are committed to act
in a way that does not
harm the environment or
people.
We are committed to
sustainable procurement
and further developing
sustainability in our
supply chain.
ESSENTIAL STANDARDS, GROUP POLICIES AND PROCEDURES RELATED TO SUSTAINABILITY
Tire/vehicle safety
regulations, such as
United Nations tyre
regulations, various
tire labelling (consumer
information) regulations
and standards, such as EU
Tyre Labelling regulation,
chemical regulation,
Nokian Tyres tire
testing policy, UN Global
Compact.
Policies and procedures
related to safety,
well-being, hiring,
induction, people
reviews and competence
development, human
rights and equality (global
policy during 2020). ISO
45001, Travel Policy, Data
Protection Policy, UN
Global Compact.
Stock exchange
rules, IFRS, Corporate
Governance, risk
management, UN Global
Compact.
ISO 14001, IATF 16949,
Environmental
Management, Chemical
Safety Management,
Responsible Care
program, Science Based
Targets, UN Global
Compact.
Procurement policy,
Supplier Code of Conduct,
ISO 9001, ISO 14001, UN
Global Compact.
LOCAL GUIDELINES AND PROCEDURES
C LI MATE-CHANGE REL ATED RIS KS
CL I MAT E-CHANG E R EL AT ED O PP ORT UN ITIES
Risk group
Sub category
Examples of
concrete risks
Opportunity
group
Sub category
Examples of
concrete opportunities
REGULATORY
Emerging regulation
Deforestation-
related regulation,
mostly concerning
natural rubber
INNOVATION
Raw materials
Recycling
Innovations with
renewable materials
Recycling system for
tires still missing in many
countries, Scandinavian
system can be used as
an example
Climate-friendly tech
Lower rolling resistance
Energy-efficient
production
Further green labelling
Stricter expectations
to oversight
PHYSICAL
Extreme weather
events
Disruptions in
logistics
Extreme temperatures
Contamination of
raw materials
PRODUCT
RANGE
Competitive
advantage
TECHNOLOGICAL Climate-related
demands for new tire
technology
Materials technology
MARKET AND
REPUTATION
Market changes
Reputational risk
Requirements for
non-renewable
material
replacements
Shift from car
ownership to
mobility-as-a-
service i .e . changing
customer base
Deforestation
scandals (natural
rubber)
EU trial labelling for
sustainable tires
Existing focus on
sustainable natural
rubber, for instance
sustainability audits
since 2016
Industrial (heavy) tires
Expertise to provide
climate-friendly solutions
ENGAGEMENT Consumers
Policy makers
Shareholders/
stakeholders
Increased preparedness
for new regulations or
incentives
17
Safety is a choice
Nokian Tyres’ goal is to promote occupational health and minimize
the number of occupational accidents . Occupational health and
safety are an integral part of the company’s daily management
and operations . During 2019, Nokian Tyres continued to globally
communicate the safety slogan “Safety is a choice”, meaning that
everyone is responsible for safety: adhering to occupational safety
guidelines, observing defects and shortcomings as well as reporting
and removing hazards .
The company’s goal for 2019 was to reduce the number of
workplace injuries by 35% compared to the 2018 level . The result
was a 51% reduction . The accident rate decreased from 8 .3 to 4 .3
(excluding Levypyörä, which will be included in the safety statistics
as of January 1, 2020), which is a clear improvement when moving
towards an accident-free workplace .
PRODUCTS
Safety is Nokian Tyres’ first priority, both on the road and in
production . Carbon dioxide, CO2, is the most significant greenhouse
gas generated by traffic . The higher the rolling resistance of a
tire is, the higher the fuel consumption and CO2 emissions will be .
In 2015, the company set a goal for 2020 to reduce the rolling
resistance of its product range by 7% in average compared to the
2013 baseline . The company reached this goal already in 2017 . In
2019, the rolling resistance was 8 .3% lower than in 2013 .
Nokian Tyres aims to further develop lowering the rolling
resistance of tires . In 2019, the Nokian Tyres research team
started working on a concept tire, which helps the company
better understand how to reduce the rolling resistance . The limit
of best A-level tires is 6 .5 in the EU tyre label system . In internal
experiments the rolling resistance of the company’s tire could be
lowered significantly under, close to the rolling resistance value of 5 .
SUPPLY CHAIN
Natural rubber is one of the main ingredients of tires . Nokian Tyres
considers cooperation with the industry and other stakeholders
as vital in improving the conditions of the employees and the
environment . The tire industry has made a joined effort to move
toward sustainable natural rubber, also as concerns labor rights .
In 2019, Nokian Tyres joined the Global Platform for Sustainable
Natural Rubber, which is a platform established by WWF, several
other nonprofit organizations, rubber traders and processors, and
large tire manufacturers .
18
THE PROPOSAL FOR THE USE OF PROFITS
BY BOARD OF DIRECTORS
The distributable funds in the Parent company total EUR 773 .9
million .
The Board of Directors proposes to the Annual General Meeting
that the distributable funds are to be used as follows:
A dividend of
be paid out, totaling
retained in equity
Total
1 .58 EUR/share
EUR 219 .5 million
EUR 554 .4 million
EUR 773 .9 million
No material changes have taken place in the financial position of
the company since the end of the financial year . The liquidity of the
company is good, and the proposed distribution of profits does not
compromise the financial standing of the company as perceived by
the Board of Directors .
Helsinki, February 4, 2020
Nokian Tyres plc
Board of Directors
Human rights in the supply chain
The company has set a goal to audit all its major rubber processor
partners by 2020, comprising at least 80% of the company’s natural
rubber purchasing volume . During 2019, the company audited seven
of its natural rubber processor partners and reaudited two . Nokian
Tyres’ sustainability audits now cover 90% of the company’s natural
rubber purchasing volume thus exceeding its goal . The audits are
conducted by an external auditor .
In addition, the procurement team of Nokian Tyres developed a
new classification model for assessing all the new suppliers globally .
The new model was implemented in fall 2019 and it includes all
the new suppliers . The assessment has four different categories:
quality, sustainability, business/strategic criticality and safety at
work . During 2020, the assessment model will be expanded to
include also existing suppliers .
MATTERS AFTER THE REVIEW PERIOD
On January 24, 2020, Nokian Tyres confirmed its guidance for the
full year 2019 and provided preliminary outlook for 2020 as follows:
In 2020, Nokian Tyres’ net sales with comparable currencies are
expected to decline and operating profit to be significantly below
the level of 2019 .
ASSUMPTIONS FOR 2020
In 2020, the market demand for replacement car tires is expected
to be at the previous year’s level or decrease slightly .
The demand for Nokian Heavy Tyres’ core products is estimated
to remain healthy .
Raw material unit costs are estimated to slightly decrease in
2020 compared with 2019 .
GUIDANCE FOR 2020
In 2020, net sales with comparable currencies are expected to
decline and operating profit to be significantly below the level of
2019 . In line with Nokian Tyres’ updated 2018 strategy, the company
is targeting further growth in Russia, Central Europe, and North
America . In 2020 however, net sales and operating profit in Russia
are expected to decline substantially due to the changed market
dynamics . Operating profit in 2020 will include costs related to
the North American expansion and other investment programs to
support long-term growth, as communicated in 2018 .
NET SALES, OPERATING PROFIT
AND OPERATING PROFIT %
EUR million
2,000
Operating profit %
50
1,600
1,200
800
400
0
40
30
20
10
0
2015
2016
2017
2018
2019
Net sales
Operating
profit
Operating
profit %
2015
2016
2017
2018
2019
Net sales
1,360 .1 1,391 .2 1,572 .5 1,595 .6 1,595.8
Operating profit
296 .0
310 .5
365 .4
372 .4 316.5
Operating profit %
21 .8
22 .3
23 .2
23 .3
19.8
EARNINGS PER SHARE AND
DIVIDEND PER SHARE
EUR
3.0
3,0
2.5
2,5
2.0
2,0
1.5
1,5
1.0
1,0
0.5
0,5
0.0
0,0
2015
2016
2017
2018
2019
Earnings
per share
Dividend
per share
2015 2016 2017 2018 2019
Earnings per share, EUR
1 .80
1 .87
1 .63
2 .15 2.89*
Dividend per share, EUR
1 .50
1 .53
1 .56
1 .58 1.58**
* EPS 2019 excl . the impact of the rulings on the tax disputes of
EUR 1 .08 were EUR 1 .81
** The Board’s proposal to the Annual General Meeting
AVERAGE NUMBER OF PERSONNEL
RETURN ON CAPITAL EMPLOYED
19
5,000
5000
4,000
4000
3,000
3000
2,000
2000
1,000
1000
0
0
2015
2016
2017
2018
2019
2015 2016 2017 2018 2019
Personnel
4,421 4,433 4,630 4,790 4,942
R&D EXPENSES
EUR million
25
20
15
10
5
0
%
25
20
15
10
5
0
2015
2016
2017
2018
2019
2015 2016 2017 2018 2019
%
20 .3
19 .9
22 .4
23 .3
17.6
GROSS INVESTMENTS
EUR million
300
250
200
150
100
50
0
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
2015 2016 2017 2018 2019
2015 2016 2017 2018 2019
EUR million
18 .7
20 .3
21 .8
20 .8
22.7
EUR million 101 .7 105 .6 134 .9 226 .5 299.6
NET SALES BY GEOGRAPHICAL AREA, %
NET SALES BY BUSINESS UNIT*, %
Nordic countries
Russia
Other Europe
North America
Other Countries
2019
2018
40
19
26
13
2
39
19
27
12
2
Passenger Car Tyres
Heavy Tyres
Vianor
2019
2018
71
13
21
72
12
21
* Including internal sales
GEARING
EQUITY RATIO
20
%
30
20
10
0
-10
-20
-30
%
80
60
40
20
0
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
2015 2016 2017 2018 2019
%
–16 .9 –19 .7 –14 .2 –21 .2
2.3
2015 2016 2017 2018 2019
%
70 .8
73 .8
78 .2
71 .0
75.9
PASSENGER CAR TYRES
NET SALES, OPERATING PROFIT
AND OPERATING PROFIT %
HEAVY TYRES
NET SALES, OPERATING PROFIT
AND OPERATING PROFIT %
VIANOR
NET SALES, OPERATING PROFIT
AND OPERATING PROFIT %
EUR million
EUR million
2,000
Operating profit %
50
1,600
1,200
800
400
0
40
30
20
10
0
2015
2016
2017
2018
2019
EUR million
Operating profit %
50
EUR million
400
Operating profit %
250
200
150
100
50
0
40
30
20
10
0
300
200
100
0
-100
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
12
9
6
3
0
-3
Net sales
Operating
profit
Operating
profit %
Net sales
Operating
profit
Operating
profit %
Net sales
Operating
profit
Operating
profit %
2015
2016
2017
2018
2019
2015 2016 2017 2018 2019
2015 2016 2017 2018 2019
Net sales
951 .5
981 .1 1,138 .8 1,150 .8 1,134.2
Net sales
155 .3 155 .3 172 .3 187 .7 202.7
Net sales
327 .6 334 .8 339 .4 337 .2 336.5
Operating profit
285 .5
305 .8
359 .9
356 .5 287.7
Operating profit
28 .7
28 .2
32 .2
28 .6
Operating profit % 30 .0
31 .2
31 .6
31 .0
25.4
Operating profit % 18 .5
18 .2
18 .7
15 .2
35.7
17.6
Operating profit
Operating profit %
–1 .9
–0 .6
–8 .1
–2 .4
–5 .8
–1 .7
1 .6
0 .5
7.7*
2.3
* Including EUR 2 .0 million profit from sale of real estate
Financial statements
21
FINANCIAL STAT EMENTS 201 9
This report is a translation . The original Finnish is the authoritative version .
Consolidated income statement
CONSOLIDATED I NCO ME STATEM E NT, IF R S
22
EUR million 1.1.–31.12.
Net sales
Cost of sales
Gross profit
Other operating income
Selling and marketing expenses
Administration expenses
Other operating expenses
Operating profit
Financial income
Financial expenses (1
Profit before tax
Tax expense (2 (3
Profit for the period
Attributable to:
Equity holders of the parent
Non-controlling interest
Notes
(1)
(3)(6)(7)
(4)
(6)(7)
(6)(7)
(5)(6)(7)
(8)
(9)
(10)
Earnings per share (EPS) for the profit attributable
to the equity holders of the parent:
(11)
Basic, euros
Diluted, euros
2019
1,595.8
–912.9
2018
EUR million 1.1.–31.12.
Notes
2019
2018
1,595 .6
–865 .5
CONSOLIDATED OTHER COMPREHENSIVE INCOME
683.0
730 .2
Result for the period
Other comprehensive income, items that may be
reclassified subsequently to profit and loss, net of tax
399.9
295 .2
2 .5
–286 .4
–47 .9
–25 .9
Gains/Losses from hedge of
net investment in foreign operations
Cash flow hedges
(10)
(10)
Translation differences on foreign operations
Total other comprehensive income for the period, net
of tax
372 .4
Total comprehensive income for the period
Total comprehensive income attributable to:
Equity holders of the parent
Non-controlling interest
0.0
–1.2
86.6
85.4
485.3
485.3
-
0 .0
1 .3
–67 .8
–66 .6
228 .7
228 .7
-
(1 Financial expenses 1–12/19 contain returned EUR 34 .4 million punitive interest related to tax disputes that were
booked in previous fiscal years based on tax reassessment decisions . Additionally financial expenses 1–12/19
contain a gain of EUR 1 .4 million of interest from returned taxes .
(2 Tax expense 1–12/19 contain returned EUR 115 .2 million additional taxes and punitive increases that were
booked in previous fiscal years based on tax reassessment decisions .
(3 Otherwise tax expense in the consolidated income statement is based on the taxable result for the period .
3.6
–288.9
–45.4
–35.8
316.5
67.3
–47.0
336.7
63.1
399.9
399.9
-
2.89
2.89
83 .3
–94 .0
361 .7
–66 .5
295 .2
295 .2
-
2 .15
2 .14
Consolidated statement of financial position
CONSOLIDATED STATEMENT O F
FINA NCIAL POSI TION , IFR S
23
Notes
2019
2018
EUR million 31.12.
Notes
2019
2018
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
(22)(23)
EUR million 31.12.
ASSETS
Non-current assets
Property, plant and equipment
Goodwill
Other intangible assets
Investments in associates
Right of use assets
Available-for-sale financial assets
Other receivables
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Current tax assets
Cash and cash equivalents
(12)
(2)(13)
(13)
(16)
(14)
(16)
(15)(17)
(18)
(19)
(20)(28)
(21)
885.0
84.4
35.3
0.1
122.9
0.7
7.7
15.9
647 .3
83 .6
33 .6
0 .1
-
0 .7
7 .3
9 .3
Share capital
Share premium
Treasury shares
Translation reserve
Fair value and hedging reserves
Paid-up unrestricted equity reserve
Retained earnings
1,152.0
781 .8
Non-controlling interest
Total equity
387.0
559.1
15.6
218.8
369 .2
481 .3
13 .0
447 .5
1,180.5
1,311 .0
Liabilities
Non-current liabilities
Deferred tax liabilities
Provisions
Interest-bearing financial liabilities
Other liabilities
Total assets
(1)
2,332.6
2,092 .9
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Interest-bearing financial liabilities
Total liabilities
25.4
181.4
–8.0
–278.8
–1.8
238.2
1,613.3
1,769.7
-
1,769.7
36.4
0.0
229.1
1.0
266.5
255.9
4.6
5.0
30.9
296.4
562.8
25 .4
181 .4
–11 .4
–365 .4
–0 .6
222 .6
1,434 .1
1,486 .1
-
1,486 .1
32 .5
0 .0
6 .3
0 .5
39 .3
430 .5
6 .5
4 .4
126 .0
567 .4
606 .8
(18)
(25)
(26)(28)
(27)
(25)
(26)(29)
(1)
Total equity and liabilities
2,332.6
2,092 .9
Changes in working capital arising from operative business are partly covered by EUR 350 million domestic
commercial paper programme .
Interest-bearing liabilities include EUR 94 .8 million of non-current and EUR 30 .0 million of current lease liabilities .
Consolidated statement of cash flows
CONSOLIDATED STATEMENT
OF CASH FLOWS, IFR S
24
2019
2018
15.6
-
75.0
1.2
–125.8
127.9
–30.7
0.3
–218.1
–154.5
18 .7
-
–9 .0
0 .5
123 .5
–125 .1
-
0 .5
–214 .2
–205 .1
EUR million 1.1.–31.12.
Cash flow from financing activities:
Proceeds from issue of share capital
Purchase of treasury shares
Change in current financial receivables,
increase (–) / decrease (+)
Change in non-current financial receivables,
increase (–) / decrease (+)
Change in current financial borrowings,
increase (+) / decrease (–)
Change in non-current financial borrowings,
increase (+) / decrease (–)
Payment of lease liabilities
Dividens received
Dividends paid
Cash flow from financing activities (C)
2019
399.9
125.2
–20.3
6.4
–63.1
448.0
–68.0
6.1
–173.8
–235.7
4.1
–56.7
0.0
60.1
7.4
219.8
2018
295 .2
93 .4
10 .7
11 .8
66 .5
477 .6
–11 .0
–41 .8
185 .3
132 .4
2 .2
–12 .4
0 .0
–63 .0
–73 .2
536 .9
Change in cash and cash equivalents, increase (+) /
decrease (-) (A+B+C)
–231.9
104 .7
Cash and cash equivalents at the
beginning of the period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the period
447.5
3.2
218.8
343 .4
0 .7
447 .5
Implementation of IFRS 16 has resulted in increased cash flow from operating activities of EUR 30 .7 million, which
is equivalent to negative cash flow from financial activities as payment of lease liabilities .
Changes in working capital and 1–12/18 include EUR 59 .0 million based on the tax reassessment decision on year
2011 and EUR 89 .2 million based on the tax reassessment decision on years 2007–2013 .
–290.1
–226 .5
Groups financial borrowings were at the beginning of the year 1 .1 .2019 EUR 132 .3 million and at the end of
the year EUR 135 .2 million . Changes affecting cash flow were EUR –0 .1 million and non-cash changes were
EUR 3 .0 million .
2.3
–9.5
-
0.0
0 .3
–0 .9
-
0 .0
EUR million 1.1.–31.12.
Profit for the period
Adjustments for
Depreciation, amortisation and impairment
Financial income and expenses
Gains and losses on sale of intangible assets, other
changes
Income Taxes
Cash flow before changes in working capital
Changes in working capital
Current receivables, non-interest-bearing,
increase (–) / decrease (+)
Inventories, increase (–) / decrease (+)
Current liabilities, non-interest-bearing,
increase (+) / decrease (–)
Changes in working capital
Financial items and taxes
Interest and other financial items, received
Interest and other financial items, paid
Dividens received
Income taxes paid
Financial items and taxes
Cash flow from operating activities (A)
Cash flows from investing activities
Acquisitions of property, plant and
equipment and intangible assets
Proceeds from sale of property, plant and
equipment and intangible assets
Acquisitions of Group companies
Change in non-controlling interest
Acquisitions of other investments
Cash flows from investing activities (B)
–297.2
–227 .1
Consolidated statement
of changes in equity
CONSOLIDATED STATEMENT O F
C HANGES IN EQ UI TY, I FRS
EUR million
Equity, 31 Dec 2017
Change in accounting principles (IFRS 2)
Change in accounting principles (IFRS 9)
Equity, 1 Jan 2018
Profit for the period
Other comprehensive income, net of tax:
Cash flow hedges
Net investment hedge
Translation differences
Total comprehensive income for the period
Dividends paid
Exercised warrants
Acquisition of treasury shares
Share-based payments
Total transactions with owners for the period
Equity, 31 Dec 2018
Equity, 1 Jan 2019
Profit for the period
Other comprehensive income, net of tax:
Cash flow hedges
Net investment hedge
Translation differences
Total comprehensive income for the period
Dividends paid
Exercised warrants
Acquisition of treasury shares
Share-based payments
Total transactions with owners for the period
Equity, 31 Dec 2019
Equity attributable to equity holders of the parent
Notes
Share
capital
25 .4
Share
premium
181 .4
Treasury
shares
–20 .3
Translation
reserve
–297 .6
Fair value
and
hedging
reserves
–1 .8
Paid-up
unrestricted
equity
reserve
203 .9
25 .4
181 .4
–20 .3
–297 .6
–1 .8
203 .9
–67 .8
–67 .8
25 .4
181 .4
8 .9
8 .9
–11 .4
–365 .4
25.4
181.4
–11.4
–365.4
86.6
86.6
1 .3
1 .3
–0 .6
–0.6
–1.2
–1.2
25.4
181.4
3.4
3.4
–8.0
–278.8
–1.8
(22)
(22)
(23)
(22)
(22)
(23)
18 .7
18 .7
222 .6
222.6
15.7
15.7
238.2
Retained
earnings
1,377 .4
6 .1
–9 .6
1,373 .8
295 .2
295 .2
–214 .2
–20 .7
–234 .9
1,434 .2
1,434.2
399.9
399.9
–218.1
–2.7
–220.7
1,613.3
Non-
controlling
interest
-
-
-
-
-
25
Total
equity
1,468 .4
6 .1
–9 .6
1,464 .8
295 .2
1 .3
-
–67 .8
228 .7
–214 .2
18 .7
-
–11 .8
–207 .3
1,486 .1
1,486.1
399.9
–1.2
86.6
485.3
15.7
0.7
–201.7
1,769.8
Accounting policies for the consolidated
financial statements
26
ACCOUNTING P OLI CIES FOR TH E
CONSOLIDATED FI NA NC IA L STATEM EN TS
Basic information
Nokian Tyres plc is a Finnish public corporation founded in
accordance with the Finnish laws and domiciled in the city of Nokia .
The shares of Nokian Tyres plc have been quoted on the Nasdaq
Helsinki Oy since 1995 .
Nokian Tyres Group develops and manufactures summer and
winter tires for passenger cars and vans, and special tires for heavy
machinery . The Group also manufactures retreading materials and
retreads tires . The largest and most extensive tire retail chain in
the Nordic countries, Vianor, is also a part of the Group . The core
business areas in the Group are Passenger Car Tyres, Heavy Tyres
and Vianor .
Basis of preparation
The consolidated financial statements have been prepared in
accordance with the International Financial Reporting Standards
and in compliance with the IAS and IFRS standards as well as
the SIC and IFRIC interpretations in force on 31 December 2019 .
International Financial Reporting Standards refer to the standards
and related interpretations to be applied within the Community as
provided in the Finnish Accounting Act and the provisions issued
on the basis of this Act, and in accordance with the procedure laid
down in Regulation (EC) No 1606/2002 of the European Parliament
and of the Council on the application of international accounting
standards . Notes to the consolidated financial statements also
comply with the Finnish accounting and corporate laws .
The information in the financial statements is presented
in millions of euro and is prepared under the historical cost
convention except as disclosed in the following accounting policies .
Revised standards and interpretations
The Group has adopted new and revised standards and
interpretations enforced in the EU during the period . Except
for IFRS 16, the changes had no material impact on the result,
the financial position or the other information presented in the
financial statements of the Group for the period .
■ IFRS 16 – Leases
Under IFRS 16, all leases will be recognized in the lessee’s balance
sheet as the classification between operating and finance leases
according to IAS 17 will no longer be valid . In accordance with the
new standard, all assets related to lease agreement (right-of use
assets) and future lease payment obligations (lease liabilities)
are recognized in the balance sheet . The only exceptions are the
short-term leases and leases for which the underlying asset is of
low value, the accounting treatment of which is explained below .
The accounting treatment for lessors remains largely in line with IAS
17 . Nokian Tyres acts mainly as a lessee . The vast majority of leases
recognized as Right-of-use assets under IFRS 16 are comprised of
Vianor chain real estate and warehouses .
Transition
Nokian Tyres has chosen a modified retrospective approach, under
which the cumulative effect of initial application is recognised in
retained earnings at 1 January 2019 . Accordingly, the comparative
information presented for 2018 has not been restated . Nokian Tyres
applies the following practical expedients in adoption of IFRS 16:
• Leases with lease term less than 12 months remaining at the date
of transition on January 1, 2019 are accounted for as short-term
leases and not recognized in the balance sheet . The election shall
be made by class of underlying asset and is applied to all other
classes except cars, which are recognized in the balance sheet
even if their remaining lease term would be less than 12 months
at the time of transition .
• The lease liability and the right-of-use asset are not recognized
in the balance sheet in respect of leases relating to low value
assets . Nokian Tyres uses a threshold of EUR 10,000 for low value
assets .
• Lease agreements with reasonably similar characteristics are
subject to one predetermined discount rate . The criteria used
to determine the discount rate are the class of underlying asset,
the geographic location, the currency and the maturity of the
risk-free interest rate .
• In case of leases that the lease term includes extension
options or termination options, current knowledge is used in
determination of the lease term .
Management judgements
Nokian Tyres complies with IFRS 16 guidance for determining the
lease term . In case of lease agreements where the lease term
is defined valid until further notice, the expected lease term is
based on management judgement . The financial impact of the
sanctions included in the leases, such as those related to the early
termination of the contract, has also been taken into account in
determining the expected lease term . According to the standard
guidance, the option to extend or terminate the lease is taken
into account in determining the lease term . The period covered
by an option to extend the lease is included into the lease term
if it is reasonably certain that the option will be exercised and,
and correspondingly, if it is reasonably certain that the option
to terminate the lease is not exercised the remaining period is
included in the lease term . When the agreement includes a lease
component and a non-lease component, Nokian Tyres separates
the non-lease components; such as maintenance or services, based
on either the stand-alone prices given in the lease agreement or by
using estimates .
Impact of the adoption of IFRS 16
The adoption of the standard will have an impact on the balance
sheet of Nokian Tyres Group and key figures derived from it, as the
Group’s interest-bearing debt and non-current assets will increase .
At the time of transition, January 1, 2019, the amount of the
right-of-use assets and lease liabilities recognized in the Group’s
opening balance sheet is EUR 137 .7 million . Right-of-use assets are
presented in the balance sheet as one item and lease liabilities are
classified as non-current and current liabilities .
IFRS are under constant development . Other new standards,
interpretations or their amendments have also been published
but they are not yet in force and the Group will not apply them
before they are enforced . The Group will adopt each standard and
interpretation on the effective date or from the beginning of the
following financial period .
Use of estimates
The preparation of financial statements in compliance with IFRS
requires the use of estimates and assumptions that affect the
amount of assets and liabilities shown in the statement of financial
position at the time of preparation, the presentation of contingent
assets and liabilities in the financial statements, and the amount
of revenues and expenses during the reporting period . Estimates
have been used e .g . to determine the amount of items reported in
the financial statements, to measure assets, to test goodwill and
other assets for impairment, and for the future use of deferred
tax assets . Since the estimates are based on the best current
assessments of the management, the final figures may deviate
from those used in the financial statements .
Key sources of estimation uncertainty still relate to the country
risk in the Russian business environment . Though the positive
development in global economy is expected to continue in 2020,
political uncertainties could cause serious disruption and additional
trade barriers, and affect the company’s sales and credit risk .
Brexit, as such, has practically no effect on Nokian Tyres’ business .
Other sources of uncertainty relate to the challenging pricing
environment of tires in line with price development of raw materials .
27
Principles of consolidation
The consolidated financial statements include the financial
statements of the parent company Nokian Tyres plc as well as all
subsidiaries in which the Parent company owns, directly or indirectly,
more than 50% of the voting rights or in which the Parent company
otherwise exercises control . Control exists when the Group through
participation in an investee is exposed or entitled to its variable
returns and is able to affect the returns through exercising power
over the investee .
Associated companies in which the Group has 20 to 50 % of
the voting rights and in which it exercises significant influence but
not control, have been consolidated using the equity method . If
the Group’s share of the associated company’s losses exceeds its
holding in the associated company, the carrying amount will be
recorded in the balance sheet at nil value and losses in excess of
that value will be ignored unless the Group has obligations towards
the associated companies . Investments in associates include the
carrying amount of the investment in an associated company
according to the equity method, and possible other non-current
investments in the associated company, which are, in substance,
part of a net investment in the associated company .
A joint arrangement refers to a contractual undertaking,
in which the Group has agreed to share control over material
financial and business principles with one or more parties . A joint
arrangement is either a joint operation or a joint venture . In a
joint venture the Group holds rights to the net assets of the
arrangement whereas in a joint operation the Group holds rights
to the assets and carries obligations on the liabilities of the
arrangement . Nokianvirran Energia Oy is a joint operation as the
parties share control according to a specific Mankala-principle
where the company is not intended to make profit while the parties
have agreed to utilize the total output . Nokianvirran Energia Oy
is accounted for as a Group company using the proportionate
consolidation method on each row according to the 32 .3%
shareholding .
Acquired subsidiaries have been consolidated using the
acquisition method, according to which the acquired company’s
assets and liabilities are measured at fair value on the date of
acquisition . The cost of goodwill is the excess of the cost of the
business combination over the acquirer’s interest in the net fair
value of the identifiable assets, liabilities and contingent liabilities .
