Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on NOKIAN RENKAAT OYJ. We currently have 9 research reports from 1 professional analysts.
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NOKIAN RENKAAT OYJ
NOKIAN RENKAAT OYJ
Strong Q4 pushed sales and profits up
02 Feb 17
Stronger than expected demand for passenger car tyres resulted in full-year numbers that were higher than we had anticipated. The group’s consolidated turnover increased by 2.3% to €1.39bn and operating and net earnings by 4.9% to €311m and 4.6% to €252m, respectively. Much improved working capital management allowed cash from operations to increase by 29% to €364m. This latter number is the highest since 2012, whereas operating earnings are still lower than what the company achieved in the early years of the current decade. Management proposes a dividend of €1.53 vs. €1.50 paid for 2015.
Nokian Renkaat will dispute the Finnish income tax claim
07 Nov 16
The Finnish tax authorities have argued, for the years 2007-10, that intercompany pricing between the Russian factory and the Finnish sales operation was too high, i.e. profits generated in Finland were ‘artificially’ lowered. The subsequent years have, up to now, not been audited by the tax authorities. The Board of Adjustment of the Finnish Tax Administration has now ruled that the total tax claim of €94m (including penalties and interest), which had been charged to the company’s 2015 P&L and paid in January 2016, has to be reduced by €5m. Management continues to regard the first decision as unfounded and is appealing against the remaining charge of €89m. If the decision is not annulled, the group’s future tax rate will increase from around 17% to a maximum of 22%. We are currently using a tax rate of around 18% for the next few years. Nokian Renkaat has a favourable tax regime in Russia, i.e. high Russian profits do not translate into a high tax charge in the country while high intercompany prices reduce the tax burden in Finland.
CEO steps down and leaves at the end of 2016
27 Sep 16
CEO Ari Lehtoranta intends to pursue new opportunities outside Nokian Renkaat. This is the justification given for this surprising move. He had joined the company only two years ago. Whether this is the reason or whether his February 2016 media interview is the reason, we do not know. At that time he had admitted that the tyre industry had developed special tyres for test purposes in the past. These tyres were different from the ones the industry had sold to end-customers. During the time of his reign, the company’s revenue and profit numbers have fallen considerably. However, this was almost exclusively the result of the Russian crisis, where the share of revenue fell from a good 30% in 2013 to probably less than 15% in 2016.
Fundamentals have deteriorated in Q2
09 Aug 16
Nokian Renkaat’s Q2 was clearly worse than Q1. While the group’s revenue was down by 1.9% to €276m in Q1 and EBIT was up by 4.6% to €51m, these two numbers were -2.4% to €337m and -3.7% to €78m in Q2. Both H1 numbers of €613m (-2.2%) and €128m (-0.6%), respectively, are below our expectations of €627m and €136m. Net earnings after minorities fell by 49% to €101m. However, last year’s Q1 profit number was supported by one-off retroactive tax income of €101m. Excluding this, the Q1 number is up by around 2%, but the Q2 net profit number is down by 5% to €61m. For the full-year, management expects revenue and operating earnings to match last year’s numbers, whereas we had expected a mild recovery in H2.
Q1 revenue poor, but good profits
04 May 16
Revenue fell by 2% to €276m in the last quarter but EBIT was up by 5% to €51m. We had expected €285m and €50m, respectively. At a glance, net profit (-71% to €40m) is a disaster. However, the company was burdened with retroactive tax charges in 2013. Some €101m of these charges were vindicated in Q1 15. Consequently, net profit is up by 16% when this one-off income item is excluded and it is above our projected €38m.
Outperformance in the bag
24 Mar 17
IG Design has had a very good second half trading and has issued a year-end update indicating that numbers will exceed market estimates. We have lifted our FY17 and FY18 numbers by 8-10% at the pre-tax and EPS levels, following an 11% uplift to earnings with the interims. Particularly notable is the comment on strong cash flow, with the group reaching its target of average leverage less than 2.5x EBITDA two years ahead of plan. With the earnings and cash flow momentum, strong balance sheet and progressive dividend, there is good potential for further share price upside.
24 Mar 17
We note the share transaction yesterday, and think the stock will benefit from the increased liquidity. We continue to believe there is good valuation upside to the shares. However, we are terminating coverage of Watkins Jones from this morning and withdrawing our forecasts from the market.
Management hopes for a better 2017
21 Mar 17
BMW’s final 2016 accounts were, compared to what we had anticipated, slightly disappointing. We had said so when preliminary numbers were released earlier this month. Today’s guidance for 2017 shows slight growth in all categories, i.e. volume, revenue and consolidated pre-tax earnings are all projected to go up. Reading between the lines, the statement suggests that the EBIT margin generated by the Automobiles division is likely to fall further (it was down from 9.2% to 8.9% in 2016). Whether Financial Services can again increase its margin (it was up by 0.1pp to 8.4% last year) remains to be seen and will also depend on the price development of used vehicles.
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.