Acquisition-related costs, except for the costs to issue debt or
equity securities, are expensed . Possible contingent consideration
is measured at fair value on the date of acquisition and is classified
as a liability . Contingent consideration classified as a liability is
measured at fair value on each reporting date and the following
gain or loss is recognized in the income statement . Under IFRS
goodwill is not amortised but is tested annually for impairment .
Subsidiaries acquired during the financial year have been
consolidated from the acquisition date and those divested until the
divestment date .
All internal transactions, receivables, liabilities and unrealised
margins, as well as distribution of profits within the Group, are
eliminated while preparing the consolidated financial statements .
Profit for the period is attributed to the owners of the
Parent company and to the non-controlling interests . Moreover,
non-controlling interests are disclosed as a separate item under the
consolidated equity .
Foreign currency items
Transactions in foreign currencies have been recorded at the
exchange rates effective on the transaction date . In the statement
of financial position all items in foreign currencies unsettled on
the reporting date are measured at the European Central Bank’s
closing exchange rate . The quotations of the relevant central bank
are applied if the European Central Bank does not quote a specific
currency . Foreign exchange gains and losses related to business
operations and financing activities have been recorded under
financial income and expenses .
Foreign Group companies
The statements of financial position of foreign subsidiaries have
been translated into euro using the European Central Bank’s closing
rates, and the income statements monthly using the average rate
for the period . Translation differences arising from the subsidiaries’
income statements and statements of financial position have been
recorded under other comprehensive income and in the translation
reserve within equity as a separate item . Translation differences
arising from the elimination of foreign company acquisition cost
and from the profits and losses incurred after the acquisition have
been recorded under other comprehensive income as a separate
item and in the translation reserve within equity . If settlement
of a loan to a foreign operation is neither planned nor likely to
occur in the fore-seeable future, then the loan is considered as a
net investment in a foreign operation and the foreign exchange
gains and losses arising on the item are recognized in other
comprehensive income and accumulated in the translation reserve
in equity .
When a subsidiary is divested fully or in part, the related
accumulated translation differences are brought from equity to the
income statement and entered as a gain or loss on the sale .
Cash and cash equivalents
Cash and cash equivalents include cash in hand and other current
investments, such as commercial papers and bank deposits .
Financial assets and liabilities
Classification of financial instruments
When recognizing a financial asset in its statement of financial
position the Group classifies it into one of the following
measurement categories:
• Amortized cost
• Fair value through other comprehensive income
• Fair value through profit or loss
These categories apply to subsequent measurement and profit
or loss recognition . The classification is based on the business
model for managing the asset and the contractual cash flow
characteristics of the asset .
A financial asset is classified as subsequently measured at
amortized cost when the objective is to hold financial assets to
collect contractual cash flows that are payments of principal and
interest on the principal amount outstanding . In the Group in
principle this measurement category includes trade receivables,
loan receivables and cash and cash equivalents including liquid
short-term investments in money market instruments .
A debt instrument in the financial assets is classified as
subsequently measured at fair value through other comprehensive
income when the objective is to both hold the financial assets to
collect contractual cash flows that are payments of principal and
interest on the principal amount outstanding and sell the financial
assets .
If there are other business objectives for the holding of a
financial asset than the foresaid, it is classified as subsequently
measured at fair value through profit or loss . The Group’s derivative
assets are included in this category . However, when recognizing an
investment in an equity instrument in its statement of financial
position the Group may make an irrevocable election to present
subsequent changes in fair value in other comprehensive income .
The election is made on an instrument-by-instrument basis . The
Group typically designates investments in quoted and unquoted
shares that are not held for trading as at fair value through other
comprehensive income .
The measurement category of a financial liability is either at
amortized cost or at fair value through profit or loss . A financial
liability is classified as at fair value through profit or loss if it is
held-for-trading, is a derivative or is specifically designated as such .
Other financial liabilities are subsequently measured at amortized
cost . The financial liabilities of the Group are classified as measured
at amortized cost except for derivative liabilities .
Measurement of financial instruments
At initial recognition all financial assets and liabilities are measured
at its fair value taking into account any transaction costs and in
the statement of financial position they are included in current
or non-current assets or liabilities depending on the maturity of
the item . Financial assets and financial liabilities are subsequently
measured at amortized cost, at fair value through other
comprehensive income, or at fair value through profit or loss in
accordance with the measurement category of the item .
Impairment of financial assets
At each reporting date the Group recognizes a loss allowance for
expected credit losses on a financial asset that is not measured
at fair value through profit or loss . Expected credit losses are a
probability-weighted estimate of credit losses over the expected
life of the financial instrument . When measuring expected credit
losses the Group reviews actual credit losses, current conditions
and forecasts of future economic conditions .
For trade receivables the Group follows the simplified
approach whereby the impairment recognized in trade receivables
corresponds to lifetime expected credit losses for trade receivables .
Derivative financial instruments
and hedge accounting
The Group may hold derivative financial instruments to hedge its
interest rate, foreign currency and commodity price risk exposures .
Derivatives are recognized initially at fair value and subsequently
measured at fair value . Publicly quoted market prices and rates, as
well as generally used measurement models, are used to define
the fair value of derivatives . The data and assumptions used in the
measurement models are based on verifiable market prices and
values .
Fair value changes of derivatives are recognized in profit or
loss unless the derivative is part of a hedging relationship when fair
value changes are recognized according to the hedge accounting
standards for hedging relationships .
In general, hedge accounting is not applied to the derivatives
used to hedge cash flows from the Group’s business operations in
foreign currencies .
Hedge accounting can be used to reduce the volatility in the
income statement caused by the items measured at fair value
through profit or loss . Hedge accounting eliminates the accounting
asymmetry between the hedging instrument and the hedged
item as it enables the foresaid to affect the income statement
simultaneously . The Group may designate derivative financial
instruments as hedging instruments to hedge the variability in cash
flows that is attributable to changes in foreign exchange rates,
interest rates and electricity prices . In addition, the Group may, if
necessary, designate derivative financial instruments and other
financial instruments as hedging instruments in hedges of foreign
exchange risk on a net investment in a foreign operation .
At the inception of hedge accounting for a hedging relationship
the Group designates and documents the hedging relationship
and the risk management objective and strategy for undertaking
the hedge . The documentation includes an assessment whether
the hedge effectiveness requirements are met in the hedging
relationship . The Group aims to use hedging instruments that
create no ineffective portion .
Cash flow hedges
In cash flow hedges the effective portion of changes in the
fair value of the hedging instrument is recognized in other
comprehensive income and accumulated in the cash flow hedge
reserve in equity . Any ineffective portion of changes in fair value is
recognized immediately in profit or loss . The amount accumulated
in the cash flow hedge reserve is reclassified to profit or loss as the
hedged item affects profit or loss .
The Group applies hedge accounting to interest rate swaps by
which floating rate borrowings have been converted into fixed rate
borrowings and interest rate and currency swaps where foreign
currency floating rate loan receivables have been converted into
functional currency floating rate loan receivables . The gains or
losses related to both the effective and ineffective portion of the
hedge are presented in profit or loss within financial items .
The price risk of the Group’s forecast electricity purchases
in Finland is hedged with electricity derivatives to which hedge
accounting is applied . The Group may hedge separately the two
components of electricity price risk, the system price and the area
price difference, or a combination of these components . The gain
or loss related to the effective portion of the hedge is presented
in profit or loss within cost of sales . The ineffective portion is
recognized in profit or loss within other operating income or
expenses .
Hedge of a net investment in a foreign operation
Hedges of net investments in foreign operations are accounted
for similarly to cash flow hedges . The effective portion of changes
in the fair value of the hedging instrument is recognized in other
comprehensive income and accumulated in the translation
reserve in equity . Any ineffective portion of changes in fair value is
recognized immediately in profit or loss . The amount accumulated
in the translation reserve is reclassified to profit or loss on the
disposal or partial disposal of the foreign operation .
The Group does not currently have hedges of a net investment
in a foreign operation .
Income recognition
Income from the sale of products is recognised when the
significant risks and rewards connected with ownership of the
goods, as well as the right of possession and effective control, have
been transferred to the buyer and payment is probable . This is also
the case when a customer separately requests that the assignment
of goods be deferred . Revenue from services is recognised once
the services have been rendered . Generally, sales are recognised
upon delivery in accordance with the contractual terms and
conditions . To calculate the net sales, sales revenue is adjusted with
indirect taxes and discounts .
Leasing agreements
Following adoption of IFRS 16 as at January 1, 2019 accounting
policy for leases where the Group is the lessee changed . The impact
of the adoption in presented under impact from adoption of new
standards . Until December 31, 2018, payments related to operating
lease contracts were treated as rentals and charged to the
statement of income on a straight-line basis over the leasing term .
Leasing agreements by which the risks and benefits associated
with the ownership of an asset are substantially transferred to the
lessee company represent finance leases .
The Group as a lessee
Assets held under finance leases, less depreciation, were included
in intangible assets and property, plant and equipment and the
obligations resulting from the lease in financial liabilities . Lease
payments resulting from finance leases were apportioned between
28
finance charges and the reduction of the outstanding liability .
Charges paid under operating leases were recognized as expenses
in the income statement .
Finance leases were recorded in the statement of financial
position in the amount equaling the fair value of the leased
property or, if lower, present value of minimum lease payments,
each determined at the inception of the lease . The assets were
depreciated consistent with assets that are owned and any
impairment losses are recorded . Depreciation was carried out over
the useful life or a shorter lease term .
The Group as a lessor
Assets held under finance leases were recorded in the statement
of financial position as receivables at amount equal to the net
investment in the lease . Lease income resulting from finance leases
were recorded in the income statement with constant periodic
rate of return on the lessor’s net investment in the finance lease .
Assets held under leases other than finance leases were included
in intangible assets and property, plant and equipment in the
statement of financial position . These were depreciated over their
useful lives, consistent with assets in the company’s own use . Lease
income was recorded in the income statement on a straight-line
basis over the lease term .
Research and development costs
Research costs are recorded as other operating expenses for the
financial period in which they incurred . Development costs are
capitalised once certain criteria associated with commercial and
technical feasibility have been met . Capitalised development costs
primarily comprising materials, supplies and direct labour costs, as
well as related overheads, are amortised systematically over their
expected useful life . The amortisation period is 3–5 years .
Government grants
Grants received from governments or other parties are recognised
adjustments to related expenses in the income statement for the
period . Grants received for the acquisition of property, plant and
equipment reduce the acquisition cost .
Operating profit
The Group has defined operating profit as follows: operating profit
is the net sum of net sales plus other operating income less cost
of sales, selling and marketing expenses, administration expenses
and other operating expenses . Operating profit does not include
exchange rate gains or losses .
Borrowing costs
The borrowing costs of items included in property, plant and
equipment or other intangible assets, and requiring a substantial
construction period, are capitalised for the period needed to
produce the investment for the intended purpose . Other borrowing
costs are recognised as expenses for the period in which they
incurred .
29
Income taxes
The tax expense of the Group include taxes based on the profit or
loss for the period or dividend distribution of the Group companies,
as well as change in deferred tax, and adjustment of taxes from
prior periods . The penalty interests on those are recorded as
financial expenses . The tax impact of items recorded directly
in equity or other comprehensive income is correspondingly
recognised directly in equity or in other comprehensive income .
The share of associated companies’ profit or loss is shown in the
income statement calculated from the net result, and thereby
includes the impact of taxes . Deferred taxes are measured
with tax rates enacted by the reporting date, to reflect the net
tax effects of all temporary differences between the financial
reporting and tax bases of assets and liabilities . The most
significant temporary differences arise from the amortisation and
depreciation differences of intangible assets and property, plant
and equipment, measuring the net assets of business combinations
at fair value, measuring available-for-sale financial assets and
hedging instruments at fair value, internal profits in inventory
and other provisions, appropriations and unused tax losses .
Deferred tax liabilities will also be recognised from the subsidiaries’
non-distributed retained earnings if profit distribution is likely and
will result in tax consequences . Deferred tax assets relating to
the temporary differences is recognised to the extent that it is
probable that future taxable profits will be available against which
the asset can be utilised before expiration . Deferred taxes are not
recorded on goodwill that is not deductible for tax purposes .
Earnings per share
Basic earnings per share are calculated by dividing the profit or loss
attributable to the equity holders of the parent for the period by
the weighted average number of shares outstanding during the
period . The average number of treasury shares has been deducted
from the number of shares outstanding .
For the calculation of the diluted earnings per share the diluting
impact of all potentially diluting share conversions have been taken
into account . The Group has share options and previously also
convertible bonds as diluting instruments . The dilution of share
options has been computed using the treasury stock method . In
dilution, the denominator includes the shares obtained through the
assumed conversion of the options, and the repurchase of treasury
shares at the average market price during the period with the funds
generated by the conversion . The assumed conversion of options
is not taken into account for the calculation of earnings per share
if the effective share subscription price defined for the options
exceeds the average market price for the period . The convertible
bonds are assumed to have been traded for company shares after
the issue .
Property, plant and equipment
The values of property, plant and equipment acquired by the
Group companies are based on their costs . The assets of acquired
subsidiaries are measured at fair value on the date of acquisition .
Depreciation is calculated on a straight-line basis from the original
acquisition cost, based on the expected useful life . Depreciation
includes any impairment losses .
In the statement of financial position, property, plant and
equipment are stated at cost less accumulated depreciation
and impairment losses . The borrowing costs of items included
in property, plant and equipment, and requiring a substantial
construction period, are capitalised for the period needed to
produce the investment for the intended purpose . Other borrowing
costs are recognised as expenses in the period they incurred .
Depreciation is based on the following expected useful lives:
Buildings
Machinery and equipment
Other tangible assets
Land is not depreciated .
20–40 years
4–20 years
10–40 years
The expected useful lives are reviewed at each reporting
date, and if they differ materially from previous estimates, the
depreciation schedules are changed accordingly .
Regular maintenance and repair costs are recognised
as expenses for period . Expenses incurred from significant
modernisation or improvement projects are recorded in the
statement of financial position if the company gains future
economic benefits in excess of the originally assessed standard of
performance of the existing asset . Modernisation and improvement
projects are depreciated on a straight-line basis over their useful
lives . Gains and losses from the divestment and disposal of
property, plant and equipment are determined as the difference
of the net disposal proceeds and the carrying amounts . Sales gains
and losses are included in operating profit in the income statement .
Goodwill and other intangible assets
Goodwill arising from business combinations is recognised as the
amount by which the aggregate of the transferred consideration,
any non-controlling interest in the acquiree and any previously
held interest exceeds the fair value of the net assets acquired .
Goodwill is not amortised but is tested for impairment annually and
whenever an indication of possible impairment exists .
Other intangible assets include customer relationships,
capitalised development costs, patents, copyrights, licences and
software . Intangible rights acquired in business combinations are
measured at fair value and amortised on a straight-line basis over
their useful lives . Other intangible assets are measured at cost
and amortised on a straight-line basis over their useful lives . An
intangible asset is only recorded in the statement of financial
position if it is probable that the expected future economic
benefits that are attributable to the asset will flow to the company
and cost can be measured reliably . Subsequent expenses related
to the assets are only recorded in the statement of financial
position if the company gains future economic benefits in excess
of the originally assessed standard of performance of the existing
asset; otherwise, costs are recognised as expenses at the time of
occurrence .
In the statement of financial position, intangible assets are
recorded at cost less accumulated amortisation and impairment
losses . The borrowing costs of items included in other intangible
assets, and requiring a substantial construction period, are
capitalised for the period needed to produce the investment for
the intended purpose . Other borrowing costs are recognised as
expenses in the period they incurred . The amortisation schedule for
intangible assets is 3–10 years .
Impairment
At reporting date the Group shall assess whether there is any
indication that an asset may be impaired . If any such indication
exists, the recoverable amount of the asset in question is
estimated . Goodwill and intangible assets not yet available for use
are tested for impairment at least annually . To assess impairment,
the Group’s assets are allocated to cash-generating units on the
smallest group that is largely independent of other units and the
cash flows of which can be separated .
The recoverable amount is the higher of fair value of the asset
less costs to sell and a value in use . As a rule, value in use is based
on the discounted future cash flows that the corresponding asset
or the cash-generating unit can derive . The impairment recognised
in the income statement is the amount by which the carrying
amount of the asset exceeds the corresponding recoverable
amount, and in the statement of financial position it is allocated
first to reduce the carrying amount of any goodwill of the unit
and then pro rata against the other assets . An impairment loss
recognised in prior periods will be reversed if the estimates used
to determine the recoverable amount change . However, a reversal
of impairment loss shall not exceed the carrying amount that
would have been determined in the statement of financial position
without the recognised impairment loss in prior periods . Impairment
loss on goodwill is not reversed under any circumstances .
Inventories
Inventories are measured at the lower of cost or the net realisable
value . Cost is primarily determined in accordance with standard
cost accounting, which corresponds to the cost calculated in
accordance with the FIFO (first-in, first-out) method . The cost of
finished goods and work in progress includes raw material purchase
costs, direct manufacturing wages, other direct manufacturing
costs, and a share of production overheads, borrowing costs
excluded . Net realisable value is the estimated sales price in
ordinary activities less the costs associated with the completion of
the product and the estimated necessary costs incurred to make
the sale of the product .
Trade receivables
Trade receivables in the statement of financial position are carried
at the original invoice value (and those in foreign currencies are
measured at the closing rate of the European Central Bank) less a
loss allowance for expected credit losses and credits for returned
goods .
30
Other option and incentive schemes
No other option and incentive schemes were in use during 2019 .
Non-current assets held for sale
and discontinued operations
A non-current asset, or a group of disposable items, is classified
as being held for sale if the amount corresponding to its carrying
amount will primarily be generated from the sale of the asset
instead of being generated from the continued use of the asset .
Non-current assets held for sale, and assets related to discontinued
operations, are measured at their carrying amounts, or the lower
fair value less costs to sell, if the amount corresponding to its
carrying amount will primarily be generated from the sale of the
asset and if the sales transaction is most likely to take place .
A discontinued operation is a part of the entity that has been
divested or classified as being held for sale and represents a
separate core business area or a geographic operating area .
The Group’s financial statements for 2019 and 2018 do not
include any non-current assets held for sale or any discontinued
operations .
Dividend
The dividend proposed by the Board of Directors at the Annual
General Meeting has not been recognised in the financial
statements . Dividends are only accounted for on the basis of the
decision of the Annual General Meeting .
Equity
The acquisition cost of treasury shares repurchased by the Group is
recognised as a deduction in equity . The consideration received for
the treasury shares when sold, net of transaction costs and tax, is
included in equity .
Provisions
A provision is entered into the statement of financial position if
the Group has a present legal or constructive obligation as a result
of a past event, and it is probable that an outflow of economic
benefits will be required to settle the obligation and the amount
of the obligation can be reliably estimated . Provisions may be
related to the reorganisation of activities, unprofitable agreements,
environmental obligations, trials and tax risks . Warranty provisions
include the cost of product replacement during the warranty
period . Provisions constitute best estimates at the balance sheet
date and are based on past experience of the level of warranty
expenses .
Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from past
events and whose existence will be confirmed only by realization
of an uncertain future event not totally controllable by the Group .
A contingent liability is also defined as a present obligation that
probably will not require the settlement of the obligation, or cannot
be measured reliably . A contingent liability is disclosed in the notes
to the consolidated financial statements .
Correspondingly, a contingent asset is a possible asset that
arises from past events and whose existence will be confirmed only
by realization of an uncertain future event not totally controllable
by the Group . In case an inflow of economic benefits is probable,
a contingent asset is disclosed in the notes to the consolidated
financial statements .
Employee benefits
Pension liabilities
The Group companies have several pension schemes in different
countries based on local conditions and practices . These pension
arrangements are classified as either defined contribution plans or
defined benefit plans . Payments for defined contribution plans are
recorded as expenses in the income statement for the period they
relate to . All of the material pension arrangements in the Group are
defined contribution plans .
Share-based payments
Share options are measured at fair value on the grant date
and expensed on a straight-line basis over the vesting period .
Corresponding amounts are recorded as an increase in equity . The
expense determined on the grant date is based on the Group’s
estimate of the number of options that are assumed to vest at
the end of the vesting period . The Black & Scholes’ option pricing
model is used to determine the fair value of options . The impact of
non-market-based conditions (such as profitability and a certain
profit growth target) is not included in the fair value of the option;
instead, it is taken into account in the final number of options that
are assumed to vest at the end of the vesting period . The Group
updates the assumption of the final number on each reporting
date . Changes in the estimates are recognised in the income
statement .
When options are exercised, the payments received on the
basis of share subscriptions (adjusted with any transaction costs)
are recorded in paid-up unrestricted equity reserve .
Performance shares are measured at fair value on the grant
date and are expensed on a straight-line basis over the vesting
period . The equity-settled amounts are recorded as an increase in
equity . The expense determined on the grant date is based on the
Group’s estimate of the number of shares that are assumed to vest
at the end of the vesting period . The impact of non-market-based
conditions (such as net sales and operating profit) is not included
in the fair value of the share; instead, it is taken into account in
the final number of shares that are assumed to vest at the end of
the vesting period . The Group updates the assumption of the final
number on each reporting date . The fair values of cash-settled
amounts are similarly updated on each reporting date and recorded
in equity . Changes in the estimates of both the equity and cash-
settled amounts are recognised in the income statement .
Notes to the consolidated
financial statements
NOTE S TO THE
CONSOLIDATED
FINA NCIAL
STAT EMENTS
1. SEGMENT INFORMATION
The Group’s management team is the chief operating decision
maker . The segment information is presented in respect of the
business and geographical segments . Business segments are based
on the internal organization and financial reporting structure .
The business segments comprise of entities with assets and
operating activities providing products and services . The segments
are managed as separate entities .
Pricing of inter-segment transactions is based on current
market prices and the terms of evaluating profitability and
resources allocated to segments are based on profit before
interests and taxes .
Segment assets and liabilities include items directly attributable
to a segment and items that can be allocated on a reasonable basis .
The unallocated items contain tax and financial items together
with joint Group resource items . Capital expenditure comprises of
additions to intangible assets and property, plant and equipment
used in more than one period .
Operating segments
2019
EUR million
Net sales from external customers
Services
Sales of goods
Inter-segment net sales
Net sales
Operating result
% of net sales
Financial income and expenses
Profit before tax
Tax expense
Profit for the period
Assets
Unallocated assets
Total assets
Liabilities
Unallocated liabilities
Total liabilities
Capital expenditure
Depreciation and amortisation
Other non-cash expenses
2018
EUR million
Net sales from external customers
Services
Sales of goods
Inter-segment net sales
Net sales
Operating result
% of net sales
Financial income and expenses
Profit before tax
Tax expense
Profit for the period
Assets
Unallocated assets
Total assets
Liabilities
Unallocated liabilities
Total liabilities
Passenger
Car Tyres
1,076.2
1,076.2
58.0
1,134.2
287.7
25.4%
Heavy
Tyres
173.3
173.3
29.4
202.7
35.7
17.6%
Vianor
335.6
87.9
247.7
0.8
336.5
7.7
2.3%
Other
operations
10.7
Eliminations
0.0
10.7
0.4
11.1
–17.0
–152.9%
0.0
–88.7
–88.7
2.3
1,638.4
179.6
238.4
20.9
–10.9
167.2
43.1
51.8
0.4
–12.8
253.4
84.6
7.6
Passenger
Car Tyres
1,090 .1
1,090 .1
60 .7
1,150 .8
356 .5
31 .0 %
40.4
11.2
0.2
Heavy
Tyres
159 .1
159 .1
28 .7
187 .7
28 .6
15 .2 %
5.7
28.4
0.8
Vianor
336 .5
86 .6
250 .0
0 .7
337 .2
1 .6
0 .5 %
0.1
1.0
0.4
0.0
0.0
0.0
Other
operations
9 .9
Eliminations
0 .0
9 .9
0 .6
10 .5
–13 .3
–126 .7 %
0 .0
–90 .6
–90 .6
–1 .0
1,275 .7
143 .0
161 .2
21 .0
–14 .3
184 .6
38 .0
51 .4
0 .7
–12 .2
Capital expenditure
Depreciation and amortisation
Other non-cash expenses
201 .5
74 .3
10 .2
17 .9
9 .7
1 .5
6 .2
8 .5
1 .2
0 .9
0 .9
–0 .5
0 .0
0 .0
0 .0
31
Group
1,595.8
87.9
1,507.9
1,595.8
316.5
19.8%
20.3
336.7
63.1
399.9
2,066.5
266.1
2,332.6
249.7
313.2
562.8
299.6
125.2
9.1
Group
1,595 .6
86 .6
1,509 .0
1,595 .6
372 .4
23 .3 %
–10 .7
361 .7
–66 .5
295 .2
1,586 .6
506 .3
2,092 .9
262 .5
344 .3
606 .8
226 .5
93 .4
12 .5
Business segments
Passenger Car Tyres business unit covers the development and
production of summer and winter tires for cars and vans .
Heavy Tyres business unit comprises tires for forestry machinery,
special tires for agricultural machinery, tractors and industrial
machinery as well as retreading and truck tire business .
Vianor tire chain sells car and van tires as well as truck tires . In
addition to Nokian brand, Vianor sells other leading tire brands and
other automotive products and services .
Other operations contain business development and Group
management unallocated to the segments .
Eliminations consist of eliminations between different business
segments .
Notes concerning geographical segments
The business segments are operating in seven geographic regions:
Finland, Sweden, Norway, Russia, Other Europe, North America and
Other countries .
In presenting information on the basis of geographical
segments, segment revenue is based on the location of the
customers and segment assets are based on the location of the
assets .
32
Geographical information
2019
EUR million
Net sales
Services
Sales of goods
Assets
Unallocated assets
Total assets
Finland
Sweden
Norway
235.0
33.4
201.6
213.9
20.1
193.9
196.1
31.7
164.4
Russia
303.0
0.0
Other
Europe
North
America
Other
countries
Group
414.6
205.4
27.9
1,595.8
0.0
2.8
87.9
303.0
414.6
202.6
27.9
1,507.9
550.1
97.2
123.7
669.1
197.3
365.9
15.8
2,019.2
313.4
2,332.6
Capital expenditure
93.0
1.7
2.1
44.3
17.3
141.0
0.3
299.6
2018
EUR million
Net sales
Services
Sales of goods
Assets
Unallocated assets
Total assets
Finland
Sweden
Norway
233 .8
33 .7
200 .1
204 .1
20 .6
183 .5
191 .4
29 .8
161 .6
Russia
305 .5
0 .0
305 .5
Other
Europe
North
America
Other
countries
Group
436 .9
0 .0
436 .9
194 .5
2 .6
191 .9
29 .5
1,595 .6
86 .6
29 .5
1,509 .0
472 .5
82 .6
62 .0
518 .4
187 .3
206 .0
8 .8
1,537 .6
555 .3
2,092 .9
Capital expenditure
64 .8
1 .3
3 .4
38 .8
12 .1
105 .9
0 .1
226 .5
2. ACQUISITIONS
Acquisitions and other changes in 2019
On August 1st the Group acquired all shares of Levypyörä Oy .
This acquisition has minor impact on group accounts .
The expectations relating to the growth in sales through
increased customer base, and the future expectations on improved
market area coverage and sales increase resulted in the recognition
of goodwill .
EUR million
Total identifiable net assets
Note
2018
0 .1
The actual acquisition date and the nature of the operations
Composition of goodwill in the acquisition
33
EUR million
Purchase consideration
Consideration paid in cash
Contingent consideration liability
Total consideration
Recognised amounts of identifiable assets
acquired and liabilities assumed:
EUR million
Property, plant and equipment
Inventories
Trade and other receivables
Cash and cash equivalents
Total Assets
Deferred tax liabilities
Financial Liabilities
Trade and other payables
Total Liabilities
Total identifiable net assets
Composition of goodwill in the acquisition
Consideration transferred
Total identifiable net assets
Goodwill
Consideration paid in cash
Cash and cash equivalents in the subsidiaries
acquired
Net cash outflow
Note
(12)
(18)
(14)
2019
9.4
-
9.4
2019
8.0
3.0
1.4
1.1
13.6
0.1
3.2
1.6
5.0
8.6
9.4
8.6
0.9
9.4
1.1
8.3
taken into account the effect of the acquisitions on the
consolidated net sales and profit is not material even if it were
combined as of the beginning of the financial year .
The acquisition related costs of EUR 0 .0 million have been
recorded as cost of sales expenses . There were no other
transactions recognised separately from these acquisitions . The
consideration has been transferred in cash and no significant
contingent consideration arrangements were included . No
non-controlling interest remained in the acquiree . The identifiable
asset acquired and liabilities assumed are recorded in fair value .
Acquisitions and other changes in 2018
On December 31 2018 Vianor AS acquired Dekksenteret Forde AS .
This acquisition has minor impact on group accounts
EUR million
Purchase consideration
Consideration paid in cash
Contingent consideration liability
Total consideration
Recognised amounts of identifiable assets
acquired and liabilities assumed:
EUR million
Property, plant and equipment
Inventories
Trade and other receivables
Cash and cash equivalents
Total Assets
Deferred tax liabilities
Financial Liabilities
Trade and other payables
Total Liabilities
2018
1 .0
-
1 .0
2018
0 .0
0 .1
0 .2
0 .1
0 .5
-
-
0 .3
0 .3
Note
(12)
(18)
Consideration transferred
Total identifiable net assets
Goodwill
(14)
Consideration paid in cash
Cash and cash equivalents in the subsidiaries
acquired
Net cash outflow
1 .0
0 .1
0 .9
1 .0
0 .1
0 .9
The expectations relating to the growth in sales through
increased customer base, and the future expectations on improved
market area coverage and sales increase resulted in the recognition
of goodwill .
The actual acquisition dates and the nature of the operations
taken into account the effect of the acquisitions on the
consolidated net sales and profit is not material even if they all
were combined as of the beginning of the financial year .
The acquisition related costs of EUR 0 .0 million have been
recorded as cost of sales expenses . There were no other
transactions recognised separately from these acquisitions . The
consideration has been transferred in cash and no significant
contingent consideration arrangements were included . No
non-controlling interest remained in the acquiree . The identifiable
asset acquired and liabilities assumed are recorded in fair value .
3. COST OF SALES
EUR million
Raw materials
Goods purchased for resale
Wages and social security contributions on
goods sold
Other costs
Depreciation of production
Sales freights
Change in inventories
Total
2019
354.7
220.2
46.2
148.0
72.0
70.4
1.3
912.9
2018
347 .9
226 .3
46 .4
140 .6
70 .3
58 .6
–24 .5
865 .5
Expenses arising from leases of low-value assets and shot-term
leases amounted to EUR 28 .5 million in 2019 .
6. DEPRECIATION, AMORTISATION
AND IMPAIRMENT LOSSES
EUR million
Depreciation and amortisation by asset
category
Intangible rights
Other intangible assets
Buildings
Machinery and equipment
Right of use asset
Other tangible assets
Total
Impairment losses by asset category
Intangible assets
4. OTHER OPERATING INCOME
Total
EUR million
Gains on sale of property, plant and
equipment
Other income
Total
2019
2018
2.7
0.9
3.6
0 .9
1 .6
2 .5
Depreciation and amortisation by
function
Production
Selling and marketing
Administration
Other depreciation and amortisation
5. OTHER OPERATING EXPENSES
Total
EUR million
Losses on sale of property, plant and
equipment and other disposals
Research and development costs
Quality control
Other expenses
Total
2019
2018
0.4
22.7
3.8
9.0
35.8
0 .6
20 .8
3 .1
1 .4
25 .9
Impairment losses by function
Administration
Total
7. EMPLOYEE BENEFIT
EXPENSES
EUR million
Wages and salaries
Pension contributions - defined
contribution plans
Share-based payments
Other social security contributions
Total
34
8. FINANCIAL INCOME
2019
2018
EUR million
Interest income
2019
2018
Financial assets measured at amortized
cost
3.9
2 .0
7.6
2.7
8.1
70.6
31.1
5.0
125.2
-
-
72.0
40.9
7.8
4.5
125.2
-
-
8 .1
2 .0
11 .1
71 .3
-
0 .9
93 .4
1 .9
1 .9
70 .3
11 .2
9 .1
2 .8
93 .4
1 .9
1 .9
2019
188.6
2018
173 .0
26.8
3.0
16.9
27 .1
11 .4
17 .4
235.3
228 .9
Dividend income
Non-current financial investments
measured at fair value through other
comprehensive income
Exchange rate gains and changes in fair
value
Financial assets and liabilities at
amortized cost
Foreign currency derivatives
Other financial income
Total
9. FINANCIAL EXPENSES
EUR million
Interest expenses
Financial liabilities measured at
amortized cost
Interest rate derivatives designated as
hedges
Lease liabilities
Exchange rate losses and changes in fair
value
Financial assets and liabilities at
amortized cost
Foreign currency derivatives
Other financial expenses
Total
0.0
0 .0
10.0
53.2
0.2
67.3
32 .4
48 .7
0 .2
83 .3
2019
2018
–4.1
–0.9
–3.8
–4.5
–67.8
34.1
–47.0
–2 .9
–0 .9
-
–42 .0
–46 .8
–1 .4
–94 .0
Financial expenses 2019 contain returned EUR 34 .4 million punitive
interest related to tax disputes that were booked in previous fiscal
years based on tax reassessment decisions . Additionally financial
expenses 2019 contain a gain of EUR 1 .4 million of interest from
returned taxes .
Information on the employee benefits and loans of the key
management personnel is presented in note 33 Related party
transactions .
35
10. TAX EXPENSE
EUR million
Current tax expense
Adjustment for prior periods
Change in deferred tax
Total
11. EARNINGS PER SHARE
2019
–52.8
114.6
1.3
63.1
2018
–64 .3
–0 .4
–1 .7
–66 .5
Basic earnings per share is calculated by dividing the profit or
loss for the period by the weighted average number of shares
outstanding during the period . The average weighted number
of shares used for the calculation of diluted EPS takes into
consideration the dilutive effect of the options outstanding during
the period .
The reconciliation of tax expense recognised in the income
statement and tax expense using the domestic corporate tax rate
(2019: 20 .0%, 2018: 20 .0%):
EUR million
Profit before tax
2019
336.7
2018
361 .7
EUR million
Profit attributable to the equity holders
of the parent
Profit for the period to calculate the
diluted earnings per share
2019
2018
399.9
295 .2
399.9
295 .2
Tax expense using the domestic corporate
tax rate
Effect of deviant tax rates in foreign
subsidiaries
Tax exempt revenues
Non-deductible expenses
Losses on which no deferred tax benefits
recognised
Adjustment for prior periods
Other items
Tax expense
–67.3
–72 .3
Shares, 1,000 pcs
Weighted average number of shares
138,168
137,260
11.4
0.3
–0.9
5.7
114.6
–0.7
63.1
7 .1
0 .4
–5 .6
3 .7
–0 .4
0 .6
–66 .5
Dilutive effect of the options
216
Diluted weighted average number of shares 138,383
884
138,144
Earnings per share, euros
Basic
Diluted
2.89
2.89
2 .15
2 .14
Income tax relating to components of other comprehensive income:
2019
EUR million
Cash flow hedges
Translation differences on foreign
operations
2018
EUR million
Cash flow hedges
Translation differences on foreign
operations
Before
tax
amount
Tax
benefit
Net
of tax
amount
–1.5
0.3
–1.2
90.2
88.7
90.2
89.0
0.3
Before
tax
amount
1 .6
Tax
benefit
–0 .3
Net
of tax
amount
1 .3
–67 .8
–66 .2
–67 .8
–66 .6
–0 .3
36
12. PROPERTY, PLANT AND EQUIPMENT
EUR million
Accumulated cost, 1 Jan 2018
Increase
Acquisitions through business combinations
Decrease
Transfers between items
Other changes
Exchange differences
Accumulated cost, 31 Dec 2018
Accum . Depreciation, 1 Jan 2018
Depreciation for the period
Decrease
Other changes
Exchange differences
Accum . Depreciation, 31 Dec 2018
Carrying amount, 31 Dec 2018
Accumulated cost, 1 Jan 2019
Increase
Acquisitions through business combinations
Decrease
Transfers between items
Other changes
Exchange differences
Accumulated cost, 31 Dec 2019
Accum . Depreciation, 1 Jan 2019
Depreciation for the period
Decrease
Other changes
Exchange differences
Accum . Depreciation, 31 Dec 2019
Carrying amount, 31 Dec 2019
Land
property
7 .8
4 .6
0 .0
–0 .3
12 .1
0 .0
0 .0
12 .1
12.1
0.7
–0.3
0.3
0.2
13.0
0.0
0.0
13.0
Buildings
281 .9
2 .4
–1 .4
8 .9
–0 .2
–21 .4
270 .2
–95 .9
–11 .0
0 .5
6 .2
–100 .2
170 .0
270.2
8.4
–1.0
1.3
–28.7
17.8
267.9
–100.2
–8.1
18.7
–5.3
–94.9
173.0
Machinery
and equipment
991 .7
Other
tangible
assets
17 .8
Advances and
fixed assets under
construction
63 .6
46 .6
–11 .6
41 .9
0 .0
–54 .5
1,014 .2
–698 .9
–70 .9
3 .2
0 .0
33 .0
–733 .6
280 .5
1,014.2
54.0
–14.4
9.5
–18.4
51.2
1,096.1
–733.6
–70.6
7.3
15.2
–33.1
–814.9
281.1
0 .4
–0 .1
0 .3
0 .0
–0 .7
17 .7
–13 .7
–0 .9
0 .1
0 .0
0 .7
–13 .9
3 .8
17.7
1.7
–0.5
0.5
55.3
4.2
78.8
–13.9
–5.0
0.4
–35.1
–2.4
–55.9
22.9
176 .0
–0 .2
–57 .1
0 .0
–1 .4
180 .9
180 .9
180.9
219.8
0.0
–11.3
0.4
5.2
395.0
395.0
Total
1,362 .7
212 .6
0 .0
–13 .2
–6 .0
–0 .2
–78 .3
1,495 .0
–808 .6
–82 .9
3 .3
0 .6
39 .9
–847 .7
647 .3
1,495.0
284.5
0.0
–16.3
0.0
9.0
78.6
1,850.8
–847.7
–83.7
7.7
–1.2
–40.8
–965.8
885.0
13. INTANGIBLE ASSETS
EUR million
Accumulated cost, 1 Jan 2018
Increase
Goodwill
84 .6
Intangible
rights
83 .4
Other
intangible
assets
22 .4
Acquisitions through business combinations
1 .0
Decrease
Transfers between items
Other changes
Exchange differences
Accumulated cost, 31 Dec 2018
Accum . Depreciation, 1 Jan 2018
Depreciation for the period
Impairment
Decrease
Other changes
Exchange differences
Accum . Depreciation, 31 Dec 2018
Carrying amount, 31 Dec 2018
–0 .7
84 .9
–1 .3
0 .0
–1 .3
83 .6
Impairment losses
In 2018 Vianor recorded impairment losses of total EUR 1 .9 million
on intangible assets . The impairments were caused by operational
cancellations of certain functionalities in the ICT-system . This is
fully recognized as losses, which are reported in administration
expenses .
Impairment tests for goodwill
Goodwill has been allocated to the Group’s cash-generating units
that have been defined according to the business organization .
Allocation of goodwill
EUR million
Passenger Car Tyres
Heavy Tyres
Vianor
Total goodwill
68.9
0.9
14.6
84.4
Total
190 .4
9 .2
1 .0
–0 .6
0 .3
0 .0
–2 .4
197 .9
–71 .5
–8 .2
–1 .9
0 .0
0 .0
0 .9
–80 .7
117 .2
EUR million
Accumulated cost, 1 Jan 2019
Increase
Goodwill
84.9
Acquisitions through business combinations
0.9
Decrease
Transfers between items
Other changes
Exchange differences
Accumulated cost, 31 Dec 2019
Accum . Depreciation, 1 Jan 2019
Depreciation for the period
Impairment
Decrease
Other changes
Exchange differences
Accum . Depreciation, 31 Dec 2019
Carrying amount, 31 Dec 2019
–1.3
–0.1
84.4
–1.3
1.3
0.0
0.0
84.4
Intangible
rights
Other
intangible
assets
89.2
5.2
0.0
0.0
0.0
0.0
94.4
–62.8
–7.6
0.0
0.0
–70.4
24.1
23.8
5.9
–0.9
0.0
0.2
1.7
30.7
–16.6
–2.7
0.8
–1.0
–19.6
11.1
37
Total
197.9
11.2
0.9
–0.9
0.0
–1.1
1.6
209.6
–80.7
–10.4
0.0
0.0
2.0
–1.0
–89.9
119.6
6 .2
–0 .6
0 .3
0 .0
–0 .1
89 .2
–54 .7
–6 .2
–1 .9
0 .1
–62 .8
26 .4
3 .1
0 .0
0 .0
–1 .6
23 .8
–15 .5
–2 .0
0 .9
–16 .6
7 .2
The recoverable amount of a cash-generating unit is based on
The testing indicated no need to recognise impairment losses .
calculations of the value in use . The cash flow forecasts used in
these calculations are based on five-year financial plans approved
by the management . The estimated sales and production volumes
are based on the current condition and scope of the existing assets .
The key assumptions used in the plans include product selection,
country-specific sales distribution, margin on products, and their
past actual outcomes . Assumptions are also based on commonly
used growth, demand and price forecasts provided by market
research institutes .
The discount rate used is the weighted average cost of capital
(WACC) before taxes defined for the Group . The calculation
components are risk-free rate of return, market risk premium,
industry-specific beta co-efficient, borrowing cost and the capital
structure at market value at the time of testing . The discount
rate used for Passenger Car Tyres is 5 .3% (6 .0% in 2018) and for
Vianor is 4 .7–6 .8% (5 .3–7 .9% in 2018) varying through country
locations . Future cash flows after the forecast period approved by
the management have been capitalised as a terminal value using
a steady 2% growth rate and discounted with the discount rate
specified above .
In Vianor the calculations indicated that the recoverable amount
exceeded the carrying value by EUR 426 million (EUR 38 million
in 2018) . Of the key assumptions, Vianor is the most sensitive to
actual realisation of gross margin levels based on demand forecasts .
A lag of 13 .6%-units from the gross margin target levels in future
years might lead to a need for impairment . The recoverable amount
in Passenger Car Tyres significantly (well over 100%) exceeds the
carrrying amount of the cash-generating unit, and small sales
margin or sales volume changes have no effect on the impairment
testing results . A possible impairment would require e .g . an annual
decrease above 19% in net sales or a weakening of the present
gross margin level permanently over 50% .
14. RIGHT OF USE ASSETS
EUR million
Accumulated cost, 1 Jan 2019
Increase
Decrease
Other changes
Exchange differences
Accumulated cost, 31 Dec 2019
Accum . Depreciation, 1 Jan 2019
Depreciation for the period
Exchange differences
Accum . Depreciation, 31 Dec 2019
Carrying amount, 31 Dec 2019
Land
property
1.4
0.1
0.0
0.1
0.0
1.6
0.0
–0.3
0.0
–0.3
1.2
Buildings
135.0
10.4
–0.1
5.5
0.4
151.1
0.0
–30.5
–0.1
–30.6
120.5
Machinery
and
equipment
1.3
0.1
0.0
0.1
0.0
1.5
0.0
–0.3
0.0
–0.3
1.2
Total
137.7
10.6
–0.1
5.6
0.4
154.1
0.0
–31.1
–0.1
–31.2
122.9
15. CARRYING AMOUNTS AND FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES
Note
Carrying
amount
2019
Fair value
Level 1 Level 2 Level 3
Carrying
amount
38
2018
Fair value
Fair value measurements have been classified using a fair value
hierarchy that reflects the significance of the inputs used in making
the measurements . The fair value hierarchy has the following levels:
Level 1 Level 2 Level 3
Level 1: Quoted prices in active markets for identical assets or
liabilities .
EUR million
Financial assets
Fair value through profit or loss
Derivatives held for trading
Derivatives designated as hedges
Amortized cost
Other non-current receivables
Trade and other receivables
Money market instruments
Cash in hand and at bank
Fair value through other comprehensive income
Unquoted shares
Total financial assets
Financial liabilities
Fair value through profit or loss
Derivatives held for trading
Derivatives designated as hedges
Amortized cost
Interest-bearing financial liabilities
Trade and other payables
Total financial liabilities
(29)
(29)
(17)
(20)
(21)
(21)
(16)
(29)
(29)
(26)
(27)
2.9
1.2
7.6
498.8
-
218.8
0.7
730.1
2.3
6.3
135.2
89.4
233.2
-
-
-
-
-
-
-
-
-
-
-
-
-
2.9
1.2
7.2
499.4
-
218.8
-
729.5
2.3
6.3
138.1
89.4
236.1
-
-
-
-
-
-
0.7
0.7
-
-
-
-
-
5 .5
23 .4
7 .3
409 .9
83 .0
364 .4
0 .7
894 .3
9 .9
3 .9
132 .3
111 .0
257 .1
-
-
-
-
-
-
-
-
-
-
-
-
-
5 .5
23 .4
6 .1
410 .5
83 .0
364 .4
-
892 .9
9 .9
3 .9
133 .1
111 .0
257 .8
-
-
-
-
-
-
0 .7
0 .7
-
-
-
-
-
Level 2: Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (i .e . as prices)
or indirectly (i .e . derived from prices) .
Level 3: The level in the fair value hierarchy within which the
fair value measurement is categorised in its entirety shall be
determined on the basis of the lowest level input that is significant
to the fair value measurement in its entirety .
All items measured at fair value through profit or loss have
been classified to Level 2 in the fair value hierarchy and items
include Group’s derivative financial instruments . To establish the
fair value of these instruments the Group uses generally accepted
valuation models with inputs based on observable market data .
Level 3 includes unquoted shares measured at fair value
through other comprehensive income since cost is assessed to
represent the fair value .
Financial assets and liabilities not measured at fair value but
for which the fair value can be measured are categorised in Level
2 in the fair value hierarchy . Level 2 includes financial assets and
financial liabilities measured at amortized cost . Their fair values are
based on the future cash flows that are discounted with market
interest rates on the reporting date .
There were no transfers between different levels during the
financial year .
The carrying amount of financial assets corresponds to the maximum exposure to the credit risk on the reporting date .
See note 28 for the impairments in respect of trade receivables . Other financial assets measured at amortized cost and
fair value through other comprehensive income are not subject to material impairment .
39
16. INVESTMENTS IN ASSOCIATES AND
NON-CURRENT FINANCIAL INVESTMENTS
EUR million
Accumulated cost, 1 Jan 2019
Decrease/Increase
Accumulated cost, 31 Dec 2019
Carrying amount, 31 Dec 2019
Carrying amount, 31 Dec 2018
Investments
in associates
Unquoted
shares
0.1
-
0.1
0.1
0.1
0.7
-
0.7
0.7
0.7
17. OTHER NON-CURRENT RECEIVABLES
EUR million
Loan receivables
Other non-current receivables
Total
2019
7.6
0.1
7.7
2018
7 .3
-
7 .3
18. DEFERRED TAX ASSETS AND LIABILITIES
EUR million
Deferred tax assets
31 Dec
2017
Recognised
in income
statement
Recognised
in other
comprehensive
income
Net
exchange
differences
Acquisitions/
disposals of
subsidiaries
31 Dec
2018
EUR million
Deferred tax assets
31 Dec
2018
Recognised
in income
statement
Recognised
in other
comprehensive
income
Net
exchange
differences
Acquisitions/
disposals of
subsidiaries
31 Dec
2019
40
Intercompany profit in inventory
13 .2
Provisions
Tax losses carried forward
Cash flow hedges
Other items
Total
Deferred tax assets offset
against deferred tax liabilities
Deferred tax assets
Deferred tax liabilities
Property, plant and equipment
and intangible assets
Untaxed reserves
Undistributed earnings in
subsidiaries
Other items
Total
Deferred tax liabilities offset
against deferred tax assets
Deferred tax liabilities
0 .9
–0 .3
–0 .3
12 .0
25 .7
–16 .5
9 .2
17 .3
0 .5
27 .3
1 .9
46 .9
–16 .5
30 .4
1 .7
0 .0
0 .3
–0 .9
1 .1
–1 .0
0 .0
–0 .7
0 .9
3 .0
0 .0
3 .2
–1 .0
2 .1
-
-
-
-
0 .0
0 .0
0 .0
0 .0
0 .0
0 .0
14 .9
0 .9
0 .0
–0 .3
11 .1
26 .8
–17 .5
9 .3
16 .6
1 .3
30 .3
1 .9
50 .0
–17 .5
32 .5
-
-
-
-
Intercompany profit in inventory
14.9
–1.3
Provisions
Tax losses carried forward
Cash flow hedges
Other items
Total
Deferred tax assets offset
against deferred tax liabilities
Deferred tax assets
Deferred tax liabilities
Property, plant and equipment
and intangible assets
Untaxed reserves
Undistributed earnings in
subsidiaries
Other items
Total
Deferred tax liabilities offset
against deferred tax assets
Deferred tax liabilities
0.9
0.0
–0.3
11.1
26.8
–17.5
9.3
16.6
1.3
30.3
1.9
50.0
–17.5
32.5
0.2
4.0
1.0
0.8
4.6
2.1
6.7
0.1
0.5
0.4
0.9
1.8
2.1
3.9
13.6
1.1
4.0
0.7
11.9
31.4
–15.4
15.9
16.6
1.8
30.7
2.8
51.8
–15.4
36.4
-
-
-
-
-
-
-
-
0.0
0.0
0.0
0.0
0.0
0.0
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal
authority .
On 31 December 2019 the Group had carry forward losses for EUR 27 .1 million (EUR 9 .6 million in
2018), on which a deferred tax asset has been recognised . The Group also had carry forward losses
for EUR 3 .1 million (EUR 22 .3 million in 2018), on which no deferred tax asset was recognised . It is not
probable that future taxable profit will be available to offset these losses .
The Group has utilised previously unrecognised tax losses from prior periods with EUR 1 .5 million in
2019 (EUR 1 .3 million in 2018) .
No deferred tax liability was recognised on the undistributed earnings, EUR 55 .1 million in 2019
(EUR 54 .8 million in 2018), of foreign subsidiaries as the earnings have been invested permanently to the
countries in question .
19. INVENTORIES
EUR million
Raw materials and supplies
Work in progress
Finished goods
Total
2019
139.1
7.8
240.1
387.0
2018
126 .4
6 .9
236 .0
369 .2
Annually an additional expense is recognised in the carrying
amounts of all separate inventory items to avoid them
exceeding their maximum probable net realisable values . In 2019
EUR 2 .5 million expense was recognised to decrease the carrying
amount of the inventories to reflect the net realisable value
(EUR 1 .1 million in 2018) .
20. TRADE AND OTHER RECEIVABLES
21. CASH AND CASH EQUIVALENTS
41
EUR million
Cash in hand and at bank
Money market instruments
Total
2019
218.8
-
218.8
2018
364 .4
83 .0
447 .5
EUR million
Trade receivables
Loan receivables
Accrued revenues and deferred expenses
Derivative financial instruments
Designated as hedges
Measured at fair value through
profit or loss
Current tax assets
Other receivables
Total
2019
498.3
0.5
17.0
0.9
2.9
15.6
38.4
2018
409 .5
0 .5
21 .1
20 .6
5 .6
13 .0
21 .9
573.7
492 .1
The carrying amount of trade and other receivables corresponds to
the maximum exposure to the credit risk on the reporting date .
The carrying amount of trade and other receivables is a
reasonable approximation of their fair value .
See note 28 for the impairments in respect of trade
receivables .
Significant items under accrued revenues
and deferred expenses
EUR million
Annual discounts, purchases
Financial items
Social security contributions
Insurances
Payments in transit
Other items
Total
Significant items under other receivables
EUR million
VAT receivables
Advance payments
Total
2019
3.7
0.6
1.4
0.9
-
10.5
17.0
2019
33.9
4.5
38.4
2018
5 .9
0 .6
1 .9
0 .5
2 .9
9 .4
21 .1
2018
19 .6
2 .3
21 .9
42
22. EQUITY
Reconciliation of the number of shares
EUR million
1 Jan 2018
Exercised warrants
Acquisition/conveyance of treasury shares
Other changes
31 Dec 2018
1 Jan 2019
Exercised warrants
Acquisition/conveyance of treasury shares
Other changes
31 Dec 2019
Number of
shares
(1,000 pcs)
136,745
Share
capital
25 .4
Share
premium
181 .4
Paid-up
unrestricted
equity reserve
203 .9
799
243
-
-
-
-
-
-
-
18 .7
-
-
Treasury
shares
–20 .3
-
8 .9
-
Total
390 .4
18 .7
8 .9
-
137,788
25 .4
181 .4
222 .6
–11 .4
418 .0
137,788
25.4
181.4
856
80
-
-
-
-
-
-
-
222.6
15.7
-
-
–11.4
-
3.4
-
418.0
15.7
3.4
0.0
138,724
25.4
181.4
238.2
–8.0
437.0
The nominal value of shares was abolished in 2008, hence
no maximum share capital of the Group exists anymore . All
outstanding shares have been paid for in full .
Below is a description of the reserves within equity:
Share premium
Before the nominal value of shares was abolished, the amount
exceeding the nominal value of shares received by the company in
connection with share issue and share subscription were recognised
in share premius .
Translation reserve
Translation reserve includes the differences arising from the
translation of the foreign subsidiaries’ financial statements . The
gains and losses from the net investments in foreign units and
hedging those net investments are also included in translation
reserve once the requirements of hedge accounting have been met .
Fair value and hedging reserves
The fair value and hedging reserves comprises of two sub reserves:
a fair value reserve for financial assets measured at fair value
through other comprehensive income and a hedging fund for
changes in the fair value of the derivative financial instruments
used for cash flow hedging .
Paid-up unrestricted equity reserve
After the nominal value of shares was abolished, the entire share
subscription made by option rigts are entered in the paid-up
unrestricted reserve .
Treasury shares
No share repurchases were made during the review period, and the
company did not possess any own shares on December 31, 2019 .
Nokian Tyres has an agreement from 2017 with a third-party
service provider concerning the share-based incentive program
for key personnel . The third party owns Nokian Tyres’ shares
related to the incentive program until the shares are given to
the participants of the program . In accordance with IFRS, these
repurchased shares, 480,000 in 2017, have been reported as
treasury shares in the Consolidated Statement of Financial Position .
On December 31, 2019, the number of these shares was 197,947 . This
number of shares corresponded to 0 .14% of the total shares and
voting rights in the company .
Dividends
After the balance sheet date, the Board of Directors proposed that
a dividend of EUR 1 .58 per share be paid (EUR 1 .58 in 2018) .
Specification of the distributable funds
The distributable funds on 31 December 2019 total EUR 773 .9 million
(EUR 683 .0 million on 31 December 2018) and are based on the
balance of the Parent company and the Finnish legislation .
43
23. SHARE-BASED PAYMENTS
SHARE OPTION PLANS
Share option plan 2013 directed at personnel
The Annual General Meeting in 2013 decided to issue a share option plan, as a part of the Group’s incentive scheme, to employees of the
Group or persons recruited to the Group at a later stage . The Board issued the shares in spring 2015 (2013C warrants) and the expiration
date was 31 May, 2019 .
The share options were granted to the personnel employed by or in the service of the Nokian Tyres Group and to Direnic Oy, a wholly
owned subsidiary of Nokian Tyres . Should a share option holder cease to be employed by or in the service of the Nokian Tyres Group before
the warrants become exercisable, for any other reason than the death of the employee, or the statutory retirement of the employee in
compliance with the employment contract, or the retirement of the employee otherwise determined by the company, the holder shall
without delay and compensation offer to Nokian Tyres or its order the share options for which the share subscription period under the terms
and conditions had not begun at the last day of such holder’s employment or service .
The following tables present more specific information on the share option plans .
BASIC INFORMATION
Annual General Meeting date
Initial amount of options, pcs
Shares to subscribe per option, pcs
Initial exercise price, EUR
Dividend adjustment
Current exercise price, EUR
Initial allocation date
Vesting date
Expiration date
Maximum contractual life, years
Method of settlement
Vesting condition
* Weighted average
Total
1,150,000
2013 warrants
2013C
11 April 2013
1,150,000
1
24 .42
yes
18 .25
7 May 2015
1 May 2017
31 May 2019
4 .1
in equity
4 .1 *
employment requirement until the vesting date
44
TRANSACTIONS DURING THE PERIOD
1 January 2019
At the beginning of the period (pcs)
outstanding
reserve
Changes during the period (pcs)
Exercised during the period
Weighted average exercise price during the exercise period, €
Weighted average share price during the excercise period, € *
Expired during the period
Not issued & expired
31 December 2019
At the end of the period (pcs)
exercised
outstanding
vested & outstanding
2013 warrants
2013C
Exercise price,
weighted average, €
Total
882,642
136,005
855,741
18 .27
29 .49
159,108
3,798
19 .83
19 .83
18 .27
18 .27
29 .49
25 .39
882,642
136,005
855,741
159,108
3,798
990,892
18 .25
990,892
0
0
0
0
0
0
* The weighted average price of the Nokian Tyres plc share during the period that the option in question was exercisable in 2019 .
EUR million
Impact on period profits and financial position
Expense recognised for the period, equity-settled
2019
2018
0.1
0 .4
PERFORMANCE SHARE PLANS
Performance share plan 2016 directed at key employees
In 2016 the Board approved a new share based incentive plan for
the key employees of the Group . The plan is intended to combine
the objectives of the shareholders and the key employees in order
to increase the value of the Group, to commit the key employees to
the Group, and to offer them a competitive incentive plan based on
earning the Nokian Tyres’s shares . The plan includes three earning
periods, calendar years 2016, 2017 and 2018 . The Board will decide
on the performance criteria and their targets for the plan at the
beginning of each earning period .
The performance shares are granted to the key employees of
the Nokian Tyres Group . In general no performance shares will be
released, if the key employee’s employment or service ends before
the end of the restriction period . The performance shares may
not be transferred during an approximately one-year restriction
period established for the shares . The members of the Group’s
Management Team must hold 25% of the received gross shares
until the member’s shareholding in the Company equals the
member’s fixed gross annual salary .
Performance Share Plan: Performance Share
Plan 2019, Restricted Share Plan 2019
On February 5, 2019, Nokian Tyres announced that the Board of
Directors of Nokian Tyres plc has decided on a new share-based
long-term incentive scheme for the Company’s management and
selected key employees . The decision includes a Performance
Share Plan (hereinafter also referred to as “PSP 2019”) as the
main structure, and a Restricted Share Plan (“RSP 2019”) as a
complementary structure for specific situations . The purpose of
the share-based incentive scheme is to harmonize the goals of the
Company’s shareholders and key personnel in order to increase
the value of the Company in the long term and to commit key
personnel to the Company and its strategic targets .
Performance Share Plan 2019
The Performance Share Plan consists of annually commencing
individual three-year Performance Periods, followed by the
payment of the potential share reward to the participants . The
commencement of each individual Performance Period is subject to
a separate Board approval .
The first Performance Period (PSP 2019–2021) commenced
as of the beginning of 2019, and the potential share rewards
thereunder will be paid in the first half of 2022, provided that the
performance criteria set by the Board of Directors are achieved .
The potential reward will be paid partly in shares in Nokian Tyres plc
and partly in cash . The cash portion of the reward is intended to
cover the taxes arising from the paid reward . Approximately 200
individuals are eligible to participate in PSP 2019–2021, including
the members of Nokian Tyres’ Management Team . The possible
rewards paid based on the Performance Period of 2019–2021
correspond approximately to a maximum of 535,000 gross shares .
In addition to the 3-year performance period (PSP 2019–
2021), a separate one-time, two-year performance period (PSP
2019–2020) commenced in 2019 in order to bridge the previous
two-year PSP 2018 and the three-year PSP 2019–2021 . The
potential share rewards thereunder will be paid in the first half of
2021, provided that the performance criteria set by the Board of
Directors are achieved . Approximately 210 individuals are eligible
to participate in PSP 2019–2020, including the members of Nokian
Tyres’ Management Team . The possible rewards paid based on the
Performance Period of 2019–2020 correspond approximately to a
maximum of 580,000 gross shares .
The potential share rewards payable under the PSP 2019–2020
and PSP 2019–2021 are based on the Company’s Earnings Per
Share (EPS) growth % and Return on Capital Employed (ROCE) .
Restricted Share Plan 2019
The purpose of the Restricted Share Plan (RSP 2019–2021) is
to serve as a complementary tool for individually selected key
employees of Nokian Tyres in specific situations . It consists of
annually commencing individual Restricted Share Plans, each with a
three-year retention period after which the share rewards granted
within the plan will be paid to the participants .
The commencement of each individual plan is subject to a separate
Board approval .
A precondition for the payment of the share reward based
on the Restricted Share Plan is that the employment relationship
45
of the individual participant with Nokian Tyres continues until the
payment date of the reward . The potential reward will be paid partly
in shares in Nokian Tyres plc and partly in cash . Cash portion of the
reward is intended to cover the taxes arising from the paid reward .
The first plan (RSP 2019–2021) within the Restricted Share Plan
structure commenced as of the beginning of 2019, and the
potential share reward thereunder will be paid in the first half
of 2022 . The possible rewards paid based on RSP 2019–2021
correspond approximately to a maximum of 70,000 gross shares .
Other terms
Nokian Tyres applies a share ownership policy to the members of
Nokian Tyres’ Management Team . According to this policy, each
member of the Management Team is expected to retain in his/her
ownership at least 25% of the shares received under the share-
based incentive programs of the Company until the value of his/
her share ownership in the Company corresponds to at least his/her
annual gross base salary .
The Board of Directors anticipates that no new shares will be
issued based on the share-based incentive scheme and that the
scheme will, therefore, have no dilutive effect on the registered
number of the Company’s shares .
The following tables present more specific information on the
performance share plans .
Instrument
Issuing date
Initial amount, pcs
Dividend adjustment
Grant date
Beginning of earning period
End of earning period
End of restriction period
PSP 2017
23 .2 .2016
540,000
No
31 .1 .2017
1 .1 .2017
31 .12 .2017
31 .3 .2019
PSP 2018
23 .2 .2016
560,000
No
2 .2 .2018
1 .1 .2018
31 .12 .2018
31 .3 .2020
Vesting conditions
EBIT,
Net sales
EBIT,
Net sales
PSP 2019–2020
5 .2 .2019
580,000
No
26 .2 .2019
1 .1 .2019
31 .12 .2020
31 .3 .2021
Earnings Per Share
(EPS) growth % and
Return on Capital
Employed (ROCE)
PSP 2019–2021
5 .2 .2019
535,000
No
26 .2 .2019
1 .1 .2019
31 .12 .2021
31 .3 .2022
Earnings Per Share
(EPS) growth % and
Return on Capital
Employed (ROCE)
RSP 2019–2021
5 .2 .2019
TOTAL
70,000 2,285,000
No
26 .8 .2019
1 .1 .2019
31 .12 .2021
31 .3 .2022
Continued
employment
Maximum contractual life, yrs
Remaining contractual life, yrs
Number of persons at the end
of the reporting year
Payment method
Changes during
the period 2019
1.1.2019
Outstanding at the beginning
of the reporting period, pcs
Changes during the period
Granted
Forfeited
Restriction period
ended during FY
Earned (Gross)
Delivered (Net)
31.12.2019
Outstanding at the end
of the period
2 .2
0 .0
2 .2
0 .3
2 .3
1 .3
3 .3
2 .2
3 .3
2 .2
2 .5
1 .3
199
Cash & Equity Cash & Equity
185
191
Cash & Equity
188
Cash & Equity
4
Cash & Equity
PSP 2017
PSP 2018
PSP 2019–2020
PSP 2019–2021
RSP 2019–2021
Total
484,600
495,450
0
0
0
980,050
0
5,100
479,500
13,500
9,165
0
47,400
140,819
75,013
568,680
15,780
524,660
10,400
4,025 1,097,365
78,680
0
0
0
0
0
479,500
154,319
84,178
0
0
0
448,050
552,900
514,260
4,025 1,519,235
Measurement of fair value
Inputs to the fair value determination of the performance
shares expensed during the financial year 2019 are listed in the
following table as weighted average values . The total fair value of
the performance shares is based on the company’s estimate on
31 December 2019 as to the number of shares to be eventually
vesting .
Earning period 2019
Share price at grant, EUR
Share price at reporting date, EUR
Expected dividends, EUR
Fair market value per share at grant, EUR
Total fair value 31 December 2019, EUR million
EUR million
Impact on period profits and financial position
Expense for the period
Expense for the period, equity-settled
24. PENSION LIABILITIES
26. INTEREST-BEARING FINANCIAL LIABILITIES
All material pension arrangements in the Group are defined contribution plans .
25. PROVISIONS
EUR million
1 Jan 2019
Provisions made
Provisions used
31 Dec 2019
EUR million
Non-current provisions
Current provisions
EUR million
Non-current
Loans from financial institutions and pension loans
Warranty
provision
Total
Current
4.4
1.4
–1.0
4.9
2019
-
4.9
4.4
1.4
–1.0
4.9
2018
-
4 .4
Commercial papers
Current portion of non-current loans from financial
institutions and pension loans
Interest-bearing financial liabilities by currency
EUR million
Currency
EUR
RUB
Total
46
28.41
25.63
3.79
24.62
84,767
2019
2018
1.7
9 .9
2019
2018
134.3
134.3
-
0.9
0.9
6 .3
6 .3
-
126 .0
126 .0
2019
2018
112.3
22.9
135.2
112 .3
20 .1
132 .3
Warranty provision
The goods are sold with a normal warranty period . Additionally, a Hakka Guarantee warranty has been
established in certain markets for certain products to compensate tyre damages not covered by
the normal warranty, one year after the purchase and to a certain wear limit . Damaged goods will be
repaired at the cost of the company or replaced with a corresponding product . The provisions are
based on the sales and statistical compensation volumes of the tyres sold under these warranties .
The warranty provisions are expected to be utilised within 1 year .
Effective interest rates for interest-bearing financial liabilities
Loans from financial institutions and pension loans
Total
2019
2018
Without
hedges
With
hedges
1.8%
1.8%
2.4%
2.4%
Without
hedges
2 .0%
With
hedges
2 .7%
2 .0%
2 .7%
See note 15 for the fair values of the interest-bearing financial liabilities .
47
27. TRADE AND OTHER PAYABLES
EUR million
Trade payables
Accrued expenses and deferred revenues
Advance payments
Derivative financial instruments
Designated as hedges
Measured at fair value through profit or loss
Current tax liabilities
Other liabilities
Total
The carrying amount of trade and other payables is a reasonable approximation of their fair value .
Significant items under accrued expenses and deferred revenues
EUR million
Wages, salaries and social security contributions
Annual discounts, sales
Commissions
Goods received and not invoiced
Marketing expenses
Transportation costs
Warranties
Financial items
Returned taxes from tax disputes
Value added tax liabilities
Other items
Total
2019
89.4
141.7
0.6
6.3
2.3
4.6
21.7
266.5
2019
37.0
61.3
5.4
6.7
5.5
3.7
4.2
0.0
-
-
17.8
141.7
2018
111 .0
292 .9
0 .6
2 .3
10 .0
6 .5
23 .4
437 .1
2018
38 .2
63 .9
5 .4
1 .3
4 .9
3 .9
4 .3
-
148 .2
7 .3
15 .4
292 .9
28. FINANCIAL RISK MANAGEMENT
The objective of financial risk management is to protect the
Group’s planned profit development from adverse movements
in financial markets . The principles and targets of financial risk
management are defined in the Group’s financial policy, which
is approved by the Board . Financing activities and financial risk
management are centralized to the parent company Treasury,
which executes financing and hedging transactions with external
counterparties and acts as a primary counterparty to business units
in financing activities like funding, foreign exchange transactions
and cash management . The Group Credit Committee makes credit
decisions that have a significant impact on the credit exposure of
the Group .
Foreign currency risk
The Nokian Tyres Group consists of the parent company in Finland,
the sales companies in Russia, Sweden, Norway, the USA, Canada,
Czech Republic, Switzerland, Ukraine, Kazakhstan, Belarus and
China, the tire chain companies in Finland, Sweden, Norway and the
USA . The tire plants are located in Nokia, Finland and Vsevolozhsk,
Russia . The opening of the newest tire plant in Dayton, Tennessee,
USA was in October 2019 .
Transaction risk
According to the Group’s financial policy, transactions between
the parent company and the foreign subsidiaries are primarily
carried out in the local currency of the subsidiary in question,
and the transaction risk is carried by the parent company and
there is no significant currency risk in the foreign subsidiaries .
Exceptions to the main rule are subsidiaries, which have non-home
currency items due to the nature of business activities . In this
case transactions between the parent company and the subsidiary
are carried out in a currency appropriate for the Group currency
exposure . The parent company manages transaction risk in these
subsidiaries and implements required hedging transactions for
hedging the currency exposure of the subsidiary according to the
Group hedging principles . Hedging principles are not applied to the
currency exposures of Ukraine and Belarus as UAH and BYN are
non-convertible currencies .
The transaction exposure of the parent company and the
subsidiaries with non-home currency items comprises of the foreign
currency denominated receivables and payables in the statement
of financial position and the foreign currency denominated binding
purchase and sales contracts . According to the Group’s financial
policy the significant transaction exposure in every currency
pair is hedged, although 20% over-hedging or under-hedging is
48
allowed if a +/- 10% change in the exchange rate does not create
over EUR 1 million impact on the income statement . However, a
simultaneous +/- 10% change in all the Group exposure currencies
against EUR must not create over a EUR 5 million impact on the
income statement . Exceptions to the main rule are non-convertible
currencies, which do not have active hedging markets available . For
budget exposure the estimated currency cash flows are added to
the transaction exposure so that the overall foreign currency risk
exposure horizon covers the next 12 months . The budget exposure
may be hedged according to the market situation and the hedge
ratio can be up to 70% of the budget exposure . Currency forwards,
currency options and cross-currency swaps are used as hedging
instruments .
31 Dec 2019
31 Dec 2018
Transaction risk
EUR million
Functional currency
Foreign currency
Trade receivables
Loans and receivables
Total currency income
Trade payables
Borrowings
Total currency expenditure
EUR
CAD
15.0
10.4
25.3
0.0
0.0
0.0
EUR
NOK
18.7
46.6
65.3
EUR
RUB
19.3
108.9
128.2
EUR
SEK
21.9
54.7
76.7
0.0
–38.2
–38.2
–44.6
–86.2
–130.8
0.0
–20.6
–20.6
EUR
USD
17.7
5.7
23.4
–9.4
–7.9
CZK
EUR
83.1
2.1
85.1
–43.3
–60.0
–17.3
–103.3
Foreign exchange derivatives
–23.3
–21.8
–6.0
–59.3
–7.9
19.8
Binding sales contracts
Binding purchase contracts
Future interest items
8.3
0.0
0.0
3.1
0.0
0.7
5.2
–13.1
1.2
3.6
0.0
0.3
0.3
–24.9
0.0
13.5
–15.8
–0.6
UAH
EUR
0.0
0.0
0.0
–0.2
0.0
–0.2
0.0
0.0
0.0
0.0
RUB
EUR
17.5
0.0
17.5
–6.0
–15.0
–21.0
EUR
CAD
17 .7
8 .4
26 .2
0 .0
–7 .6
–7 .6
EUR
NOK
20 .5
39 .1
59 .6
EUR
RUB
16 .7
95 .4
112 .1
0 .0
–39 .3
–39 .3
–42 .3
–125 .8
–168 .1
EUR
SEK
23 .4
54 .7
78 .1
0 .0
–11 .8
–11 .8
EUR
USD
27 .7
10 .6
38 .4
CZK
EUR
92 .8
1 .7
94 .5
–1 .7
–19 .0
–20 .7
–42 .0
–84 .2
–126 .2
0.0
–16 .0
–20 .1
53 .3
–71 .2
–18 .8
30 .7
0.0
0.0
–0.1
7 .1
0 .0
0 .1
9 .7
5 .0
0 .0
0 .6
5 .9
1 .3
–0 .3
0 .1
2 .6
0 .0
0 .4
0 .8
–6 .2
0 .0
10 .8
–5 .1
–0 .6
UAH
EUR
0 .0
0 .0
0 .0
0 .0
–6 .0
–6 .0
0 .0
0 .0
0 .0
0 .0
RUB
EUR
24 .1
0 .1
24 .2
–6 .1
–20 .0
–26 .1
0 .0
0 .0
0 .0
–0 .1
Net exposure
10.4
9.1
–15.4
0.6
–26.5
–0.7
–0.1
–3.5
–1 .7
–1 .9
–6 .6
4 .6
–6 .0
–2 .0
Translation risk
In financial statements the statements of financial position of the
foreign subsidiaries are translated into euro using the European
Central Bank’s closing rates and the income statements monthly
using the monthly average rate for the period . The impacts of the
exchange rate fluctuations arising on translation of the subsidiaries’
income statements and statements of financial position are
recorded as translation differences in other comprehensive income
and in the translation reserve in equity . The net investments in
foreign subsidiaries are not hedged based on the Board decision in
2013 .
Group’s total comprehensive income was positively affected by
translation differences on foreign operations by EUR 90 .2 million
(EUR –67 .8 in 2018) .
Translation risk
Net investments by currency
EUR million
Currency of net investment
CZK
NOK
RUB
SEK
USD
49
31 Dec 2019 31 Dec 2018
52.4
49.8
625.2
21.1
321.8
45 .0
44 .4
542 .2
16 .6
167 .8
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity to a reasonably possible change in the base currency against the quote currency, with all
other variables held constant, of the Group’s profit before tax and equity due to changes in the fair value of financial assets and liabilities .
A reasonably possible change is assumed to be a 10% base currency appreciation or depreciation against the quote currency . A change
of a different magnitude can also be estimated fairly accurately because the sensitivity is nearly linear .
31 Dec 2019
Base currency
31 Dec 2018
Base currency
10% stronger
10% weaker
10% stronger
10% weaker
Income
statement
Equity
Income
statement
Equity
Income
statement
Equity
Income
statement
Equity
–0.2
0.2
–1.1
0.5
0.3
0.0
0.2
-
-
-
-
-
-
-
0.2
–0.2
2.5
–0.5
–0.3
0.0
–0.2
-
-
-
-
-
-
-
–0 .3
–0 .1
–1 .0
–0 .1
0 .5
–0 .6
0 .4
-
-
-
-
-
-
-
0 .3
0 .1
0 .4
–0 .1
–0 .5
0 .6
–0 .5
-
-
-
-
-
-
-
EUR million
Base currency / Quote currency
EUR/CAD
EUR/CZK
EUR/NOK
EUR/RUB
EUR/SEK
EUR/UAH
EUR/USD
50
Interest rate risk
The interest rate risk of the Group consists mainly of borrowing,
which is split between floating and fixed rate instruments . On the
reporting date the floating rate interest-bearing financial liabilities
amounted to EUR 128 .8 million (EUR 25 .4 million in 2018) and the
fixed rate interest-bearing liabilities EUR 6 .3 million (EUR 107 .0
million in 2018) including the interest rate derivatives . The Group’s
policy aims to have at least 50% of the non-current financial
liabilities in fixed rate instruments . Interest rate risk is managed by
using interest rate derivatives . On the reporting date the portion of
the non-current fixed rate interest-bearing financial liabilities was
79% (100% in 2018) and the average fixing period of the interest-
bearing financial liabilities was 48 months (8 months in 2018)
including the interest rate derivatives . The Group uses interest rate
derivatives as cash flow hedges and hedge accounting is mainly
applied for those derivatives .
Electricity price risk
The Group purchases electricity in Finland at market price from
the Nordic electricity exchange and this leads to an electricity
price exposure . Annually around 90 GWh of electricity is procured .
According to the procurement policy electricity purchases are
hedged with electricity derivatives within the limits set by the
pre-defined hedge ratios for the coming five year period . On the
reporting date the energy amount of the electricity derivatives
amounted to 140 GWh (180 GWh in 2018) .
Sensitivity analysis for interest rate risk
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of
the Group’s profit before tax through the impact on floating rate borrowings and interest rate hedges measured at fair value through profit
or loss and the Group’s equity due to changes in the fair value of cash flow hedges .
A reasonably possible change is assumed to be a 1%-point increase or decrease of the market interest rates . A change of a different
magnitude can also be estimated fairly accurately because the sensitivity is nearly linear .
31 Dec 2019
Interest rate
31 Dec 2018
Interest rate
1%-point higher
1%-point lower
1%-point higher
1%-point lower
EUR million
Income
statement
Impact of interest rate change
–1.3
Equity
4.5
Income
statement
1.3
Equity
–4.5
Income
statement
–1 .3
Equity
1 .7
Income
statement
1 .3
Equity
–1 .7
Sensitivity analysis for electricity price risk
The following table demonstrates the sensitivity to a reasonably possible change in electricity price, with all other variables held constant, of
the Group’s profit before tax and equity due to changes in the fair value of the electricity derivatives .
A reasonably possible change is assumed to be a 5 EUR/MWh increase or decrease of the electricity market prices . A change of a
different magnitude can also be estimated fairly accurately because the sensitivity is nearly linear .
31 Dec 2019
Electricity price
31 Dec 2018
Electricity price
5 EUR/MWh higher
5 EUR/MWh lower
5 EUR/MWh higher
5 EUR/MWh lower
EUR million
Income
statement
Equity
Income
statement
Impact of electricity price change
-
0.7
-
Equity
–0.7
Income
statement
0 .0
Equity
0 .9
Income
statement
0 .0
Equity
–0 .9
Liquidity and funding risk
In accordance with the Group’s financial policy, the Treasury is
responsible for maintaining the Group’s liquidity, efficient cash
management and sufficient sources of funding . The committed
credit limits cover all funding needs, like outstanding commercial
papers, other current loans, working capital changes arising from
operative business and investments .
Refinancing risk is reduced by split maturity structure of
loans and credit limits . The EUR 150 million domestic revolving
credit facility with an international bank syndicate is due in 2023 .
Additionally, there is a EUR 350 million domestic commercial paper
program available . The current credit limits and the commercial
paper program are used to finance inventories, trade receivables,
subsidiaries in distribution chains and thus to control the typical
seasonality in the Group’s cash flows .
The Group reports the main financial covenants to creditors
quarterly . If the Group does not satisfy the requirements set in
financial covenants, creditor may demand accelerated repayment
of the credits . In 2019 the Group has met all the requirements set
in the financial covenants, which are mainly linked to equity ratio .
Management monitors regularly that the covenant requirements
are met . Financing agreements contain terms and conditions upon
which the agreement may be terminated, if control in the company
changes as a result of a public tender offer .
On the reporting date the Group’s liquidity in cash and cash
equivalents was EUR 218 .8 million (EUR 447 .5 million in 2018) .
At the end of the year the Group’s credit limits available were
EUR 561 .0 million (EUR 558 .8 million in 2018), out of which the
committed limits were EUR 205 .5 million (EUR 205 .5 million in
2018) . The available committed non-current credits amounted to
EUR 200 .0 million (EUR 150 .0 million in 2018) .
The Group’s interest-bearing financial liabilities totaled
EUR 135 .2 million, compared to the year before figure of
EUR 132 .3 million . Around 83% of the interest-bearing financial
liabilities were in EUR . The average interest rate of interest-bearing
financial liabilities was 2 .4% . Current interest-bearing financial
liabilities, including the portion of non-current financial liabilities
maturing within the next 12 months, amounted to EUR 0 .9 million
(EUR 126 .0 million in 2018) .
Contractual maturities of financial and lease liabilities
EUR million
Non-derivative financial liabilities
Loans from financial institutions and pension loans
Fixed rate loans
Floating rate loans
Trade and other payables
Lease liabilities
Derivative financial liabilities
Interest rate derivatives
Designated as hedges
Foreign currency derivatives
Designated as hedges
Cashflow out
Cashflow in
Measured at fair value through profit or loss
Cashflow out
Cashflow in
Electricity derivatives
Designated as hedges
Total
51
2019
Contractual maturities*
2020
2021
2022
2023
2024 2025–
Total
Carrying
amount
6.3
128.8
89.4
124.8
–0.8
–2.5
–89.4
–32.5
–0.7
–2.5
0.0
–27.9
–0.7
–2.5
0.0
–0.6
–1.2
–2.4 –127.6
0.0
–12.0
–7.1
–3.1
–1.3 –138.9
–89.4
–29.6 –137.9
0.0
0.0
–19.9 –16.1
3.2
–0.8
–0.8
–0.7
–0.6
–0.2
0.0
–3.1
3.0
–0.3
–5.0
0.3
–4.8
0.3
–62.0 –21.3
18.6
57.0
2.3 –393.2
–2.9 394.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
–93.1
76.2
0.0 –393.2
0.0 394.5
–0.9
0.5
353.8 –128.9
0.3
–36.1
0.1
0.0
–28.7 –22.9 –140.5
0.0
0.0
0.9
–34.1 –391.2
* The figures are undiscounted and include both the finance charges and the repayments .
EUR million
Non-derivative financial liabilities
Loans from financial institutions and pension loans
Fixed rate loans
Floating rate loans
Trade and other payables
Derivative financial liabilities
Interest rate derivatives
Designated as hedges
Foreign currency derivatives
Designated as hedges
Cashflow out
Cashflow in
Measured at fair value through profit or loss
Cashflow out
Cashflow in
Electricity derivatives
Designated as hedges
Total
2018
Contractual maturities*
2019
2020
2021
2022
2023 2024–
Total
Carrying
amount
7 .0
–0 .8
125 .4 –126 .6
111 .0 –111 .0
–0 .8
0 .0
0 .0
–0 .7
0 .0
0 .0
–0 .7
0 .0
0 .0
–1 .2
0 .0
0 .0
–3 .7
–7 .9
0 .0 –126 .6
0 .0 –111 .0
1 .6
–0 .8
–0 .7
–0 .4
–0 .1
0 .2
0 .2
–1 .6
0 .7
–18 .9
–56 .2
68 .7
–1 .7
0 .2
–1 .6
0 .2
–1 .6
0 .3
–19 .1
18 .8
0 .0
0 .0
–80 .2
88 .2
7 .9 –435 .0
431 .8
–3 .5
0 .0
0 .0
0 .0
0 .0
0 .0
0 .0
0 .0
0 .0
0 .0 –435 .0
431 .8
0 .0
–2 .9
1 .6
228 .2 –228 .3
0 .9
–2 .0
0 .3
–2 .2
0 .1
–2 .0
0 .0
–1 .3
0 .0
2 .9
–3 .5 –239 .3
* The figures are undiscounted and include both the finance charges and the repayments .
The aging and impairment of trade receivables
31 Dec 2019
1 Jan 2019
52
EUR million
Not past due
Past due less than 30 days
Past due between 30 and 90 days
Past due between 91 and 180 days
Past due more than 180 days
Total
Trade receivables
gross amount
Impairment loss
allowance
445.6
34.2
9.9
1.6
66.3
557.7
–2.5
–0.8
–0.6
–0.2
–55.2
–59.4
Changes in the impairment loss allowance for trade receivables
EUR million
Loss allowance, 1 Jan under IAS 39
Adjustment on initial application of IFRS 9
Loss allowance, 1 Jan under IFRS 9
Write-offs
Other changes
Change in loss allowance recognized in profit or loss
Loss allowance, 31 Dec
Trade receivables
gross amount
362 .5
Impairment
loss allowance
–2 .8
38 .4
3 .6
2 .7
53 .2
460 .4
2019
51.0
–0.6
3.7
5.3
59.4
–1 .1
–0 .2
–0 .3
–46 .5
–51 .0
2018
43 .6
9 .6
53 .0
–2 .0
0 .0
0 .0
51 .0
Credit Risk
The Group is exposed to credit risk from customers’ trade
receivables and also from deposits and derivative transactions with
different banks and financial institutions .
The credit risk in financial transactions is controlled by doing
business only with banks and financial institutions with high credit
ratings . In investments the Group’s placements are current and
funds are invested only in solid domestic listed companies, public
institutions or non-listed domestic companies which meet the
criteria set by the investment policy . The Board approves the
investment policy for financial instruments annually .
The principles of customers’ credit risk management are
documented in the Group’s credit policy approved by the Board .
The Group Credit Committee makes all the significant credit
decisions . Financial statements as well as credit analysis and
payment history collected by credit information companies are
used for evaluating credit worthiness . The credit status of the
customers is reviewed at the subsidiaries regularly according to
the Group credit policy principles . Bank guarantees, documentary
credits and specific payment terms are used in controlling the
credit risk in trade receivables . Payment programs, which customer
is committed to, are always agreed upon for past due receivables .
In addition, the country risk is monitored and credits are limited
in countries where political or economic environment is unstable .
There are no over 15% customer or country risk concentrations in
trade receivables, other than the Russian customers’ share of 47%
(39% in 2018) on the reporting date .
Aging and impairment of trade receivables
Impairment recognized in trade receivables corresponds to lifetime
expected credit losses for trade receivables . When measuring
expected credit losses the Group reviews sales over the past five
years, customer payment behavior, actual credit losses, current
conditions and forecasts of future economic conditions .
Capital Management
The Group’s objective of managing capital is to secure with an
efficient capital structure the Group’s access to capital markets
at all times despite of the seasonal nature of the business . The
Group monitors its capital structure on the basis of Net debt to
EBITDA ratio and Equity ratio . Equity ratio has to be at least at the
level of 30% in accordance with the financial covenants . Equity
ratio is calculated as a ratio of total equity to total assets excluding
advances received .
Net debt / EBITDA
EUR million
Average interest-bearing liabilities
Less: Average liquid funds
Average net debt
Operating profit
Add: Depreciations and amortisations
EBITDA
Average net debt / EBITDA
Equity ratio
EUR million
Equity attributable to equity holders of the parent
Add: Non-controlling interest
Total equity
Total assets
Less: Advances received
Adjusted total assets
Equity ratio
53
2018
133 .8
274 .5
–140 .7
372 .4
93 .4
465 .8
–0 .30
2018
1,486 .1
0 .0
1,486 .1
2,092 .9
0 .6
2,092 .3
2019
350.8
185.5
165.2
316.5
125.2
441.7
0.37
2019
1,769.7
0.0
1,769.7
2,332.6
0.6
2,332.0
75.9%
71 .0%
29. FAIR VALUES OF DERIVATIVE FINANCIAL INSTRUMENTS
EUR million
Derivatives measured at fair value through profit or loss
Foreign currency derivatives
Currency forwards
Currency options, purchased
Currency options, written
Derivatives designated as cash flow hedges
Foreign currency derivatives
Interest rate and currency swaps
Interest rate derivatives
Interest rate swaps
Electricity derivatives
Electricity forwards
2019
2018
Notional
amount
Fair value
Assets
Fair value
Liabilities
Notional
amount
Fair value
Assets
Fair value
Liabilities
396.8
20.3
-
75.0
100.0
3.9
2.9
0.0
-
0.3
-
0.9
2.3
-
-
3.0
3.2
0.0
420 .0
27 .5
37 .6
5 .2
0 .3
-
86 .0
18 .9
200 .0
4 .8
1 .6
2 .9
9 .7
-
0 .2
0 .7
3 .1
0 .0
Derivatives are maturing within the next 12 months excluding the interest rate and currency swaps, interest rate swaps and electricity forwards .
The fair value of forward exchange contracts is measured using the forward rates on the reporting date . The fair value of currency options is calculated using an option valuation model .
The fair values of interest rate and currency swaps and interest rate derivatives are determined as the present value of the future cash flows based on market interest rates on the reporting date .
The fair value of electricity derivatives is based on quoted market prices in active markets on the reporting date .
30. FINANCIAL INSTRUMENTS DESIGNATED AS HEDGING INSTRUMENTS
CASH FLOW HEDGES
Financial instruments designated as hedging instruments
Interest rate and currency swaps
Hedged item: Floating rate RUB loan receivables
Notional amount, EUR million
Average EUR/RUB rate
Interest rate swaps
Hedged item: Floating rate EUR debt
Notional amount, EUR million
Average fixed rate
Electricity forwards
Hedged item: Electricity system price
Notional amount, EUR million
Notional amount, GWh
Average forward rate, e/MWh
Hedged item: Electricity Finnish area price difference
Notional amount, EUR million
Notional amount, GWh
Average forward rate, e/MWh
Interest rate and currency swaps
Hedged item: Floating rate RUB loan receivable
Notional amount, EUR million
Average EUR/RUB rate
Interest rate swaps
Hedged item: Floating rate EUR debt
Notional amount, EUR million
Average fixed rate
Electricity forwards
Hedged item: Electricity system price
Notional amount, EUR million
Notional amount, GWh
Average forward rate, e/MWh
Hedged item: Electricity Finnish area price difference
Notional amount, EUR million
Notional amount, GWh
Average forward rate, e/MWh
54
2020
2021
2022
2023
2024
2025–
Total
2019
Maturity
56.6
70.65
18.4
76.06
100.0
0.5%
1.5
53
27.9
0.5
18
27.3
1.9
72
25.8
0.1
22
4.1
75.0
71.98
100.0
0.5%
3.8
143
26.7
0.1
22
4.1
2019
2020
2021
2022
2023
2024–
Total
2018
Maturity
67 .5
59 .22
100 .0
0 .6%
1 .7
70
24 .8
0 .1
20
4 .9
18 .4
76 .06
100 .0
0 .5%
86 .0
62 .83
200 .0
0 .5%
4 .6
184
25 .0
0 .2
37
4 .4
0 .9
35
25 .3
0 .5
18
27 .3
1 .5
61
24 .2
0 .1
18
3 .8
55
Effect of hedging instruments on the statement of financial position and statement of
comprehensive income
EUR million
Notional amount
Notional amount, GWh
Assets
2019
Foreign currency
derivatives
Interest rate
derivatives
Interest rate and
currency swaps
Interest rate
swaps
75.0
-
100.0
-
Electricity
derivatives
Electricity
forwards
3.9
164
EUR million
Notional amount
Notional amount, GWh
Assets
2018
Foreign currency
derivatives
Interest rate
derivatives
Electricity
derivatives
Interest rate and
currency swaps
86 .0
Interest rate
swaps
200 .0
-
-
Electricity
forwards
4 .8
221
Carrying amount
Line item in the statement of financial
position
0.3
Trade and
other receivables
-
Trade and
other receivables
0.9
Trade and
other receivables
Carrying amount
Line item in the statement of financial
position
18 .9
Trade and
other receivables
1 .6
Trade and
other receivables
2 .9
Trade and
other receivables
Liabilities
Liabilities
Carrying amount
Line item in the statement of financial
position
3.0
Trade and
other payables
3.2
Trade and
other payables
0.0
Trade and
other payables
Carrying amount
Line item in the statement of financial
position
0 .7
Trade and
other payables
3 .1
Trade and
other payables
0 .0
Trade and
other payables
Change in value for recognizing hedge
ineffectiveness
Hedged item
Hedging instrument
Effective portion
Amount recognized in other comprehensive
income
Amount reclassified from the cash flow
hedge reserve to profit or loss
Line item in the income statement
18.3
–18.3
2.5
–2.5
1.1
–1.1
Hedged item
Hedging instrument
Effective portion
Change in value for recognizing hedge
ineffectiveness
–18.3
–2.5
–1.1
20.4
Financial items
0.9
Financial items
–0.9
Cost of sales
Amount recognized in other comprehensive
income
Amount reclassified from the cash flow
hedge reserve to profit or loss
–7 .4
7 .4
7 .4
–8 .3
1 .2
–1 .2
–1 .2
0 .9
–3 .7
3 .7
3 .7
–1 .0
Line item in the income statement
Financial items
Financial items
Cost of sales
Ineffective portion
Amount recognized in profit or loss
Line item in the income statement
-
Financial items
-
-
Financial items Other operating
income or
expenses
Ineffective portion
Amount recognized in profit or loss
Line item in the income statement
-
Financial items
-
-
Financial items Other operating
income or
expenses
56
Effect of hedging instruments on equity
EUR million
Cash flow hedge reserve, 1 Jan
Cash flow hedges
Change in fair value recognized in other comprehensive income
Interest rate and currency swaps
Interest rate swaps
Electricity forwards
Amount reclassified to profit or loss
Interest rate and currency swaps
Interest rate swaps
Electricity forwards
Tax effect
Cash flow hedge reserve, 31 Dec
31. CONTINGENT LIABILITIES AND ASSETS AND
CONTRACTUAL COMMITMENTS
EUR million
For own debt
Mortgages
Pledged assets
On behalf of other companies
Guarantees
Other own commitments
Guarantees
Contractual commitments
2019
–0.6
–18.3
–2.5
–1.1
20.4
0.9
–0.9
0.3
–1.8
2018
–1 .8
7 .4
–1 .2
3 .7
–8 .3
0 .9
–1 .0
–0 .3
–0 .6
2019
2018
0.9
4.7
0.4
29.9
29.4
0 .9
4 .7
0 .4
27 .7
29 .9
57
Adjustments to the financial reporting concerning tax years
2007–2010 and 2011 were done during the first quarter of 2019 . The
decision of the Supreme Administrative Court had no cash flow
impact in 2019, as the Tax Administration returned the additional
taxes paid by the company already in 2018 .
Other tax disputes
In May 2019, Nokian Tyres U .S . Finance Oy, a subsidiary of Nokian
Tyres plc (ownership: 100% of the shares), received a negative
ruling from the Hämeenlinna Administrative Court regarding the
company’s appeal against a reassessment of EUR 18 .5 million
concerning the years 2007–2013 . Of this amount, EUR 11 .0 million
were additional taxes and EUR 7 .5 million were tax increases and
interest . The company has paid and recorded them in full in the
financial statements and results for 2013, 2014, and 2017 . The
company considers the decision unfounded and has appealed
against it by filing a claim with the Supreme Administrative Court in
July 2019 .
32. DISPUTES, LITIGATIONS AND
RISKS IN THE NEAR FUTURE
Nokian Tyres’ business and financial performance may be
affected by several uncertainties . The Group has adopted a risk
management policy, approved by the Board of Directors, which
supports the achievement of strategic goals and ensures business
continuity . The Group’s risk management policy focuses on
managing both the risks pertaining to business opportunities and
the risks affecting the achievement of the Group’s goals in the
changing operating environment . The risk management process
aims to identify and evaluate the risks and to plan and implement
the practical measures for each risk . Nokian Tyres has detailed the
overall business risks and risk management in the 2019 Corporate
Governance Statement .
For example, the following risks could potentially have an
impact on Nokian Tyres’ business:
• Nokian Tyres is subject to risks related to consumer confidence
and macroeconomic and geopolitical conditions . Political
uncertainties may cause serious disruption and additional trade
barriers and affect the company’s sales and credit risk . Economic
downturns may increase trade customers’ payment problems
and Nokian Tyres may need to recognize impairment of trade
receivables .
• The tire wholesale and retail landscape is evolving to meet
changing consumer needs . New technologies are fueling this
with increasing digitalization . Failure to adapt to the changes in
the sales channel could have an adverse effect on Nokian Tyres’
financial performance .
• Nokian Tyres’ success is dependent on its ability to innovate
and develop new products and services that appeal to its
customers and consumers . Despite extensive testing of its
products, product quality issues and failure to meet demands of
performance and safety could harm Nokian Tyres’ reputation and
have an adverse effect on its financial performance .
• Nokian Tyres’ production facilities are located in Finland, Russia
and the US . Any unexpected production or delivery breaks at
these facilities would have a negative impact on the company’s
business . Interruptions in logistics could have a significant impact
on peak season sales .
• Significant fluctuations in raw material prices may impact
margins . Nokian Tyres sources natural rubber from producers
in countries such as Indonesia and Malaysia . Although Nokian
Tyres has policies such as the Supplier Code of Conduct and
established processes to monitor the working conditions, it
cannot fully control the actions of its suppliers . The violation of
laws, regulations or standards by raw material producers, or their
divergence from practices generally accepted as ethical in the
European Union or the international community, could have a
material adverse effect on Nokian Tyres’ reputation .
• Tire industry can be subject to risks caused by climate change,
such as changes in consumer tire preferences, regulatory
changes or impact of extreme weather events on natural rubber
producers . Nokian Tyres is committed to reducing GHG emissions
from its operations in order to combat climate change . Nokian
Tyres calculates the GHG emissions from its operations annually
and reduces them systematically . More detailed analysis on Nokian
Tyres’ climate change related risks and opportunities has been
provided in Nokian Tyres’ Non-Financial Reporting Statement for
2019 .
• Foreign exchange risk consists of transaction risk and translation
risk . The most significant currency risks arise from the Russian
ruble, the Swedish and Norwegian krona, and the US and Canadian
dollar . Approximately 60% of the Group’s sales are generated
outside of the euro-zone .
• In May 2017, the Finnish Financial Supervisory Authority filed a
request for investigation with the National Bureau of Investigation
regarding possible securities market offences . In March 2019,
the police moved the suspicions of securities markets offences
to consideration of charges . The suspects have denied any
involvement in criminal activity .
Nokian Tyres’ risk analysis also pays special attention on
corporate social responsibility risks, the most significant of which
are related to the company’s brand image and product quality .
Analyses and projects related to information security, data
protection, and customer information are continuously a special
focus area .
Transfer pricing tax disputes
The Large Taxpayers’ Office carried out a transfer pricing tax audit
regarding the tax years 2007–2010 during 2012–2013 . The company
paid in total EUR 89 .2 million as additional taxes and punitive tax
based on tax reassessment decisions . Nokian Tyres’ appeal to the
tax audit report was approved and tax adjustments abolished in May
2018 .
In October 2017, Nokian Tyres received a reassessment decision
from the Tax Administration concerning the tax year 2011, according
to which the company was obliged to pay a total of EUR 59 million,
of which EUR 39 million were additional taxes and EUR 20 million
were tax increases and interest . The company considered the
reassessment decision of the Tax Administration unfounded . Appeal
to the tax audit report was approved and tax adjustments abolished
by the Administrative Board of Tax Authorities in June 2018 .
In March 2019, the Supreme Administrative Court rejected
an application for leave to appeal from the Tax Recipients’ Legal
Services Unit in Nokian Tyres’ 2007–2010 tax dispute . The decision
of the Administrative Court in May 2018 is thus final and the tax
dispute for the tax years 2007–2010 is completed . As a result of the
decision of the Supreme Administrative Court, the Tax Recipients’
Legal Services Unit withdrew their appeal concerning Nokian
Tyres’ tax year 2011 and the positive decision taken by the Tax
Administration in 2018 is thus final .
58
Nokianvirran Energia Oy is a joint operation with three parties that
supplies production steam for the tyre plant in Nokia . The parties
share control according to a specific Mankala-principle where the
company is not intended to make profit while the parties have
agreed to utilize the total output . The company is accounted for as
a Group company using the proportionate consolidation method
on each row according to the 32 .3% shareholding .
The Board of Directors decided in their meeting on July 12, 2017
to implement a share aquisition and administration arrangement of
Nokian Tyres plc (Nokian Tyres) shares with Evli Awards Management
Oy (EAM) according to the stipulations of the Companies Act for
financing the purchase of own shares (the Finnish Companies Act,
Chapter 13, Section 10, Subsection 2) relating to incentive plans . As
a part of this arrangement EAM founded EAM NRE1V Holding Oy
(Holding company) which aquires the shares with Nokian Tyres’s
funding and according to the agreement . These shares will be
delivered to the employees according to the Nokian Tyre’s share plan
terms and conditions . The Holding company is owned by the EAM in
legal terms, but according to the agreement Nokian Tyres has control
over the company and acts as the principal, whereas EAM is an agent
through the Holding company . This control arising from contractual
terms means that the Holding company is consolidated in to the
group’s IFRS financial statements as a structured entity .
33. RELATED PARTY TRANSACTIONS
Parent and Group company relations:
Parent company
Nokian Tyres plc
Group companies
Nokian Heavy Tyres Ltd .
Levypyörä Oy
Nokian Däck AB
Nokian Dekk AS
Nokian Tyres GmbH
Nokian Tyres AG
Nokian Tyres Sp z o .o .
Nokian Tyres U .S . Holdings Inc .
Nokian Tyres Inc
Nokian Tyres U .S . Operations LLC
Nokian Tyres Canada Inc .
Nokian Tyres s .r .o .
TOV Nokian Shina
TOO Nokian Tyres
OOO Nokian Shina
TAA Nokian Shina Belarus
Nokian Tyres Holding Oy
OOO Nokian Tyres
OOO Hakkapeliitta Village
Nokian Tyres Trading (Shanghai) Co Ltd
NT Tyre Machinery Oy
OOO Hakka Invest
Koy Nokian Nosturikatu 18
Koy Nokian Rengaskatu 4
Nokian Tyres Spain S .L .U .
Nokianvirran Energia Oy
Vianor Holding Oy
Vianor Oy
Posiber Oy
Vianor AB
Nordicwheels AB
Vianor AS
Vianor Inc .
EAM NRE1V Holding Oy
Associated companies
Sammaliston Sauna Oy
Group
holding
%
Voting
rights
%
Parent
company
holding
%
Domicile
Country
Nokia
Finland
Nokia
Nastola
Vsevolozhsk
Nokia
Vsevolozhsk
Vsevolozhsk
Nokia
Vsevolozhsk
Nokia
Nokia
Nokia
Nokia
Lappeenranta
Nokia
Finland
Finland
Sweden
Norway
Germany
Switzerland
Poland
USA
USA
USA
Canada
Czech Rep .
Ukraine
Kazakhstan
Russia
Belarus
Finland
Russia
Russia
China
Finland
Russia
Finland
Finland
Spain
Finland
Finland
Finland
Finland
Sweden
Sweden
Norway
USA
Finland
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
32 .3
100
100
100
100
100
100
100
0
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
32 .3
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
99
100
100
100
100
100
32 .3
100
Nokia
Finland
33
33
33
The related parties of the Group consist of members of the Board of Directors, the President, other key
management personnel, and close members of their families .
Transactions and outstanding balances with parties having significant influence
Shares and share options granted to the President and other key management personnel
The share option plan terms for the key management are equal to the share options directed at
other personnel .
59
1,000 euros
Key management personnel
Employee benefit expenses
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
Total
Remunerations
Hille Korhonen, President
of which incentives for the reported period
Members of the Board of Directors
Petteri Walldén
Heikki Allonen
Raimo Lind
Veronica Lindholm
Inka Mero
George Rietbergen
Kari Jordan
Pekka Vauramo
Total
No incentives were paid to the members of the
Board of Directors .
2019
2018
Granted (pcs)
Shares
4,524.4
5,119 .4
Share options
0.0
183.7
0 .0
0 .0
Held (pcs)
2,186.1
5,231 .5
Shares
6,894.2
10,350 .9
Share options
Exercisable
2019
2018
260,260
229,000
-
-
221,940
195,309
-
-
19,000
19,000
No performance shares nor share options have been granted to the members of the Board of Directors .
693.2
0.0
883 .2
189 .9
101.4
102 .0
54.6
76.5
56.4
54.6
54.6
78.3
53.4
54 .0
78 .9
57 .0
54 .0
53 .4
75 .9
52 .2
529.8
527 .4
Other key management personnel
of which incentives for the reported period
3,301.4
180.0
3,708 .8
1,128 .2
No special pension commitments have been granted to the members of the Board of Directors and
no statutory pension expense incurs . In 2019 the statutory pension expense for President Korhonen
was EUR 72,9 thousand and the expense for supplementary pension plan was EUR 132 thousand . The
agreed plan retirement age is 65 years . The annual account deposits for the pension capital redemption
contract have been pledged to guarantee the recognized pension plan commitment . The contract is a
defined contribution plan . The other management has a suplamentary penson plan of 10% of the annual
salary and a retirement age of 63 years .
No loans, guarantees or collaterals have been granted to the related parties .
34. INFORMATION RELATED TO ADOPTION OF A NEW STANDARD
Nokian Tyres has adopted the new IFRS 16 effective January 1, 2019 using the modified retrospective
approach and the comparative figures have not been restated .
EUR million
Non-current assets
Property, plant and equipment
Goodwill
Other intangible assets
Investments in associates
Right of use assets
Non-current financial investments
Other receivables
Deferred tax assets
Total non-current assets
Inventories
Trade receivables
Other receivables
Current tax assets
Cash and cash equivalents
Total current assets
Total assets
Equity
Share capital
Share premium
Treasury shares
Translation reserve
Fair value and hedging reserves
Paid-up unrestricted equity reserve
Retained earnings
Non-controlling interest
Total equity
Non-current liabilities
Deferred tax liabilities
Provisions
Interest-bearing liabilities
Other liabilities
Total non-current liabilities
December 31
2018
Restatement
impact
January 1
2019
647 .3
83 .6
33 .6
0 .1
-
0 .7
7 .3
9 .3
781 .8
369 .2
409 .5
71 .9
13 .0
447 .5
1,311 .0
2,092 .9
25 .4
181 .4
–11 .4
–365 .4
–0 .6
222 .6
1,434 .1
-
1,486 .1
32 .5
0 .0
6 .3
0 .5
39 .3
647.3
83.6
33.6
0.1
137.7
0.7
7.3
9.3
919.5
369.2
409.5
71.9
13.0
447.5
1,311.0
2,230.6
25.4
181.4
–11.4
–365.4
–0.6
222.6
1,434.1
-
1,486.1
32.5
0.0
126.3
0.5
159.3
137 .7
137 .7
137 .7
119 .9
119 .9
EUR million
Current liabilities
Trade payables
Other current payables
Current tax liabilities
Provisions
Interest-bearing liabilities
Total current liabilities
Total equity and liabilities
60
December 31
2018
Restatement
impact
January 1
2019
111 .0
319 .6
6 .5
4 .4
126 .0
567 .4
2,092 .9
111.0
319.6
6.5
4.4
143.8
585.2
2,230.6
17 .8
17 .8
137 .7
The lease commitment as of December 31, 2018 in accrodance with IAS 17 can be reconciled to the
opening lease liability as of January 1, 2019 in accordance with IFRS 16 as follows:
Operating lease commitments as at 31.12.2018
Impact from discounting future lease payments and other
changes*
IFRS 16 lease liabilities as at 1.1.2019
* Discount rates used are based on market area and length of the contract . Other changes include impact from the
–21 .6
137.7
159.3
exclusion of short-term and low-value leases as well as from the different determination of lease terms .
Below is a summary of the effects of the treatment of leases in accordance
with IFRS 16 for the fiscal year 2019 .
Balance sheet effects
EUR million
Fixed assets
Right to use
Total
Equity & Liability
Non-current liability
Current liability
Total
P&L effects
Reversed rents
Depreciations
Finance costs
Total
January 1
2019
122.9
122.9
94.8
30.0
124.8
32.2
–31.1
–3.8
–2.7
35. EVENTS AFTER THE REPORTING DATE
On January 24, 2020, Nokian Tyres confirmed its guidance for the full year 2019 and provided
preliminary outlook for 2020 as follows: In 2020, Nokian Tyres net sales with comparable currencies are
expected to decline and operating profit to be significantly below the level of 2019 .
Parent company income
statement and balance sheet
PARENT CO MPANY
INCOME STATEMENT, FAS
PARENT COMPANY
BAL A NCE SHE ET, FAS
61
Note
(1)
(2)(3)
2019
677.7
–556.8
2018
707 .8
–546 .8
EUR million 31.12.
Note
2019
2018
ASSETS
120.9
160 .9
Fixed assets and other non-current assets
EUR million 1.1.–31.12.
Net sales
Cost of sales
Gross profit
Selling and marketing expenses
Administration expenses
Other operating expenses
Other operating income
Operating profit
(2)(3)
(2)(3)(4)
(2)(3)
–29.0
–26.8
–21.5
0.4
44.0
–32 .8
–34 .5
–9 .0
0 .2
84 .9
Financial income and expenses
(5)
156.1
164 .9
Profit before appropriations and tax
Appropriations
Income tax
Profit for the period
(6)
(7)
200.1
–6.7
96.9
290.4
249 .8
–16 .2
–22 .4
211 .2
Intangible assets
Tangible assets
Shares in Group companies
Investments in associates
Shares in other companies
Total non-current assets
Current assets
Inventories
Non-current receivables
Current receivables
Cash and cash equivalents
Total current assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity
Share capital
Share premium
Treasury shares
Paid up unrestricted equity fund
Retained earnings
Profit for the period
Total shareholders' equity
Untaxed reserves and provisions
(8)
(8)
(9)
(9)
(9)
(10)
(11)
(12)
(13)
17.6
175.6
371.2
4.3
0.6
569.1
101.0
266.5
328.9
169.5
866.0
15 .5
157 .6
254 .5
4 .3
0 .6
432 .5
106 .0
255 .1
357 .7
398 .6
1,117 .4
1,435.1
1,549 .9
25.4
182.5
–7.6
238.2
252.8
290.4
981.8
25 .4
182 .5
–10 .1
222 .6
259 .4
211 .2
891 .0
Accumulated depreciation in excess of plan
(8)
38.3
38 .2
Liabilities
Non-current liabilities
Current liabilities
Total liabilities
(14)
(15)
103.9
311.0
415.0
0 .2
620 .5
620 .7
1,435.1
1,549 .9
Parent company statement
of cash flows
PARENT CO MPANY STATEME NT OF CAS H F LOWS, FAS
62
EUR million 1.1.–31.12.
Profit for the period
Adjustments for
Depreciation, amortisation and impairment
Financial income and expenses
Gains and losses on sale of intangible assets, other changes
Income Taxes
Cash flow before changes in working capital
Changes in working capital
Current receivables, non-interest-bearing, increase (–) / decrease (+)
Inventories, increase (–) / decrease (+)
Current liabilities, non-interest-bearing, increase (+) / decrease (–)
Changes in working capital
Financial items and taxes
Interest and other financial items, received
Interest and other financial items, paid
Dividens received
Income taxes paid
Financial items and taxes
2019
2018
EUR million 1.1.–31.12.
2019
2018
290.4
211 .2
Cash flow from financing activities:
Proceeds from issue of share capital
91.8
29 .2
Purchase of treasury shares
–156.1
–164 .9
Change in current financial receivables, increase (-) / decrease (+)
Change in non-current financial receivables, increase (-) / decrease (+)
Change in current financial borrowings, increase (+) / decrease (-)
Change in non-current financial borrowings, increase (+) / decrease (-)
Group contributions paid
Dividends paid
Cash flow from financing activities (C)
15.6
0.0
15.0
–11.6
–106.9
103.7
8.4
–218.1
–193.8
18 .7
0 .0
–1 .7
–22 .3
109 .1
–102 .3
0 .0
–214 .2
–212 .7
Change in cash and cash equivalents, increase (+) / decrease (–) (A+B+C)
–230.4
90 .8
Cash and cash equivalents at the beginning of the period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the period
398.6
1.3
169.5
307 .8
398 .6
–0.4
–96.9
128.7
13.8
5.0
–202.0
–183.2
20.1
–41.3
177.3
90.4
246.5
0 .0
22 .4
97 .9
149 .7
–15 .5
74 .0
208 .2
15 .6
–2 .5
160 .8
–21 .8
152 .0
Cash flow from operating activities (A)
192.0
458 .1
Cash flow from investing activities
Acquisitions of property, plant and equipment and intangible assets
Proceeds from sale of property, plant and equipment and intangible
assets
Acquisitions of Group companies
Acquisitions of other investments
Cash flow from investing activities (B)
–51.8
–49 .7
0.2
0.0
0 .0
0 .0
–177.0
–228.6
–104 .9
–154 .7
Accounting policies for the
parent company
ACCOUNTING P OLI CIES FOR TH E PA R EN T COM PA NY
General
The financial statements of Nokian Tyres plc, domiciled in the city
of Nokia, have been prepared according to the Finnish Accounting
Standards (FAS) .
Pensions and coverage of pension liabilities
Pension contributions are based on periodic actuarial calculations
and are charged to the income statement .
In Finland the pension schemes are funded through payments
63
to a pension insurance company .
Equity
The acquisition cost of treasury shares repurchased by the Group is
recognised as a deduction in equity . The consideration received for
the treasury shares when sold, net of transaction costs and tax, is
included in equity .
Foreign currency items
Transactions in foreign currencies are recorded at the exchange
rates ruling at the dates of the transactions . At the end of the
accounting period unsettled balances on foreign currency
transactions and forward exchange contracts are valued at the
rates published by the European Central Bank as on the financial
statement date .
All foreign currency exchange gains and losses are entered
under financial income and expenses .
Direct taxes
The income statement includes direct taxes based on the taxable
profit and the change in deferred tax arising from temporary
differences . The untaxed reserves are shown in full in the balance
sheet, and the deferred tax liability is not recorded .
The deferred tax liability and assets are recorded as separate
items and are based on the prevailing corporate tax rate .
Inventory valuation
Inventories are valued at the lower of cost and net realisable value .
Cost is determined on a first in - first out (FIFO) basis . In addition
to the direct costs, an appropriate proportion of production
overheads is included in the value of finished goods .
Fixed assets and depreciation
Fixed assets are stated in the balance sheets at cost less
depreciation according to plan . The accumulated difference
between the total depreciation charged to the income statement
and depreciation according to plan is shown as a separate item in
untaxed reserves .
Depreciations according to plan are calculated on the basis
of the estimated useful life of the assets using the straight line
method .
The depreciation times are as follows:
Intangible assets
Buildings
Machinery and equipment
Other tangible assets
3–10 years
20–40 years
4–20 years
10–40 years
Land property, as well as investments in shares, are not regularly
depreciated .
Research and development
Research and development costs are charged to the other
operating expenses in the income statement in the year in which
they are incurred . Certain significant development costs with
useful life over three years are capitalised and are amortised on a
systematic basis over their expected useful lives . The amortisation
period is between three and five years .
Notes to the financial statement
of the parent company
64
NOTE S TO THE FINANC I AL STATEM EN TS
OF THE PARENT CO MPA NY
1. NET SALES BY SEGMENTS AND MARKET AREAS
3. DEPRECIATION
5. FINANCIAL INCOME AND EXPENSES
EUR million
Passenger Car Tyres
Heavy Tyres
Other
Total
Finland
Other Nordic countries
Baltic countries and Russia
Other European countries
North America
Other countries
Total
2019
493.4
184.3
0.0
677.7
133.2
199.4
49.5
169.1
115.4
11.0
677.7
2. WAGES, SALARIES AND SOCIAL EXPENSES
EUR million
Wages and salaries
Pension contributions
Other social expenses
Total
2019
52.5
7.8
1.6
61.8
2018
535 .8
172 .0
0 .0
707 .8
133 .4
185 .9
48 .9
186 .6
139 .1
13 .9
707 .8
2018
56 .9
9 .0
1 .6
67 .5
Remuneration of the members of the
Board of the Directors and the President on
accrual basis
of which incentives
1.2
0.0
1 .4
0 .2
No special pension commitments have been granted to the members of
the Board . The agreed retirement age of the President is 65 years . See
also Notes to Consolidated Financial Statements, note 33 Related party
transactions .
Personnel, average during the year
Total
2019
879
2018
842
EUR million
Depreciation according to plan by asset
category
Intangible assets
Buildings
Machinery and equipment
Other tangible assets
Total
Depreciation by function
Production
Selling and marketing
Administration
Other operating depreciation
Total
2019
2018
6.7
2.4
22.3
0.2
31.6
21.5
1.3
4.9
3.9
31.6
5 .1
2 .3
21 .6
0 .2
29 .2
20 .9
1 .0
4 .5
2 .8
29 .2
EUR million
Dividend income
From the Group companies
From others
Total
Interest income, non-current
From the Group companies
From others
Total
Other interest and financial income
From the Group companies
From others
Total
2019
2018
177.3
0.0
177.3
160 .8
0 .0
160 .8
11.6
0.0
11.6
6.6
1.9
8.5
10 .8
0 .0
10 .8
4 .4
0 .4
4 .8
4. AUDITORS' FEES
EUR million
Authorized public accountants KPMG Oy Ab
Exchange rate differences (net)
–9.4
–4 .4
2019
2018
Write-off, long-term investments
–60,0
0,0
Auditing
Tax consulting
Other services
Total
0.2
1.0
0.1
1.3
0 .1
0 .4
0 .2
0 .7
Interest and other financial expenses
To the Group companies
To others
Other financial expenses
Total
–4.2
32.9
–0.5
28.2
–4 .9
–1 .6
–0 .5
–7 .0
Total financial income and expenses
156.1
164 .9
Financial expenses 2019 include returned EUR 34 .4 million interest booked
in previous fiscal year based on tax reassesment decisions . Additionally
financial income 2019 include a gain of EUR 1 .4 million of interest from
returned taxes .
8. FIXED ASSETS
2019
2018
6. APPROPRIATIONS
EUR million
Change in accumulated depreciation in
excess of plan
Intangible assets
Buildings
Machinery and equipment
Other tangible assets
Total
Other appropriations
Group contributions
Total
Total appropriations
7. INCOME TAX
EUR million
Direct tax for the year
Direct tax from previous years
Change in deferred tax
Total
–0.1
–0.7
0.5
0.4
0.2
6.6
6.6
6.7
2019
–16.8
113.7
-
96.9
0 .5
–0 .6
1 .2
0 .0
1 .2
15 .0
15 .0
16 .2
2018
–22 .4
0 .0
-
–22 .4
In March 2019, the Supreme Administrative Court rejected an application
for leave to appeal from the Tax Recipients’ Legal Services Unit in Nokian
Tyres’ 2007–2010 tax dispute . The decision of the Administrative Court
in May 2018 is thus final and the tax dispute for the tax years 2007–2010
is completed . As a result of the decision of the Supreme Administrative
Court, the Tax Recipients’ Legal Services Unit withdrew their appeal
concerning Nokian Tyres’ tax year 2011 and the positive decision taken by
the Tax Administration in 2018 is thus final .
Adjustments to the financial reporting concerning tax years 2007–2010
and 2011 were done during the first quarter of 2019 . The decision of
the Supreme Administrative Court had no cash flow impact, as the Tax
Administration returned the additional taxes paid by the company already
in 2018 .
65
Intangible assets
Intangible
rights
Other
intangible
rights
Tangible assets
Land
property Buildings
Machinery
and
equipment
Other
tangible
assets
Advances and fixed
assets under
construction
60.1
0.4
0.0
4.4
64.9
–45.0
0.0
–5.9
–50.9
14.0
15 .1
2.7
2 .9
3.6
0.0
0.0
4.0
7.6
–3.2
0.0
–0.8
–4.1
3.5
0 .4
0.1
0 .1
0.9
0.0
0.0
0.2
1.1
0.0
0.0
0.0
0.0
1.1
0 .9
-
-
75.1
0.0
0.0
2.2
77.3
–38.0
0.0
–2.4
–40.4
36.8
37 .1
11.6
12 .3
462.8
21.8
–11.1
8.8
482.2
–375.7
1.1
–22.3
–396.8
85.4
87 .1
5.3
0.0
0.0
0.7
6.0
–3.9
0.0
–0.2
–4.1
1.9
1 .5
19.6
0.1
19 .1
–0 .3
31.1
45.7
0.0
–26.5
50.2
0.0
0.0
0.0
0.0
50.2
31 .1
Shares in Group
companies
Investments in
associates
Shares in other
companies
254.5
–3.5
180.1
–60.0
371.2
371.2
254 .5
4.3
-
-
4.3
4.3
4 .3
0.6
-
-
0.6
0.6
0 .6
EUR million
Accumulated cost, 1 Jan 2019
Increase
Decrease
Transfer between items
Accumulated cost, 31 Dec 2019
Accum . depr . acc . to plan 1 Jan 2019
Accum . depr . on disposals
Depreciations for the period
Accum . depr . acc .to plan , 31 Dec 2019
Carrying amount, 31 Dec 2019
Carrying amount, 31 Dec 2018
Accum . depreciation in excess of plan,
31 Dec 2019
Accum . depreciation in excess of plan,
31 Dec 2018
9. INVESTMENTS
EUR million
Accumulated cost, 1 Jan 2019
Decrease
Increase
Write-off
Accumulated cost, 31 Dec 2019
Carrying amount, 31 Dec 2019
Carrying amount, 31 Dec 2018
During the fiscal year two subsidiary mergers took place .
66
The Group or the Parent company themselves do not directly hold
any treasury shares .
Nokian Tyres has an agreement from 2017 with a third-party
service provider concerning the share-based incentive program for
key personnel . The third party owns Nokian Tyres shares related to
the incentive program until the shares are given to the participants
of the program . In accordance with IFRS, these repurchased
shares, 480,000 in 2017, have been reported as treasury shares in
the Consolidated Statement of Financial Position . On December
31, 2019, the number of these shares was 197,947 . This number of
shares corresponded to 0 .14% of the total shares and voting rights
in the company .
10. INVENTORIES
EUR million
Raw materials and supplies
Work in progress
Finished goods
Total
11. NON-CURRENT RECEIVABLES
EUR million
Loan receivables from the Group
companies
Loan receivables from others
Total long-term receivables
2019
72.3
3.1
25.6
101.0
2018
73 .1
2 .7
30 .3
106 .0
2019
2018
265.9
0.6
266.5
254 .7
0 .4
255 .1
13. SHAREHOLDERS' EQUITY
EUR million
2019
2018
Restricted shareholders' equity
Share capital, 1 January
Emissions
Share capital, 31 December
Share issue premium, 1 January
Emission gains
Share issue premium, 31 December
25.4
-
25.4
25 .4
-
25 .4
182.5
182 .5
-
-
182.5
182 .5
Total restricted shareholders' equity
207.9
207 .9
The members of the Board of Directors and the President have not
been granted loans .
Non-restricted shareholders' equity
12. CURRENT RECEIVABLES
EUR million
Receivables from the Group companies
Trade receivables
Loan receivables
Accrued revenues and deferred expenses
Total
Trade receivables
Other receivables
Accrued revenues and deferred expenses
Total
2019
2018
134.7
122.4
22.8
279.9
31.1
3.0
14.9
49.0
138 .4
131 .5
23 .6
293 .5
31 .6
4 .3
28 .3
64 .2
Paid-up unrestricted equity reserve,
1 January
Emission gains
Paid-up unrestricted equity reserve,
31 December
Retained earnings, 1 January
Dividends to shareholders
Retained earnings, 31 December
222.6
15.6
203 .9
18 .7
238.2
222 .6
470.6
–217.7
252.8
473 .1
–213 .7
259 .4
Treasury shares
–7.6
–10 .1
Profit for the period
290.4
211 .2
Total short-term receivables
328.9
357 .7
Total non-restricted shareholders' equity
773.9
683 .0
Significant items under accrued revenues
and deferred expenses
Financial items
Taxes
Social payments
Capital expenditure in factories
Goods and services rendered and not
invoiced, subsidiary
Other items
Total
8.0
6.6
0.8
0.6
18.0
3.8
37.7
28 .4
0 .0
0 .6
1 .3
18 .8
2 .9
51 .9
Total shareholders' equity
981.8
891 .0
Specification of the distributable funds,
31 December
Retained earnings
Treasury shares
Paid-up unrestricted equity reserve
Profit for the period
Distributable funds, 31 December
252.8
–7.6
238.2
290.4
773.9
259 .4
–10 .1
222 .6
211 .2
683 .0
16. CONTINGENT LIABILITIES
EUR million
On behalf of Group companies and
investments in associates
67
2019
2018
Guarantees
108.8
80 .4
The amount of debts and commitments
mortgaged for total EUR 103 .3 million
(2018: EUR 72 .7 million) .
On behalf of other companies
Guarantees
Other own commitments
Guarantees
Leasing and rent commitments
Payments due in 2020
Payments due in subsequent years
0.2
0 .2
45.0
43 .5
2.2
3.9
2 .0
5 .7
14. NON-CURRENT LIABILITIES
15. CURRENT LIABILITIES
EUR million
Interest-bearing
Loans from financial institutions
Total
Non-interest-bearing
Accrued expenses and deferred revenues
Total
Total non-current liabilities
2019
2018
EUR million
2019
2018
103.3
103.3
0 .0
103 .3
0.6
0.6
103.9
0 .2
0 .2
0 .2
Interest-bearing
Liabilities to the Group companies
Finance loans
Total
Non-interest-bearing
Liabilities to the Group companies
Trade payables
Accrued expenses and deferred revenues
Total
Trade payables
Liabilities to the others
Accrued expenses and deferred revenues
Total
172.6
172.6
224 .1
224 .1
49.9
17.1
67.0
36.1
1.8
33.5
71.4
48 .8
17 .5
66 .2
38 .4
104 .4
187 .4
330 .1
Total non-interest-bearing liabilities
138.4
396 .4
Total current liabilities
311.0
620 .5
Significant items under accrued expenses
and deferred revenues
Wages, salaries and social security
contributions
Annual discounts, sales
Taxes
Financial items
Commissions
Goods received and not invoiced
Warranty commitments
Group contributions
Other items
Total
12.2
10.8
0.0
6.2
8.3
3.4
0.9
6.6
2.3
50.6
12 .5
5 .8
149 .6
12 .5
5 .2
1 .2
0 .8
15 .0
2 .3
204 .8
68
17. DERIVATIVE FINANCIAL INSTRUMENTS
EUR million
Interest rate derivatives
Interest rate swaps
Notional amount
Fair value
Foreign currency derivatives
Currency forwards
Notional amount
Fair value
Currency options, purchased
Notional amount
Fair value
Currency options, written
Notional amount
Fair value
Interest rate and currency swaps
Notional amount
Fair value
Electricity derivatives
Electricity forwards
Notional amount
Fair value
2019
2018
100.0
–3.2
200 .0
–1 .6
463.8
0.8
450 .8
–4 .3
20.3
0.0
–
–
75.0
–2.7
27 .5
0 .3
37 .6
–0 .2
86 .0
18 .1
3.9
0.9
4 .8
2 .9
Unrealised fair value changes of interest rate and electricity
derivatives are not recognised in profit and loss . The interest
rate swap hedges the future interest payments of a loan from a
financial institution and the electricity forwards hedge the future
electricity purchase prices in Finland . The contractual terms of
these derivatives and the hedged items are congruent . The cash
flows of the interest rate swaps will occur during the next five years
and the cash flows of the electricity forwards during the three four
years .
The fair value of forward exchange contracts is measured using
the forward rates on the reporting date . The fair value of currency
options is calculated using an option valuation model .
The fair value of interest rate derivatives is determined as the
present value of the future cash flows based on market interest
rates on the reporting date .
The fair value of electricity derivatives is based on quoted
market prices in active markets on the reporting date .
18. ENVIRONMENTAL COMMITMENTS
AND EXPENSES
Expenses relating to environment are included to production costs .
The company has duly attended to environmental commitments
and has no information on material environmental liabilities . In
addition to the environmental aspects presented in the Annual
Report, Nokian Tyres issued a Corporate Social Responsibility
Report in spring 2019 .
Key financial indicators
CONSOLIDATED K EY FI NA NCI A L I ND ICATOR S
Figures in EUR million unless otherwise indicated
Net sales
growth, %
Operating margin (EBITDA)
Depreciation and amortisation
Operating profit (EBIT)
% of net sales
Profit before tax
% of net sales
Return on equity, %
Return on capital employed, %
Total assets
Interest-bearing net debt
Equity ratio, %
Gearing, %
Net cash from operating activities
Capital expenditure
% of net sales
R&D expenditure
% of net sales
Dividends (proposal)
Personnel, average during the year
PER SHARE DATA
Figures in EUR million unless otherwise indicated
Earnings per share, EUR
growth, %
Earnings per share (diluted), EUR
growth, %
Cash flow per share, EUR
growth, %
Dividend per share, EUR (proposal)
Dividend pay out ratio, % (proposal)
Equity per share, EUR
P/E ratio
Dividend yield, % (proposal)
Market capitalisation 31 December
Adjusted number of shares during the year, average, million units
diluted, million units
Number of shares 31 December, million units
Number of shares entitled to a dividend, million units
2019
1,595.8
0.0%
441.7
125.2
316.5
19.8%
336.7
21.1%
24.6%
17.6%
2,332.6
41.1
75.9%
2.3%
219.8
299.6
18.8%
22.7
1.3%
219.5
4,942
2019
2.89
78.1%
2.89
35.2%
3.89
–0.7%
1.58
54.9%
12.76
8.9
6.2%
3,560.6
138.17
138.38
138.72
138.92
2018
1,595 .6
1 .5%
465 .8
93 .4
372 .4
23 .3%
361 .7
22 .7%
20 .0%
23 .3%
2,092 .9
–315 .2
71 .0%
–21 .2%
536 .9
226 .5
14 .2%
20 .8
1 .3%
218 .1
4,790
2018
2 .15
32 .4%
2 .14
32 .5%
3 .91
127 .2%
1 .58
73 .9%
10 .79
12 .5
5 .9%
3,702 .9
137 .26
138 .14
137 .79
138 .07
2017
1,572 .5
13 .0%
463 .7
98 .3
365 .4
23 .2%
332 .4
21 .1%
15 .1%
22 .4%
1,877 .4
–208 .3
78 .2%
–14 .2%
234 .6
134 .9
8 .6%
21 .8
1 .4%
214 .2
4,630
2017
1 .63
–13 .0%
1 .61
–13 .2%
1 .72
–36 .3%
1 .56
96 .7%
10 .74
23 .3
4 .1%
5,188 .7
136 .25
137 .28
136 .75
137 .28
2016
1,391 .2
2 .3%
395 .2
84 .7
310 .5
22 .3%
298 .7
21 .5%
18 .7%
19 .9%
1,975 .7
–287 .4
73 .8%
–19 .7%
364 .4
105 .6
7 .6%
20 .3
1 .5%
208 .0
4,433
2016
1 .87
3 .6%
1 .86
3 .2%
2 .70
27 .4%
1 .53
82 .6%
10 .75
19 .0
4 .3%
4,814 .0
134 .86
135 .56
135 .68
135 .93
2015
1,360 .1
–2 .1%
378 .6
82 .6
296 .0
21 .8%
274 .2
20 .2%
19 .6%
20 .3%
1,754 .8
–209 .7
70 .8%
–16 .9%
283 .4
101 .7
7 .5%
18 .7
1 .4%
202 .0
4,421
2015
1 .80
15 .1%
1 .80
15 .0%
2 .12
–12 .7%
1 .50
83 .9%
9 .24
18 .4
4 .5%
4,458 .3
133 .63
133 .74
134 .39
134 .69
2014
1,389 .1
–8 .7%
398 .5
89 .8
308 .7
22 .2%
261 .2
18 .8%
16 .0%
19 .2%
1,797 .0
–164 .6
67 .5%
–13 .6%
323 .4
80 .6
5 .8%
16 .6
1 .2%
193 .5
4,272
2014
1 .56
12 .9%
1 .56
12 .9%
2 .43
1 .4%
1 .45
92 .9%
9 .07
13 .0
7 .1%
2,708 .1
133 .16
135 .10
133 .17
133 .47
2013
1,521 .0
–5 .7%
479 .0
93 .5
385 .5
25 .3%
312 .8
20 .6%
13 .0%
21 .8%
2,062 .9
–56 .4
67 .6%
–4 .1%
317 .6
125 .6
8 .3%
16 .1
1 .1%
193 .3
4,194
2013
1 .39
–45 .0%
1 .39
–43 .5%
2 .39
–19 .2%
1 .45
105 .2%
10 .45
25 .2
4 .2%
4,647 .7
132 .65
137 .62
133 .29
133 .34
2012
1,612 .4
10 .7%
496 .9
81 .9
415 .0
25 .7%
387 .7
24 .0%
25 .2%
24 .3%
2,019 .6
–65 .2
71 .2%
–4 .5%
388 .7
209 .2
13 .0%
16 .9
1 .0%
191 .9
4,083
2012
2 .52
5 .4%
2 .46
5 .8%
2 .96
64 .2%
1 .45
58 .0%
10 .89
11 .9
4 .8%
3,971 .9
131 .24
137 .39
131 .96
132 .32
2011
1,456 .8
37 .7%
451 .7
71 .6
380 .1
26 .1%
359 .2
24 .7%
29 .1%
27 .4%
1,875 .9
–3 .6
63 .2%
–0 .3%
232 .9
161 .7
11 .1%
15 .1
1 .0%
156 .6
3,866
2011
2 .39
78 .7%
2 .32
75 .8%
1 .80
–30 .1%
1 .20
50 .7%
9 .15
10 .4
4 .8%
3,224 .7
129 .12
135 .70
129 .61
130 .50
69
2010
1,058 .1
32 .5%
291 .5
69 .4
222 .2
21 .0%
208 .8
19 .7%
20 .0%
19 .9%
1,371 .6
0 .7
68 .4%
0 .1%
327 .2
50 .5
4 .8%
12 .7
1 .2%
83 .8
3,338
2010
1 .34
186 .9%
1 .32
168 .2%
2 .58
66 .0%
0 .65
49 .4%
7 .34
20 .5
2 .4%
3,505 .4
126 .75
132 .96
127 .70
128 .85
CONSOLIDATED K EY FI NA NCI A L I ND ICATOR S
70
Definitions
Return on equity, % =
Profit for the period
Total equity (average)
Return on capital employed, % =
Profit before tax + interest and other financial expenses
Total assets – non-interest-bearing debt (average)
Equity ratio, % =
Gearing, % =
Total equity
Total assets – advances received
Interest-bearing net debt
Total equity
Earnings per share, EUR =
Profit for the period attributable to the equity holders of the parent
Average adjusted number of shares1 during the year
Earnings per share (diluted2), EUR =
Profit for the period attributable to the equity holders of the parent
Average adjusted and diluted2 number1 of shares during the year
Cash flow per share, EUR =
Cash flow from operations
Average adjusted number of shares1 during the year
Dividend per share, EUR =
Dividend for the year
Number of shares entitled to a dividend
X 100
X 100
X 100
X 100
Dividend pay-out ratio, % =
Dividend for the year
Net profit
X 100
Equity per share, EUR =
Equity attributable to equity holders of the parent
Adjusted number of shares1 on the balance sheet date
P/E ratio =
Dividend yield, % =
Share price, 31 December
Earnings per share
Dividend per share
Share price, 31 December
1 without treasury shares
2 the share options affect the dilution as the average share market price for the financial year exceeds the defined subscription price
Information on Nokian Tyres’ share
71
IN FORMATION ON NOK IAN TY RE S ’ S H AR E
Share data
Market
Listing date
Currency
ISIN
Symbol
Reuters symbol
Bloomberg symbol
Industry
Sector
Industry
Number of shares, December 31, 2019
Nasdaq Helsinki
June 1, 1995
euro
FI0009005318
TYRES
TYRES .HE
TYRES:FH
OMXH Large Caps
Consumer goods
Automobiles and parts
138,921,750
Share capital and shares
The company has one class of shares, each share entitling the
shareholder to one vote and carrying equal rights to a dividend . On
December 31, 2019, the number of shares was 138,921,750 .
Read more: www .nokiantyres .com/company/investors/share/
share-information/ .
Dividend policy
Nokian Tyres’ dividend policy for 2019–2021 is to distribute a
dividend above 50% of net earnings .
Stock options 2013 directed at personnel
The Annual General Meeting held on April 11, 2013 decided to issue
stock options to the personnel of the Nokian Tyres Group and the
wholly owned subsidiary of Nokian Tyres plc . A deviation was made
from the shareholders’ pre-emptive subscription right because the
stock options were designed to be part of the Group’s incentive
and commitment program .
The stock option 2013 program has been defined as follows:
The purpose of the stock options is to encourage the personnel
to work on a long-term basis to increase shareholder value . The
maximum total number of stock options issued will be 3,450,000
and they will be issued gratuitously . Of the stock options, 1,150,000
are marked with the symbol 2013A, 1,150,000 are marked with the
symbol 2013B, and 1,150,000 are marked with the symbol 2013C .
The stock options entitle their owners to subscribe for a
maximum total of 3,450,000 shares in the Company or existing
shares held by the Company . The stock options issued can be
exchanged for shares constituting a maximum total of 2 .5% of
all of the Company’s shares and votes of the shares, after the
potential share subscription, if new shares are issued in the share
subscription .
The share subscription price for stock option 2013A is the
trade volume weighted average quotation of the Company’s share
on Nasdaq Helsinki between January 1 and April 30, 2013, i .e . EUR
32 .26, for stock option 2013B, the trade volume weighted average
quotation of the share on Nasdaq Helsinki between January 1
and April 30, 2014, i .e . EUR 29 .54, and for stock option 2013C, the
trade volume weighted average quotation of the share on Nasdaq
Helsinki between January 1 and April 30, 2015, i .e . EUR 24 .42 . The
share subscription price will be credited to the reserve for invested
unrestricted equity .
If the company distributes dividends or similar assets from
the reserves of unrestricted equity, the amount of the dividend
or distributable unrestricted equity shall be deducted from the
share’s subscription price of the stock options and decided after
the beginning of the period for the determination of the share
subscription price but before share subscription, as per the
dividend record date or the record date of the repayment of equity .
The share subscription period:
May 1, 2015–May 31, 2017 for stock options 2013A
May 1, 2016–May 31, 2018 for stock options 2013B
May 1, 2017–May 31, 2019 for stock options 2013C
As a result of the subscriptions with the 2013 stock options,
the number of shares in Nokian Tyres plc may increase by a
maximum of 3,450,000 new shares . The share subscription price
shall be credited to the paid-up unrestricted equity reserve . A share
ownership plan is incorporated into the 2013 stock options, obliging
the Group’s senior management to acquire the Company’s shares
with a proportion of the income gained from the stock options .
Read more: www .nokiantyres .com/company/investors/share/
stock-options/ .
Stock options listed on the main
list of Nasdaq Helsinki Oy
The share subscription period for stock options 2013C ended in May
2019 . The total number of stock options 2013C was 1,150,000 . Each
stock option 2013C entitled its holder to subscribe to one share in
Nokian Tyres plc .
72
NUMBER OF SHAREHOLDERS ON DECEMBER 31, 2019
SHARE TRADING VOLUMES ON NASDAQ
HELSINKI JAN 1, 2015–DEC 31, 2019
Number of shares
1–100
101–500
501–1,000
1,001–5,000
5,001–10,000
10,001–50,000
50,001–100,000
100,001–500,000
500,001–
Total
Number of
shareholders
% of
shareholders
Total number of
shares
% of share
capital
26,203
18,954
4,590
3,625
380
240
37
21
17
48 .5
35 .1
8 .5
6 .7
0 .7
0 .4
0 .1
0 .0
0 .0
1,278,325
4,881,327
3,562,696
7,544,432
2,747,221
4,982,042
2,563,971
4,957,458
106,404,278
54,067
100
138,921,750
0 .9
3 .5
2 .6
5 .4
2 .0
3 .6
1 .8
3 .6
76 .6
100
pcs million
8
7
6
5
4
3
2
1
0
SHAREHOLDER STRUCTURE ON DECEMBER 31, 2019
Nominee registered and non-Finnish holders
Households
General Government
Financial and insurance corporations
Non-profit institutions
Corporations
Total
Number of
shares
90,426,673
19,071,922
14,079,977
6,427,203
5,066,377
3,849,598
138,921,750
Read more: www .nokiantyres .com/company/investors/share/major-shareholders/
15
16
17
18
19
% of share
capital
SHARE PRICE DEVELOPMENT ON NASDAQ
HELSINKI JAN 1, 2015–DEC 31, 2019
65 .09
13 .73
10 .14
4 .63
3 .65
2 .77
100
EUR
50
40
30
20
10
15
16
17
18
19
Read more: www .nokiantyres .com/company/investors/share/share-performance/
Nokian Tyres Group structure
NO KIAN TYRES
GRO UP STRUCTURE
73
NOKIAN DÄCK AB
NOKIAN DEKK AS
NOKIAN TYRES AG
NOKIAN TYRES GMBH
NOKIAN TYRES CANADA INC.
NOKIAN TYRES U.S. HOLDINGS INC
NOKIAN TYRES PLC
VIANOR HOLDING OY
VIANOR AB
VIANOR AS
VIANOR OY
POSIBER OY
VIANOR INC.
NOKIAN TYRES INC.
NORDICWHEELS AB
1 %
99%
NOKIAN TYRES U.S. OPERATIONS LLC
NT TYRE MACHINERY OY
NOKIAN TYRES HOLDING OY
TAA NOKIAN SHINA BELARUS
OOO NOKIAN SHINA, Vsevolozhsk
OOO NOKIAN TYRES, Vsevolozhsk
OOO HAKKAPELIITTA VILLAGE
NOKIAN TYRES TRADING (SHANGHAI) CO LTD
NOKIAN TYRES S.R.O.
NOKIAN HEAVY TYRES LTD
LEVYPYÖRÄ OY
TOV NOKIAN SHINA
TOO NOKIAN TYRES
OOO HAKKA INVEST
NOKIAN TYRES SPAIN S.L.U
NOKIAN TYRES SP Z O.O.
KIINTEISTÖ OY NOKIAN NOSTURIKATU 18
KIINTEISTÖ OY NOKIAN RENGASKATU 4
NOKIANVIRRAN ENERGIA OY
32.3%
Signatures
SIGNATURE S FOR THE FI NAN CI AL
STATE MEN TS AND THE REPO RT
BY THE BOARD OF DI RECTO R S
74
Helsinki, 4 February 2020
Petteri Walldén
Veronica Lindholm
Heikki Allonen
Inka Mero
Raimo Lind
George Rietbergen
Kari Jordan
Pekka Vauramo
Hille Korhonen
CEO
Auditor’s Report
REP ORT ON T HE AUDIT OF
TH E FINANCIAL STATEMENTS
75
To the Annual General Meeting of Nokian Tyres plc
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Nokian Tyres plc
(business identity code 0680006-8) for the year ended
31 December 2019 . The financial statements comprise the
consolidated statement of financial position, income statement,
statement of comprehensive income, statement of changes in
equity, statement of cash flows and notes, including a summary
of significant accounting policies, as well as the parent company’s
balance sheet, income statement, statement of cash flows and
notes .
In our opinion
• the consolidated financial statements give a true and fair view
of the group’s financial position, financial performance and
cash flows in accordance with International Financial Reporting
Standards (IFRS) as adopted by the EU
• the financial statements give a true and fair view of the
parent company’s financial performance and financial position
in accordance with the laws and regulations governing the
preparation of financial statements in Finland and comply with
statutory requirements .
Our opinion is consistent with the additional report submitted
to the Audit Committee .
Basis for Opinion
We conducted our audit in accordance with good auditing practice
in Finland . Our responsibilities under good auditing practice are
further described in the Auditor’s Responsibilities for the Audit of
the Financial Statements section of our report .
We are independent of the parent company and of the group
companies in accordance with the ethical requirements that are
applicable in Finland and are relevant to our audit, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements .
In our best knowledge and understanding, the non-audit
services that we have provided to the parent company and group
companies are in compliance with laws and regulations applicable
in Finland regarding these services, and we have not provided any
prohibited non-audit services referred to in Article 5(1) of regulation
(EU) 537/2014 . The non-audit services that we have provided have
been disclosed in the notes to the financial statements .
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion .
Materiality
The scope of our audit was influenced by our application of
materiality . The materiality is determined based on our professional
judgement and is used to determine the nature, timing and extent
of our audit procedures and to evaluate the effect of identified
misstatements on the financial statements as a whole . The level of
materiality we set is based on our assessment of the magnitude of
misstatements that, individually or in aggregate, could reasonably
be expected to have influence on the economic decisions of the
users of the financial statements . We have also taken into account
misstatements and/or possible misstatements that in our opinion
are material for qualitative reasons for the users of the financial
statements .
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period . These matters were addressed
in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters . The significant risks of material
misstatement referred to in the EU Regulation No 537/2014 point (c)
of Article 10(2) are included in the description of key audit matters
below .
We have also addressed the risk of management override of
internal controls . This includes consideration of whether there was
evidence of management bias that represented a risk of material
misstatement due to fraud .
76
The key audit matter
How the matter was addressed in the audit
Revenue recognition and impairment of trade receivables
(Refer to Accounting policies for the consolidated financial statements, notes 20 and 28)
• Net sales, totaling EUR 1,595 .8 thousand, is a significant individual item in the financial statements and
comprises revenue recognised from sale of tires and related services for passenger cars, trucks and
heavy machinery .
• The trade receivables amounted to EUR 498 .3 million in the consolidated statement of financial
position as at 31 December 2019 .
Our audit procedures included, among others:
• We assessed and tested internal controls over recording sales transactions and recognising related
revenues, maintaining customer data as well as over the approval practices related to price changes,
among others .
• We assessed the Group’s credit control process and considered the related instructions and other
• The industry is marked by seasonal sales, long credit periods granted to clients and fluctuation of
documentation, both on Group level and in Group companies .
client-specific discounts based on volumes .
• Due to the large number of sales transactions, risk of errors related to revenue recognition and credit
loss risk associated with trade receivables, revenue recognition and impairment of trade receivables
are addressed as a key audit matter .
• We evaluated the level of credit risk and credit loss provisions recorded based on the information on
Group’s trade receivables and customers .
Foreign currency risks
(Refer to Accounting policies for the consolidated financial statements, notes 9, 28 and 30)
• A significant part of the Group’s operations are derived from Russia, and the exchange rate between
Our audit procedures included, among others:
Euro and Rouble may fluctuate significantly .
• We obtained an understanding of the centralised Group Treasury and the methods and policies used
• The Group has invested in a production plant in the United States of America . The investment project
by financial management to manage exchange rate risks .
and related financing arrangements are carried out in US dollars by a subsidiary .
• In the Russian and US subsidiaries there is a significant amount of equity in the local currency,
and the development of Rouble/US dollar exchange rate may have a significant impact on the
consolidated equity .
• We evaluated the appropriateness of measurement of items denominated in foreign currencies in
the financial statements .
Responsibilities of the Board of Directors and the
Managing Director for the Financial Statements
The Board of Directors and the Managing Director are responsible
for the preparation of consolidated financial statements that
give a true and fair view in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU, and of financial
statements that give a true and fair view in accordance with
the laws and regulations governing the preparation of financial
statements in Finland and comply with statutory requirements . The
Board of Directors and the Managing Director are also responsible
for such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error .
In preparing the financial statements, the Board of Directors
and the Managing Director are responsible for assessing the
parent company’s and the group’s ability to continue as going
concern, disclosing, as applicable, matters relating to going
concern and using the going concern basis of accounting . The
financial statements are prepared using the going concern basis
of accounting unless there is an intention to liquidate the parent
company or the group or cease operations, or there is no realistic
alternative but to do so .
Auditor’s Responsibilities for the Audit
of Financial Statements
Our objectives are to obtain reasonable assurance on whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion . Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with good auditing practice will always
detect a material misstatement when it exists . Misstatements can
arise from fraud or error and are considered material if, individually
or in aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of the financial
statements .
As part of an audit in accordance with good auditing practice,
we exercise professional judgment and maintain professional
skepticism throughout the audit . We also:
• Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion . The risk of not detecting a
material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal control .
• Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the parent company’s or the group’s
internal control .
• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures
made by management .
• Conclude on the appropriateness of the Board of Directors’
and the Managing Director’s use of the going concern basis of
accounting and based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions
that may cast significant doubt on the parent company’s or the
group’s ability to continue as a going concern . If we conclude that
a material uncertainty exists, we are required to draw attention
in our auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify
our opinion . Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report . However, future
events or conditions may cause the parent company or the
group to cease to continue as a going concern .
• Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and
events so that the financial statements give a true and fair view .
• Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities within
the group to express an opinion on the consolidated financial
statements . We are responsible for the direction, supervision and
performance of the group audit . We remain solely responsible for
our audit opinion .
We communicate with those charged with governance
regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit .
We also provide those charged with governance with
a statement that we have complied with relevant ethical
requirements regarding independence, and communicate with
them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable,
related safeguards .
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the financial statements of the current
period and are therefore the key audit matters . We describe
these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public
interest benefits of such communication .
77
Other Reporting Requirements
Information on our audit engagement
Nokian Tyres plc has become a PIE entity in June 1995 . KPMG Oy Ab
has been auditor during all the years the company has been a PIE
entity .
Other Information
The Board of Directors and the Managing Director are responsible
for the other information . The other information comprises the
report of the Board of Directors and the information included in
the Annual Report, but does not include the financial statements
and our auditor’s report thereon . We have obtained the report of
the Board of Directors prior to the date of this auditor’s report, and
the Annual Report is expected to be made available to us after that
date . Our opinion on the financial statements does not cover the
other information .
In connection with our audit of the financial statements, our
responsibility is to read the other information identified above and,
in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially
misstated . With respect to the report of the Board of Directors,
our responsibility also includes considering whether the report of
the Board of Directors has been prepared in accordance with the
applicable laws and regulations .
In our opinion, the information in the report of the Board
of Directors is consistent with the information in the financial
statements and the report of the Board of Directors has been
prepared in accordance with the applicable laws and regulations .
If, based on the work we have performed on the other
information that we obtained prior to the date of this auditor’s
report, we conclude that there is a material misstatement of this
other information, we are required to report that fact . We have
nothing to report in this regard .
Other opinions
We support that the financial statements should be adopted .
The proposal by the Board of Directors regarding the use of
the distributable funds shown in the Financial Statements is in
compliance with the Limited Liability Companies Act . We support
that the Members of Board of Directors and the Managing Director
should be discharged from liability for the financial period audited
by us .
Helsinki 21 February 2020
KPMG OY AB
LASSE HOLOPAINEN
Authorised Public Accountant, KHT
Corporate Governance Statement
CO RPORATE GOV ERN AN CE STATE ME N T
78
I Introduction
During 2019 Nokian Tyres plc (hereinafter referred to as
“Nokian Tyres” or the “Company”) complied in full with the
Corporate Governance Code published by the Securities
Market Association that entered into force on January 1, 2016
(the “Corporate Governance Code 2015”) . As of January 1,
2020 Nokian Tyres follows the Corporate Governance Code
published by the Securities Market Association that entered
into force on January 1, 2020 (the “Corporate Governance
Code 2020”) and the Company complies with the recommen-
dations in the said code . This Corporate Governance State-
ment has been prepared in accordance with the Corporate
Governance Code 2020 . The Corporate Governance Code 2015
and 2020 are available in their entirety at www .cgfinland .fi/en/ .
The Company follows the Finnish Limited Liability Companies
Act, laws and regulations relating to publicly listed companies
in Finland, the Articles of Association, the charters of the
Board of Directors and the committees, the Nasdaq Helsinki
rules and regulations, and the orders and instructions from
the European Securities and Markets Authority as well as the
Financial Supervisory Authority .
The Company publishes its Corporate Governance
Statement as a separate document and as part of the annual
report . The statement also includes a Report of the Salaries
and Remuneration, which has been prepared in accordance
with the Corporate Governance Code 2015 as permitted by
applicable laws and the Corporate Governance Code 2020 .
The statement is available on the Company’s website at
www .nokiantyres .com under Investors – Corporate Governance .
The Company’s corporate governance is based on the
General Meeting, the Articles of Association, the Board of
Directors, the President and CEO, the group’s management
team, the legislation and regulations mentioned hereinabove
as well as the group’s policies, procedures, and practices . The
Board of Directors has approved the Corporate Governance
Statement . The Company’s auditor verifies that the state-
ment and its related descriptions of the internal reporting
controls and risk management correspond to the financial
reporting process . The statement will not be updated during
the financial period; however, up-to-date information will be
updated on the Company’s website at www .nokiantyres .com/
company/investors/ .
II Descriptions concerning governance
Nokian Tyres is a Finnish limited liability company and its
registered place of business is Nokia . The parent company
Nokian Tyres and its subsidiaries form the Nokian Tyres Group .
The administrative bodies of the parent company Nokian
Tyres plc, i .e . the General Meeting, Board of Directors and
President and CEO, are responsible for the administration and
operation of the Nokian Tyres Group . The General Meeting
elects the members of the Board of Directors, and the Board
of Directors appoints the Company’s President and CEO . The
President and CEO is assisted by the management team in
leading the Company’s operations .
Nokian Tyres’ administrative organization
Shareholders
Auditors
General Meeting
Board
Internal control
President and CEO
Management Team
Audit Committee
Personnel and
Remuneration
Committee
General Meeting
The Company’s highest decision-making power is held by the
General Meeting, whose tasks and procedures are outlined in
the Limited Liability Companies Act and the Articles of Asso-
ciation . The Annual General Meeting decides on such matters
as the confirmation of the Company’s annual accounts, profit
distribution, and discharging the Board of Directors and the
President and CEO from liability . Furthermore, the Annual
General Meeting decides on the number of members in the
Board of Directors, the selection of the board members and
the auditor, and their remuneration . In addition, the General
Meeting can make decisions on questions such as amend-
ments to the Articles of Association, share issues, granting
warrants, and acquisition of the company’s own shares .
The Annual General Meeting is held by the end of May of
each year on a date determined by the Board of Directors,
either at the Company’s registered place of business or in
the city of Tampere or Helsinki . An extraordinary general
meeting is summoned whenever the Board considers this to
79
be necessary or if an auditor or a group of shareholders with a
holding of a total of at least one-tenth of all the shares in the
Company requires it in writing in order to address a particular
issue .
According to law, a shareholder has the right to have
a matter falling within the competence of the General
Meeting dealt with by the General Meeting, if the shareholder
so demands in writing from the Board of Directors well in
advance of the General Meeting, so that the matter can be
mentioned in the notice to the meeting . The shareholder shall
submit the request for having a matter to be dealt with by
the General Meeting by the date indicated on the Company’s
website .
The Articles of Association state that the notice of a
General Meeting shall be published on the Company’s website .
In addition, the Company publishes the notice of a General
Meeting as a stock exchange release . The invitation lists the
agenda of the meeting .
The Company’s Articles of Association are available on
the Company’s website at www .nokiantyres .com/company/
investors/ .
Shareholders are entitled to participate in the General
Meeting if they are registered in the Company’s shareholders’
register, maintained by Euroclear Finland Oy, on the record
date separately indicated by the Company . A holder of
nominee registered shares can be temporarily registered in
the shareholders’ register of the Company for purposes of
participation in the General Meeting .
According to the Corporate Governance Code 2015 and
2020, the Chairman of the Board, the Board members and the
President and CEO must be present at the General Meeting,
and the auditor must be present at the Annual General
Meeting . Board member candidates must be present at the
General Meeting deciding on their election .
The Annual General Meeting for 2019 took place on 9
April 2019 at the Tampere Hall in Tampere . The meeting
confirmed the consolidated financial statements, discharged
the Board members and the President and CEO from liability
for the fiscal year 2018 and decided to amend the Articles of
Association of the Company . All of the documents related to
the Annual General Meeting are available on the Company’s
website at www .nokiantyres .com/company/investors .
The Annual General Meeting for 2020 will take place on 2
The Company has a separate Audit Committee and a
April 2020 at 4:00 p .m . in Tampere .
Personnel and Remuneration Committee .
Board of Directors
Operation of the Board of Directors
The Board is responsible for the Company’s corporate
governance and the appropriate organization of its operations
pursuant to the Finnish Limited Liability Companies Act and
other regulations . The Board holds the general authority in
company-related issues, unless other company bodies have
the authority under the applicable legislation or the Articles
of Association . The policies and key tasks of the Board are
defined in the Finnish Limited Liability Companies Act, the
Articles of Association, and the Board’s charter . The key tasks
include:
• Approving consolidated financial statements,
half year reports and interim reports
• Presenting matters to the General Meeting
• Appointing and dismissing the President and CEO
• Organization of financial control .
In addition, as defined in the Board charter, the Board
deals with, and decides on, matters of principle as well as
issues that carry financial and business significance, such as:
• Group and business unit level strategies
• The Group’s action, budget, and investment plans
• The Group’s risk management and reporting procedures
• Decisions concerning the structure
and organization of the Group
• Significant individual investments, acquisitions,
divestments, and reorganizations
• The Group’s insurance and financing policies
• Reward and incentive schemes for the Group’s management
• Appointing Board committees, and
• Monitoring and evaluating the actions
of the President and CEO .
The President and CEO of Nokian Tyres is in charge
of ensuring that the Board members have the necessary
and sufficient information on the Company’s operations .
The Board assesses its activities and operating methods
by carrying out a self-evaluation once a year . Members of
the Board and the President and CEO will not participate in
making a decision where the law states that they must be
disqualified .
Composition of the Board
According to the Articles of Association of Nokian Tyres,
the Board of Directors comprises no fewer than four and
no more than eight members . The proposal regarding the
composition of the Board for the General Meeting is prepared
by the Personnel and Remuneration Committee . The number
of Board members and the composition of the Board shall
be such that the Board is capable of efficiently carrying out
its tasks, while taking into account the requirements set by
the Company’s operations and its stage of development .
The elected Board members must be qualified for the task
and able to devote a sufficient amount of time for the Board
duties .
Members of the Board are elected at the Annual General
Meeting for a one-year term of office that begins after the
closing of the Annual General Meeting and ends at the end
of the next Annual General Meeting . The Board of Directors
appoints a Chairman and a Deputy Chairman from among its
members . The remuneration payable to the Board members is
also decided at the Annual General Meeting .
Information on the Board members
The Annual General Meeting on 9 April 2019 elected 8 Board
members . All the Board members, Heikki Allonen, Kari Jordan,
Raimo Lind, Veronica Lindholm, Inka Mero, George Rietbergen,
Pekka Vauramo and Petteri Walldén were re-elected . In the
constituent meeting held after the Annual General Meeting,
the Board appointed Petteri Walldén as its Chairman and Kari
Jordan as the Deputy Chairman .
80
Petteri Wallden, Chairman of the Board (b. 1948)
Member of the Board since 2005 . Member of the Personnel
and Remuneration Committee .
Heikki Allonen (b. 1954)
Member of the Board since 2016 . Member of the Audit
Committee .
Veronica Lindholm (b. 1970)
Member of the Board since 2016 . Member of the Personnel
and Remuneration Committee .
Education: Master of Science (Technology)
Full-time position: CEO, Wapiti Oy
Education: Master of Science (Technology)
Full-time position: CEO, Hemmings Oy Ab
Education: Master of Science (Economics)
Full-time position: Professional board member
Key experience:
2007–2010 Alteams Oy, President and CEO;
2001–2005 Onninen Oy, President and CEO;
1996–2001 Ensto Oy, President and CEO;
1990–1996 Nokia Kaapeli Oy, President and CEO;
1987–1990 Sako Oy, President and CEO .
Key positions of trust:
Chairman of the Board: Savonlinna Opera Festival
Deputy Chairman of the Board: Tikkurila Oyj
Member of the Board: Alteams Oy and Componenta
Corporation
Kari Jordan, Deputy Chairman of the Board (b. 1956)
Member of the Board since 2018 . Chairman of the Personnel
and Remuneration Committee .
Education: Master of Science (Economics), Vuorineuvos
(Finnish honorary title)
Full-time position: Chairman of the Board, Outokumpu Oyj
Key experience:
2006–2018 Metsä Group, President and CEO;
2004–2017 Metsäliitto Cooperative, CEO;
1981–2004 Several management positions in the banking and
financial sector at Citibank, OKO bank, KOP bank and Nordea
Group .
Key positions of trust:
Chairman of the Board: Outokumpu Oyj
Vice Chairman of the Board: Nordea Bank Abp
Key experience:
2016– Hemmings Oy Ab, President and CEO;
2008–2016 Patria Oyj, President and CEO;
2004–2008 Fiskars Corporation, President and CEO;
2001–2004 SRV Group Plc, President and CEO;
1992–2001 Wärtsilä Oy, Member of the Board of Management;
1991–1992 Metra Oy Ab, VP of Development;
1986–1991 Oy Lohja Ab, VP, Corporate Development and
Planning .
Key experience:
2015–2019 Finnkino Oy, CEO;
2013–2015 Mondelez Finland, CEO;
2009–2013 Walt Disney Company Nordic, VP, Chief Marketing
Officer;
2008–2009 Walt Disney Studios, Head of Digital Distribution
EMEA;
2000–2008 Walt Disney International Nordic, Marketing
Director .
Key positions of trust:
Vice Chairman of the Board: VR Group Oy
Member of the Board: Detection Technology Plc
Member of the Board: Savox Oy Ab
Raimo Lind (b. 1953)
Member of the Board since 2014 . Chairman of the Audit
Committee .
Education: Master of Science (Economics)
Full-time position: Professional board member
Key experience:
2005–2013 Wärtsilä Corporation, Senior Executive Vice
President and deputy to the CEO;
1998–2004 Wärtsilä Corporation, CFO;
1992–1997 Tamrock Oy; Coal division president, Service division
president, CFO;
1990–1991 Scantrailer Ajoneuvoteollisuus Oy; Managing
Director;
1976–1989 Service division, Vice president, Wärtsilä Singapore
Ltd, MD, Diesel division, VP Group Controller, Wärtsilä .
Key positions of trust:
Chairman of the Board: Nest Capital
Member of the Board: Nordkalk Oy and HiQ AB
Inka Mero (b. 1976)
Member of the Board since 2014 . Member of the Audit
Committee .
Education: Master of Science (Economics) .
Full-time position: Managing Partner & Founder, Voima
Ventures VC Fund
Key experience:
2019– Voima Ventures I & II VC Fund, Managing Partner &
Founder;
2016–2019 Pivot5 Oy (Industryhack Oy), Co-founder and
Chairwoman;
2008–KoppiCatch Oy, Co-founder and Chairwoman;
2006–2008 Playforia Oy, CEO;
2005–2006 Nokia Corporation, Director;
2001–2005 Digia Plc, VP, Sales and Marketing;
1996–2001 Sonera Corporation, Investment Manager .
Key positions of trust:
Chairman of the Board: KoppiCatch Oy and Voima
Ventures Oy
Member of the Board: Fiskars Corporation Plc, Dispelix Oy,
Infinited Fiber Company Oy, Elfys Oy, Tactotek Oy and
Klevu Oy
81
George Rietbergen (b. 1964)
Member of the Board since 2017 .
Education: Master of Business Administration
Full-time position: 5Square Committed Capital, Partner
Key experience:
2017– 5Square Committed Capital, Partner;
2016–2017 Nokian Tyres plc, Advisor to the Board;
2015–2016 Arriva Netherlands, COO;
2013–2015 Goodyear Dunlop Tyres, Group Managing Director,
DACH, Germany;
2012–2013 Goodyear Dunlop Tyres, Vice President, Commer-
cial Tires, EMEA Belgium;
2010–2012 Goodyear Dunlop Tyres, Group Managing Director,
UK & Ireland UK;
2005–2010 Goodyear Dunlop Tyres, General Manager, Benelux
Netherlands;
2001–2005 Goodyear Dunlop Tyres, Director Retail and
E-Business EMEA, Netherlands;
1999–2001 KLM Royal Airlines, Director of Ebusiness .
Pekka Vauramo (b. 1957)
Member of the Board since 2018 . Member of the Audit
Committee .
Education: Master of Science (Technology)
Full-time position: Metso Corporation, President and CEO
Key experience:
2013–2018 Finnair Plc, President and CEO;
2007–2013 Various management positions at Cargotec;
1995–2007 Various management positions at Sandvik AB;
1985-1995 Various management positions at Tamrock
Corporation .
Key positions of trust:
Vice Chairman of the Board: Technology Industries of Finland
Member of the Board: Confederation of Finnish Industries
Independence of the Board members
Pursuant to the recommendation of the Corporate Gover-
nance Code 2015 and 2020, the Board assesses the inde-
pendence of its members annually . According to the Board’s
estimate, all Board members are independent of the Company
and its major shareholders .
Shares owned by Board members and
their controlled corporations
Nokian Tyres holdings of the
Company’s current Board members
Number of shares,
December 31, 2019
Petteri Walldén, chairman
Kari Jordan, deputy chairman
Heikki Allonen, member
Raimo Lind, member
Veronica Lindholm, member
Inka Mero, member
George Rietbergen, member
Pekka Vauramo, member
Total
22,322
2,104
2,595
4,955
2,595
3,988
1,932
1,402
41,893
The Board members’ attendance at meetings
The Board convened a total of 11 times in 2019 .
Attendance at meetings by the
Company’s Board members in 2019
Attendance/
meetings
Petteri Walldén, chairman
Kari Jordan, deputy chairman
Heikki Allonen, member
Raimo Lind, member
Veronica Lindholm, member
Inka Mero, member
George Rietbergen, member
Pekka Vauramo, member
11/11
11/11
11/11
10/11
11/11
11/11
10/11
10/11
Diversity of the Board of Directors
The Company sees diversity as a success factor enabling the
achievement of Nokian Tyres’ strategic goals and business
growth . In practice, diversity means different factors such as
gender, age, nationality, and the complementary expertise
of the members, their education and experience in different
professional areas and industrial sectors in which the Group
mainly operates . Leadership experience and personal capaci-
ties are also considered .
The Board shall have no fewer than two representatives
from both genders . If two candidates are equally qualified,
the candidate from the minority gender has priority . This goal
has been met in the current Board . The Board members have
significant experience in industry, consumer business and
financial management, among other things . The status and
progress of diversity will be monitored by the Personnel and
Remuneration Committee in its self-assessment discussion .
The principles concerning the selection of the Board and
its diversity are visible on the Company’s website at
www .nokiantyres .com/company/investors/ .
Committees of the Board
The Board will decide on the committees and their chairper-
sons and members each year during the constituent meeting .
In 2019, the Board had two committees: The Personnel and
Remuneration Committee and the Audit Committee . Each
committee must include no fewer than three members having
the competence and expertise necessary for working in the
committee . At least one member of the Audit Committee
must have expertise in accounting or auditing . The majority of
the members of the Personnel and Remuneration Committee
must be independent of the Company . The majority of the
members of the Audit Committee must be independent of
the Company, and at least one member must be independent
of the Company’s major shareholders . The President and CEO
and the other members of the Company management team
cannot act as members of the Personnel and Remuneration
Committee .
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Personnel and Remuneration Committee
The Personnel and Remuneration Committee prepares a
proposal to the General Meeting on the members to be
appointed to the Board of Directors and the remuneration
to be paid to the Board members . In addition, the committee
prepares a proposal to the Board on the Company’s President
and CEO and on the salary and other incentives paid to
the President and CEO . The Personnel and Remuneration
Committee also prepares a proposal to the Board on the
nominations, salaries and other incentives of the Group
Management Team members . This Committee also reviews
and submits a proposal to the Board on the allocation and
criteria of the Nokian Tyres share-based incentive plans,
and on the other incentive plans . In addition, the key duties
of the Personnel and Remuneration Committee will as of 1
January 2020 include the preparation of remuneration policy
and remuneration report for the Board and the President
and CEO in accordance with applicable laws and regulations .
The committee has no independent decision-making power;
collective decisions are made by the Board, which is respon-
sible for carrying out the tasks assigned to the committee .
The committee receives access to the information
regarding factors affecting the assessment of the indepen-
dence of new member candidates and the results from the
assessment of the Board’s work .
In 2019, the members of the Personnel and Remuneration
Committee were Kari Jordan (Chairman), Veronica Lindholm,
and Petteri Walldén .
financial statements as well as any significant changes in the
recording principles and the items valued in the balance sheet .
The committee also processes the general description of the
mechanisms of internal auditing and risk management of the
financial reporting process, which forms part of the Corporate
Governance Statement . The committee follows the statutory
auditing of the financial statement and the consolidated
financial statements and assesses the independence of the
statutory auditor and the offering of services other than
auditing services by the auditor . Furthermore, the committee
will handle the auditor’s report and possible audit minutes as
well as the supplementary report presented by the auditor to
the committee . The committee prepares the draft resolution
on selecting the auditor . In addition, the Audit Committee
monitors and assesses how agreements and other legal acts
between the Company and its related parties meet the requi-
rements of the ordinary course of business and arm’s -length
terms in accordance with applicable laws and regulations . The
Audit Committee must have the expertise and experience
required for its tasks .
In 2019, the members of the Audit Committee were Raimo
Lind (Chairman), Heikki Allonen, Inka Mero, and Pekka Vauramo .
The Company’s chief auditor participates in the committee’s
meetings .
The committee assembled 5 times in 2019 .
All committee members are independent of the Company
and of all major shareholders in the Company .
The committee assembled 5 times in 2019 .
All committee members are independent of the Company
The attendance of Board members at
committee meetings in 2019
and of all major shareholders in the Company .
President and CEO and his/her duties
The President and CEO conducts the group’s business and
manages the Company operations in accordance with the
Finnish Limited Liability Companies Act and the instructions
and guidelines provided by the Board of Directors . The
President and CEO is responsible for informing the Board
of Directors regarding the development of the Company’s
business and financial situation . The President and CEO
prepares the Company´s strategy and objectives for the Board
of Directors . The President and CEO is also responsible for
implementing the approved strategy and plans . The President
and CEO is responsible for ensuring the legal compliance of
the Company’s bookkeeping and for arranging reliable asset
management . The President and CEO is elected by the Board
of Directors .
Hille Korhonen, Lic . Sc . (Tech) has been working as the
Company’s President and CEO since June 1, 2017 .
Hille Korhonen (b. 1961)
Education: Licentiate of Science (Technology)
Position: President and CEO June 1, 2017–
Key experience:
2013−5/2017 Alko Oy, President and CEO;
2008−2012 Fiskars Corporation, Vice President, Operations;
2003−2007 Iittala, Group Director, Operations;
1996−2003 Nokia Corporation, Management duties for
logistics;
1993−1996 Outokumpu Copper Plc, Manager, Logistics and
Marketing Development .
Audit Committee
The Audit Committee assists the Board of Directors in its
regulatory duties and reports to the Board . The committee
has no independent decision-making power; collective
decisions are made by the Board, which is then responsible for
carrying out the tasks assigned to the committee .
According to the committee charter, the committee
controls that bookkeeping, financial administration, financing,
internal control, internal auditing, audit of the accounts, and
risk management are appropriately arranged in the Company .
The committee follows and assesses the reporting process for
Petteri Walldén
Kari Jordan
Heikki Allonen
Raimo Lind
Veronica Lindholm
Inka Mero
George Rietbergen
Pekka Vauramo
Personnel and
Remuneration Committee
Audit
Committee
Key positions of trust: -
5/5
5/5
5/5
5/5
4/5
5/5
4/5
83
Nokian Tyres holdings of the President and CEO and
controlled corporations, December 31, 2019
Responsibility area, year of birth, education and Nokian Tyres holdings of the Group’s
management team and controlled corporations, December 31, 2019
Hille Korhonen, President & CEO
Number of
shares
47,279
Other management
The Group’s management team is responsible for assisting
the President and CEO in preparing the Company’s strategy
and in operative management, and for discussing matters
that involve substantial financial or other impacts, such as
corporate transactions and organization changes . Members of
the management team carry the main responsibility for their
business areas and functions . The management team has no
activities based on the applicable legislation or the Articles of
Association . According to the Group’s meeting practices, the
management team assembles once per month . In addition
to the President and CEO, the heads of the business units,
business areas and service functions participate in the
meetings .
Päivi Antola
Corporate Communications & Investor Relations
Tytti Bergman
People & Culture
Mark Earl
Americas Business Area
Esa Eronen
Supply Chain & Sustainability
Anna Hyvönen
Nordics Business Area and Vianor Business Unit
Teemu Kangas-Kärki
Finance
Jukka Kasi
Products & Marketing
Bahri Kurter
Central Europe Business Area
Andrei Pantioukhov
Russia and Asia Business Area
Manu Salmi
Nokian Heavy Tyres Business Unit
Timo Tervolin
Strategy & M&A
Susanna Tusa
Legal & Compliance
Frans Westerlund
IT & Processes
Year of
birth
1971
1969
1960
1957
1968
1966
1966
1966
1972
1975
1977
1972
1966
Education
Number
of shares
Master of Arts, CEFA
1,264
Master of Science (Economics and
Business Administration)
BS in Business Administration,
Computer Science
Technology Engineer
Licentiate of Science
(Technology)
Master of Science (Economics and
Business Administration)
Master of Science (Technology)
2,996
5,180
19,139
21,715
7,014
4,420
Master of Arts (Economics)
-
Master of Business Administration
69,359
Master of Military Sciences,
Master of Science (Economics), MBA
Master of Science (Technology), Master of Science
(Economics and Business Administration)
Master of Laws,
Master of International Business
Master of Science (Economics and
Business Administration)
26,601
6,385
6,546
4,042
More detailed information concerning the Group’s management team is available on the Company’s website at
www .nokiantyres .com/company/investors/corporate-governance/the-groups-management-team/ .
III Descriptions of mechanisms of internal
control and risk management
Internal control
The purpose of the group’s internal control mechanisms is
to ensure that the Company’s operation is in line with the
applicable laws and regulations and the Company’s Code
of Conduct . As regards the financial reporting process, the
purpose of the Group’s internal control mechanisms is to
ensure that the financial reports released by the Company
have been compiled in accordance with the accounting prin-
ciples applied by the Company and that they contain essen-
tially correct information on the Group’s financial position, and
to ensure that financial reporting is accurate and reliable . The
Group has defined group-level policies and instructions for the
key operative units specified below in order to ensure efficient
and profitable Company operations .
The Group’s business consists of the Passenger Car Tyres,
Heavy Tyres, and Vianor business units . The Passenger Car
Tyres is further divided into the Americas, Europe, Nordics and
Russia and Asia business areas . Heavy Tyres and the Passenger
Car Tyres business areas are responsible for their own
operations, financial results, risk management, balance sheet
and investments, supported by the different service functions .
The Group’s sales companies serve as product distribution
channels in local markets . The tire retail chain is organized into
a sub-group . The tire outlets operating in different countries
are part of the sub-group .
Subsidiaries are responsible for their daily operations and
administration . They report to the director responsible for
the said business area, while the Vianor chain reports to the
director of the Vianor business unit .
The Board of Directors is responsible for the functionality
of the internal control mechanisms, which are managed by
the Company’s management and implemented throughout
the organization . Internal control is an integral part of all
activities of the Group at all levels . The Company’s operative
management bears the main responsibility for operational
control . Every supervisor is obliged to ensure sufficient control
over the activities belonging to his or her responsibility and to
continuously monitor the functionality of the control mecha-
nisms . The Chief Financial Officer is responsible for organizing
financial administration and reporting processes and the
internal control thereof . The parent company’s Finance
and Control unit is responsible for internal and external
accounting; its tasks include producing financial information
concerning the different areas and ensuring the accuracy of
this information .
The preparation process of the consolidated financial
statements (IFRS), the related control measures, and the
task descriptions and areas of responsibility related to the
reporting process are defined . The Company’s Finance and
Control unit produces the consolidations and information
for the group level and the different areas . Each legal entity
within the Group produces its own information in compliance
with the instructions provided and in line with local legislation .
The Group’s Finance and Control unit is centrally responsible
for the interpretation and application of financial reporting
standards as well as for monitoring compliance with these
standards .
Effective internal control requires sufficient, timely, and
reliable information in order for the Company’s management
to be able to monitor the achievement of targets and the
efficiency of the control mechanisms . This refers to financial
information as well as other kinds of information received
through IT systems and other internal and external channels .
The instructions on financial administration and other matters
are shared on the Company’s intranet for all of those who
need them, and training is organized for personnel with regard
to these instructions when necessary . Communication with
the business units is continuous . The Company’s financial
performance is internally monitored by means of monthly
reporting complemented with updated forecasts . The
financial results are communicated to Company personnel
immediately after the official stock exchange releases have
been published .
84
Investor Communications
The goal of Nokian Tyres’ investor relations is to regularly and
consistently provide the stock market with essential, correct,
sufficient, and up-to-date information that is subsequently
used to determine the share value . The operations are based
on equality, openness, and accuracy .
Risk management
The Group has adopted a risk management policy, approved
by the Board of Directors, which supports the achievement
of strategic goals and ensures continuity of business . The
Group’s risk management policy focuses on managing
both the risks pertaining to business opportunities and the
risks affecting the achievement of the Group’s goals in the
changing operating environment .
The risks are classified as strategic, operational, financial
and hazard risks . Strategic risks are related to customer rela-
tionships, competitors’ actions, political and legislative risks,
reputation, country risks, brand, product development, climate
change and sustainability risks and investments . Operational
risks arise as a consequence of shortcomings or failures in
the Company’s internal processes, actions by its personnel
or systems, contractual risks, risk of non-compliance, or
external events, such as unforeseen changes in the operating
environment, cyber and information security, management of
the supply chain, or changes in raw material prices . Financial
risks are related to fluctuations in interest rate and currency
markets, liquidity and refinancing, and counterparty and
credit risks . Hazard risks arise from shortcomings or failures in
employee safety or environmental management systems .
The most significant risks related to Nokian Tyres’
business are the country risks related to the Russian
business environment and other risks of change within the
operating environment, risks related to products and product
development, production outage risks, currency and credit
risks, and tax risks . Due to the Company’s product strategy,
interruption risks that are related to marketing and logistics
may also have a significant impact on peak season sales . The
risk analysis conducted in 2019 also focused special attention
on corporate social responsibility risks, the most significant
of which are related to the Company reputation and product
quality . Analyses and projects related to information security,
data protection and customer information were a special
focus area .
85
The risk management process aims to identify and
evaluate the risks, and to plan and implement the practical
measures and continuous monitoring for each risk . Among
others, such measures may include avoiding the risk, reducing
it in different ways or transferring the risk through insurance
policies or agreements . Control functions and measures are
verification or back-up procedures applied in order to reduce
the risks and ensure the completion of the risk management
measures .
Responsibility for identifying, evaluating and to large
extent, managing risks is delegated to business units, business
areas and support functions . Treasury is responsible for
developing and maintaining risk management processes,
methods and tools . Assisted by the Audit Committee, the
Company’s Board of Directors monitors and assesses the
efficiency of the Company’s risk management mechanisms
and monitors the assessment and management of risks
related to the Company’s strategy and functions . The Audit
Committee monitors that the risk management actions are
in line with the risk management policy . Issues raising in risk
analysis are noted in development of processes, compliance
and control, and in Internal Audit planning . The Company’s
Board of Directors discusses the most significant risks
annually in connection with the strategic process .
IV Other information provided
Internal audit
The Group’s internal audit systematically carries out asses-
sments and audits on the efficiency of risk management,
internal control, and corporate governance processes . Internal
audit is an independent and objective function whose aim is
to help the organization to achieve its goals . The principles
for internal audit have been confirmed in the internal audit’s
charter approved by the Board of Directors .
The Group’s Internal Audit function is managed by the
Chief Audit Executive (CAE), who works under the Board of
Directors . The focus areas for internal audit are approved by
the Board of Directors each year . The audit assignments are
based on the key strategic focus areas of the Company’s
business operations and functions and the risks involved .
The operation of Internal Audit covers all business activities,
functions and processes within the Nokian Tyres Group . The
CAE reports on their findings and the agreed further actions
to the Audit Committee, the Board of Directors, the President
and CEO, the CFO and Management of the Company . The
Company’s Board of Directors follows and monitors the
efficiency of the Internal Audit .
In 2019, Internal Audit focused on assessing, among other
things, the operations and risks of various business areas and
country organizations, corporate governance arrangements,
risk management arrangements and instructions, corporate
sustainability and information security matters as well as
specific misconduct risks and cases . The Internal Audit
function at Vianor focuses on guiding the retail outlets and
ensuring conformity to the Vianor activity management
system . It reports to the Internal Auditor of the Group and the
country managers .
Related party transactions
The Company has procedures in place to identify and define
its related parties and assesses and monitors related party
transactions to ensure that all conflicts of interest and the
Company’s decision-making process are appropriately taken
into account . The Audit Committee monitors and assesses
how agreements and other legal acts between the Company
and its related parties meet the requirements of ordinary
activities and arm’s-length terms in accordance with appli-
cable laws and regulations . The Group’s financial management
monitors and supervises related party transactions as part of
the Company’s normal reporting and monitoring procedures
and reports to the Audit Committee on regular basis . The
Company only has related party transactions that are a part
of normal business, and the information regarding them is
provided in the annual report and the notes to the financial
statements . The decision-making processes have furthermore
been structured in order to avoid conflict of interests . In
case the Company would have any transactions that are not
part of the Company’s ordinary course of business or are not
implemented under arms-length terms, such transactions
shall be handled by the Audit Committee and approved by the
Board and provided in the annual report and the notes to the
financial statements .
Insider management
The Company complies with the guidelines for insider trading
drawn up by Nasdaq Helsinki Ltd . Furthermore, the Company
has drawn up separate insider guidelines that have been
approved by the Board of Directors and that supplement
other insider regulations as well as include instructions on
insiders and insider administration .
Project-specific insider lists are drawn up of people
involved in insider projects of the Company . Persons with
insider information are not allowed to trade in the Company’s
financial instruments until the project has become void or
been published . Those entered into the project-specific
list of insiders are notified of their entry and the duties it
entails, as well as the termination of the list’s maintenance .
Separate instructions are available for the establishment of a
project-specific list of insiders .
The Company draws up a separate list of people in execu-
tive positions and their related persons . In 2019, the persons
holding executive positions in the Company, as defined in the
Market Abuse Regulation, were the members of the Board of
Directors, the President and CEO, the Chief Financial Officer,
the directors of the business areas in the Passenger Car Tyres
business unit, the director of the Nokian Heavy Tyres business
unit and the director of the Vianor business unit .
Persons holding executive positions within the Company
are allowed to trade in the Company’s financial instruments
only for 30 days after the publication day of the Company’s
financial statement report, half year report, or interim report .
The same applies to persons who participate in the prepara-
tion, drawing up, and/or publication of the Company’s financial
reports . The prohibition on trading mentioned hereinabove
also applies to persons who process the financial reporting
and forecasts of the Nokian Tyres Group .
The Group General Counsel for Nokian Tyres is responsible
for the overall management of insider matters in the
Company and the related communication (limitations on
trade, obligations to announce and publish management
transactions) . The Group General Counsel will check the
information for the persons holding executive positions and
their related persons at least once per year . The CFO is the
Group General Counsel’s substitute for insider matters .
86
Whistleblowing
The Company has defined processes that internal and
external parties can use to notify of any suspected violations
of the Company’s insider trading guidelines or other
instructions, or of any other malpractices . External parties
can use the email address whistleblow@nokiantyres .com,
among others . All whistleblowing notifications are investigated
promptly in a confidential manner and protecting the identity
of the whistleblower as far as possible .
Audit
The auditor has an important role as a controlling body
appointed by the shareholders . The audits give shareholders
an independent opinion on how the financial statements
and report by the Board of Directors of the Company have
been drawn up and the accounting and administration of the
Company have been managed . The auditor elected at the
Annual General Meeting of 2019 is KPMG Oy Ab, authorized
public accountants, with Lasse Holopainen, Authorized Public
Accountant, acting as the Chief Auditor . The auditor’s term
of office lasts until the end of the following Annual General
Meeting . In addition to his duties under the valid regulations,
he reports all audit findings to the Group’s management .
The Group’s audit fees in 2019 amounted to EUR 451,290
(2018: 411,326) . The fees paid to the authorized public
accountants for other services totaled EUR 1,146,556 (2018:
827,885) .
Salaries and remunerations 2019
87
SAL ARIES AN D REMUN ERATIO N S 2 0 19
The Salaries and Remunerations report 2019 has
been done according to the Finnish Corporate
Governance Code 2015. A new Remuneration
Policy will be prepared according to the
Shareholders Rights Directive and Corporate
Governance Code 2020 and will be
submitted to Annual General Meeting for
adoption in 2020.
A. Decision-making mechanism
for remuneration
Each year, the Annual General Meeting decides on the
remuneration payable to the Board members on the basis
of a proposal drawn up by the Personnel and Remuneration
Committee .
The Board of Directors decides on the salary, benefits,
and short and long-term incentives of the President and
CEO as well as the rest of the Group Management Team .
The Personnel and Remuneration Committee prepares the
above-mentioned matters for the Board to decide on, while
using external experts when necessary .
In 2019, the Annual General Meeting authorized the
Board of Directors to resolve to repurchase of a maximum
of 5,000,000 of the company’s own shares using funds from
the Company’s unrestricted equity . This authorization is valid
until the next Annual General Meeting, but however at most
until June 30, 2020 . The Board may also use these shares as
incentives .
B. General principles for remuneration
Remuneration of the Board members
The Board members receive an annual fee and a meeting fee
for the meetings of the Board and its committees . Travel
costs are compensated according to the company’s travel
policy . 50% of the annual fee is paid in cash and 50% is paid
in shares of the company that are purchased for the Board
members in April following the Annual General Meeting . The
company is responsible for any asset transfer tax .
The Annual General Meeting in 2019 decided on the
following fees for Board members:
• Annual fee for chairman, EUR 90,000
• Annual fee for deputy chairman and for the
chairman of the Audit Committee, EUR 67,500
• Annual fee for member, EUR 45,000
• Meeting fee EUR 600/attended meeting/person,
or if the member of the board is living outside of
Finland, EUR 1,200/attended meeting/person .
Board members are not included in the company’s option
or share incentive plans .
Remuneration of the President and CEO
The Board of Directors decides on the salary, incentives and
other benefits of the President and CEO .
The remuneration consists of a base salary, fringe benefits,
short-term incentive based on annually defined performance
criteria and the share-based long-term incentive plans .
The total annual base salary for the President and CEO,
Hille Korhonen, has been set at EUR 693,240 including fringe
benefits such as car and phone benefit .
Short-term and long-term incentive plans
The President and CEO’s short-term performance-related
incentive is based on the Group’s profit and net sales, and
it may amount to a maximum of 100% of the annual base
salary . The performance period is one year and the possible
reward is paid out in the first half of the year following the
performance period .
The President and CEO’s long-term incentive consists of
share incentive plans . The performance criteria for the share
incentive plans in force at any given time can be found under
Long-term incentive plans for key personnel . The maximum
LTI award opportunities are set forth in Table 1 .
Pensions and information regarding the
termination of the employment
The President and CEO’s age of retirement is set by written
agreement at 65 years . The pension is determined on the
basis of the Employees Pensions Act and a separately
defined contribution pension plan taken out by the company .
The amount paid in 2019 was EUR 132,048 .
The President and CEO’s period of notice is 6 months . If
the agreement is terminated by the company, the President
and CEO is entitled to compensation corresponding to 12
months’ salary and other benefits, in addition to the notice
period’s salary .
Remuneration the Group Management Team
The Board approves the salaries, benefits and the incentive
plans of the Group Management Team based on the proposal
by the Personnel and Remuneration Committee .
The remuneration of the Group’s Management Team
consists of a base salary and fringe benefits, such as phone
and car benefits; depending on local practice, the fringe
benefits are either included in the base salary or paid in
addition to it, a short-term incentive based on annually
defined performance criteria, and a share-based long-term
incentive plan .
The salaries of the management team members
(excluding the President and CEO) were in total EUR 3,121,389
in 2019 (EUR 2,580,611 in 2018), and the short-term incentives
amounted to a total of EUR 569,943 in 2019 (EUR 753,063 in
2018) .
Short-term and long-term incentive plans
The performance criteria for the short-term incentive plan for
2019 were Group’s operating profit and net sales growth, as
well as the achievement of the financial and strategic goals
set for respective business or function of each Management
Team member . The business and function specific goals
consist of e .g . profitable growth, net sales, and the efficiency
of the operative process . The main performance criteria will
remain the same for 2020 .The maximum short-term incentive
corresponds to 60–70% of a Group Management Team
member’s annual base salary . The performance period is one
year and the possible reward is paid out in the first half of the
year following the performance period .
The Group Management Team members are eligible for
long-term incentive plans . Details of long-term incentive plans
are presented in Incentive plans for key personnel . The target
LTI award opportunities are set forth in Table 1 .
Pensions and information regarding the
termination of the employment
The Group Management Team members are eligible for a
separate defined contribution pension . The annual contri-
butions to this plan are 5–15% of annual base salary for each
Group Management Team member depending on their home
country practices . Group Management Team members are
eligible for the paid contributions after 3 years continuous
employment with the company . Retirement age has been set
to 63 years . Terms and conditions of supplementary Pension
may vary between countries .
A management team member’s notice period is 6 months
when terminated by the company and 3 months when termi-
nated by the management team member . If the employment
is terminated due to a reason attributable to the company,
the management team member is entitled to maximum 6
month’s salary and 6 month’s Severance payment .
Long-term Incentive plans for key personnel
Option scheme 2013
The Annual General Meeting held in 2013 decided on the issue
of stock options as part of the Group’s incentive and commit-
ment system for personnel . The system also covers persons
employed or recruited by the Group at a later date . The
Board distributed the options in the spring of 2013 (options
2013A), 2014 (2013B), and 2015 (2013C) . The subscription
period of 2013C options ended on 31 May 2019 . There are no
outstanding options .
Performance Share Plan 2016
In the spring of 2016, the Board of Nokian Tyres plc decided to
update the Group’s incentive schemes . The update aimed to
clarify and improve the schemes and to offer a competitive
rewards system for all personnel .
The purpose of Nokian Tyres’ share-based incentive
system was to harmonize the goals of the owners and key
personnel in order to increase the value of the company in
the long term, and to commit key personnel to the company .
The share rewards system covered some 5% of the Group’s
personnel, including the management team members .
The share rewards system had three one-year perfor-
mance periods for the calendar years 2016, 2017, and
2018 . The company’s Board decided separately on each
performance period for the system and set the performance
criteria, and the goals for each criterion, at the beginning
of the performance period . The performance criteria for
performance period 2018 were the Group’s operating profit
and net sales .
88
The rewards based on the performance period 2018 were
paid in 2019 and corresponded to a total of 146,000 gross
shares . The rewards were paid partially in shares and partially
in money . The monetary reward was intended to cover the
taxes and tax-like charges incurred on the key person . For
shares paid on the basis of the performance period 2018, the
restriction period will end on 31 March 2020 .
Performance Share Plan 2019 and Restricted Share Plan 2019
In February 2019, the Board of Nokian Tyres plc decided to
establish a new share-based long-term incentive scheme for
the Company’s management and selected key employees .
The decision included a Performance Share Plan (PSP) as
the main structure and a Restricted Share Plan (RSP) as a
complementary structure for specific situations .
The purpose of the share-based incentive plans is to
harmonize the goals of the Company’s owners and key
personnel in order to increase the value of the Company in
the long term, to commit key personnel to the Company and
its strategic target and to offer a competitive rewards system
for personnel . The Performance Share Plan is targeted to the
President and CEO, Group Management Team members and
other key employees .
The Performance Share Plan 2019 consists of annually
commencing three year performance periods after which
the possible reward is deliver to participants . The company’s
Board will decide separately on each performance period and
set the performance criteria at the beginning of the earnings
period .
A member of the Group’s Management Team must own
25% of the gross total number of shares earned through the
system, up to the point where the total value of their share
ownership is equal to their gross annual salary . They must own
this number of shares for as long as they are involved in the
Group’s Management Team .
89
Performance Period 2019–2020 and
Performance Period 2019–2021
The first plan (PSP 2019–2021) commenced effective as of the
beginning of 2019 and the potential share reward thereunder
will be paid in the first half of 2022 provided that the perfor-
mance targets set by the Board of Directors are achieved . The
potential reward will be paid partly in shares of Nokian Tyres
Plc and partly in cash . Cash portion of the reward is intended
to cover the taxes arising from the paid reward .
In addition to the 3 year performance period (PSP
2019–2021), a separate one-time 2 year performance period
(PSP 2019–2020) commenced in 2019 in order to bridge the
previous two year PSP 2018 and three year PSP 2019–2021 .
Potential share reward thereunder will be paid in the first half
of 2021 provided that the performance targets set by the
Board of Directors are achieved .
The potential share reward payable under the PSP
2019–2020 and PSP 2019–2021 are based on the Earning Per
Share (EPS) growth and Return on Capital Employed (ROCE) .
The possible rewards paid based on the performance period
of 2019–2020 correspond to a maximum of 580,000 gross
shares and based on the performance period of 2019–2021 to
a maximum of 535,000 gross shares .
Performance Period 2020–2022
In February 2020, the Board of Nokian Tyres plc decided
continue the Performance Share Plan for a new performance
period for the years 2020–2022 . The PSP 2020–2022
commences effective as of the beginning of 2020 and the
potential share reward thereunder will be paid in the first half
of 2023 provided that the performance targets set by the
Board of Directors are achieved . The potential reward will be
paid partly in shares of Nokian Tyres Plc and partly in cash .
Cash portion of the reward is intended to cover the taxes
arising from the paid reward .
The potential share reward payable under the PSP
2020–2022 is based on the Earning Per Share (EPS) growth
and Return on Capital Employed (ROCE) . The possible rewards
paid based on the performance period of 2020–2022
correspond to a maximum of 569,260 gross shares .
Table 1. Long-term incentives
President and CEO
Other management
team
Performance share plan 2019–2020 and 2019–2021
Performance
period 2019–2020 (target)
Performance period
2019–2021 (target)
Performance period
2020–2022 (target)
125%
125%
125%
50%–130%
Maximum share award level
is defined as % of the annual
salary, max is 2 x target .
50%–125%
50%–100%
Maximum share award level
is defined as % of the annual
salary, max is 2 x target .
Restricted Share Plan 2019–2021
The Restricted Share Plan (RSP) consists of annually
commencing restricted share plans, each with a three-year
vesting period after which the allocated share rewards will be
delivered to the participants provided that their employment
with Group continues until the delivery date of the share
rewards . The commencement of each new plan is subject to a
separate approval by the Board .
The RSP 2019–2021 commenced at the beginning of 2019
and potential share rewards will be delivered in the first half
of 2022 . The possible rewards paid based on the Restricted
Share Plan 2019–2021 correspond to a maximum of 70,000
gross shares .
Restricted Share Plan 2020–2022
In February 2020, the Board of Nokian Tyres plc decided to
continue the Restricted Share Plan and the RSP 2020–2022
will commence at the beginning of 2020 . Potential share
rewards will be delivered in the first half of 2023 . The possible
rewards paid based on the Restricted Share Plan 2020–2022
correspond to a maximum of 120,000 gross shares .
90
C. Remuneration statement
Board of Directors
The remuneration paid to the Board members, the number of
shares purchased, and the meeting fees for the Board and the
committees are presented in the table below .
Table 2. Remuneration paid to the Board members in 2019 (cash basis)
Position on the Board
Fixed annual fee, €*
Meeting
remuneration
fees, €
Committee meeting
remuneration fees, €
Total
remuneration fees, €
Shares acquired with a
fixed annual fee, number
of shares
Share holdings of the
Board, number of shares
Petteri Walldén
Kari Jordan
Heikki Allonen
Raimo Lind
Veronica Lindholm
Inka Mero
George Rietbergen
Pekka Vauramo
Total
Chairman
Deputy Chairman,
Chairman of the Personnel
and Remuneration
Committee
member
Chairman of the Audit
Committee
member
member
member
member
90,000
67,500
45,000
67,500
45,000
45,000
45,000
45,000
450,000
6,600
6,600
6,600
6,000
6,600
6,600
9,600
6,000
* 50% of the annual remuneration to be paid in cash and 50% in company shares
President and CEO and management team
4,800
4,200
3,000
3000
4,800
3,000
2,400
101,400
78,300
54,600
76,500
56,400
54,600
54,600
53,400
529,800
1,457
1,093
728
1,093
728
728
728
728
7,283
22,322
2,104
2,595
4,955
2,595
3,988
1,932
1,402
41,893
Table 3: Salaries and financial benefits paid to the President and CEO and the company’s other management team members in 2019 (cash basis)
Annual salary, €
(including fringe
benefits)
Performance based
bonuses, €
(based on year 2018)
Severance
payment, €
Total value of
share-based bonus, €*
Total, €
Share-based bonus paid
in shares, number of shares
President and CEO
Other members of the management team
693,240
3,121,389
189,948
569,943
183,665
479,799
1,362,987
1,706,317
5,397,649**
6,971
31,962
* According to the stock exchange price of the assignment date of March 5, 2019 / September 2, 2019 the payment for the performance period of 2018 of the share-based incentive plan
** Excluding Severance payment
Board of Directors
BOARD OF DIRECTORS January 1, 2020 | More details at www .nokiantyres .com/board-of-directors
91
PETTERI WALLDÉN
• b . 1948
• Master of Science (Technology)
• CEO, Wapiti Oy
• Member of the Board since 2005,
Chairman of the Board
• Member of the Personnel and
Remuneration Committee
• Independent of the company
• Shares: 22,322
KARI JORDAN
HEIKKI ALLONEN
RAIMO LIND
• b . 1956
• Master of Science (Economics),
Vuorineuvos (Finnish honorary title)
• Chairman of the Board, Outokumpu Oyj
• Member of the Board since 2018,
Deputy Chairman of the Board
• Chairman of the Personnel and
Remuneration Committee
• Independent of the company
• Shares: 2,104
• b . 1954
• Master of Science (Technology)
• CEO, Hemmings Oy Ab
• Member of the Board since 2016
• Member of the Audit Committee
• Independent of the company
• Shares: 2,595
• b . 1953
• Master of Science (Economics)
• Professional board member
• Member of the Board since 2014
• Chairman of the Audit Committee
• Independent of the company
• Shares: 4,955
VERONICA LINDHOLM
INKA MERO
• b . 1970
• Master of Science (Economics)
• Professional board member
• Member of the Board since 2016
• Member of the Personnel and
Remuneration Committee
• Independent of the company
• Shares: 2,595
• b . 1976
• Master of Science (Economics)
• Managing Partner & Founder,
Voima Ventures VC Fund
• Member of the Board since 2014
• Member of the Audit Committee
• Independent of the company
• Shares: 3,988
GEORGE RIETBERGEN
• b . 1964
• Master of Business Administration
• 5Square Committed Capital, Partner
• Member of the Board since 2017
• Independent of the company
• Shares: 1,932
PEKKA VAURAMO
• b . 1957
• Master of Science (Technology)
• President and CEO, Metso Corporation
• Member of the Board since 2018
• Member of the Audit Committee
• Independent of the company
• Shares: 1,402
Management Team
MANAGEMENT TEAM January 1, 2020 | More details at www .nokiantyres .com/management
92
HILLE KORHONEN
ANDREI PANTIOUKHOV
PÄIVI ANTOLA
TYTTI BERGMAN
• b . 1961
• President and CEO
• Licentiate of Science (Technology)
• Member of the Board 2006–2017,
member of management team and
President and CEO since 2017
• b . 1972
• Executive Vice President, Nokian Tyres plc and
General Manager, Russia and Asia business area
• Master of Business Administration
• With the company since 2004 and a member
of management team since 2009
• b . 1971
• Corporate Communications and Investor Relations
• Master of Arts, CEFA
• With the company and a member of
management team since 2018
• b . 1969
• People and Culture
• Master of Science (Economics and
Business Administration)
• With the company and a member of
management team since 2018
MARK EARL
ESA ERONEN
ANNA HYVÖNEN
• b . 1960
• Americas Business Area
• Bachelor of Sciences in Business
Administration, Computer Science
• With the company and a member of
management team since 2018
• b . 1957
• Supply Chain and Sustainability
• Technology Engineer
• With the company since 1988 and a member
of management team since 2001
• b . 1968
• Nordics Business Area and Vianor Business Unit
• Licentiate of Science (Technology)
• With the company and a member of
management team since 2016
TEEMU KANGAS-KÄRKI
• b . 1966
• Finance
• Master of Science (Economics and
Business Administration)
• With the company and a member of
management team since 2018
93
JUKKA KASI
BAHRI KURTER
MANU SALMI
TIMO TERVOLIN
• b . 1966
• Products and Marketing
• Master of Science (Technology)
• With the company and a member of
management team since 2018
• b . 1966
• Central Europe Business Area
• Master of Arts (Economics)
• With the company and a member of
management team since 2019
• b . 1975
• Nokian Heavy Tyres Business Unit
• Master of Military Sciences, Master of Science
(Economics and Business Administration),
Master of Business Administration
• b . 1977
• Strategy and M&A
• Master of Science (Technology), Master of Science
(Economics and Business Administration)
• With the company and a member of
• With the company since 2001 and a member
management team since 2016
of management team since 2008
FRANS WESTERLUND
• b . 1966
• IT and Processes
• Master of Science (Economics and
Business Administration)
• With the company and a member of
management team since 2017
ANTTI-JUSSI TÄHTINEN Marketing
Member of the management team
until September 2019
SUSANNA TUSA General Council
Member of the management team
until December 2019
Investor information and investor relations
IN VESTOR INFO RMAT ION
AN D INVESTOR REL AT IONS
Annual General Meeting 2020
The Annual General Meeting of Nokian Tyres plc will be held at
Tampere-talo in Tampere, Finland, street address Yliopistonkatu
55, on April 2, 2020, at 4 p .m . The reception of persons who
have registered for the meeting and coffee service prior to the
meeting will begin at the meeting venue at 2:30 p .m . on the day
of the meeting .
During the silent period, the company’s top management
and Investor Relations do not meet representatives of capital
markets or financial media, nor comment on issues related
to the company’s financial situation or general outlook . If an
event occurring during the silent period requires immediate
disclosure, Nokian Tyres will disclose the information without
delay in compliance with disclosure rules and may also
comment on the event concerned .
More details: www .nokiantyres .com/annualgeneralmeeting2020 .
Dividend payment
The Board of Directors proposes to the Annual General Meeting
a dividend of EUR 1 .58 per share for the financial year 2019,
representing a payout ratio of 54 .9% .
Investor relations pages on the web
Nokian Tyres’ investor relations pages at www .nokiantyres .
com/investors contain a share monitor, information about
Nokian Tyres’ largest shareholders registered in Finland,
presentations and reports, among others .
Stock exchange releases
Stock exchange releases are available in Finnish and English at
www .nokiantyres .com/investors immediately after publication .
Stock exchange releases can be subscribed at
www .nokiantyres .com/company/publications/order-releases/ .
Financial reports in 2020
• January–March: May 5, 2020
• January–June: August 4, 2020
• January–September: October 27, 2020
Silent period
Nokian Tyres observes a silent period before issuing financial
statements, interim and half-year reports .
• Start of the silent period: January 1,
April 1, July 1, and October 1 .
• End of the silent period: The results of the
respective quarter are made public .
Change of address
Shareholders are advised to inform any changes in their
contact information to the book entry register in which they
have a book entry securities account .
Flagging notifications
Under the provisions of the Securities Markets Act, changes
in holdings must be disclosed when the holding reaches,
exceeds or falls below 5, 10, 15, 20, 25, 30, 50 or 90 per cent
or two thirds of the voting rights or the numbers of shares of
the company .
Notifications of changes in holdings or voting rights must be
made without undue delay .
Shareholders are advised to send the flagging notifications to
flaggings@nokiantyres .com .
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Contact information
Regarding inquiries and meeting requests, you can send an
email to ir@nokiantyres .com .
Päivi Antola, SVP, Corporate Communications & IR
Tel . +358 10 401 7327
Annukka Angeria, Investor Relations Manager
Tel . +358 10 401 7581
Anne Aittoniemi, Financial Communications Specialist
Tel . +358 10 401 7641
Address:
Nokian Tyres plc
P .O . Box 20
(Visiting address: Pirkkalaistie 7)
FI–37101 Nokia
www .nokiantyres .com