Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on NOKIAN RENKAAT OYJ. We currently have 8 research reports from 1 professional analysts.
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NOKIAN RENKAAT OYJ
NOKIAN RENKAAT OYJ
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.
Nokian Renkaat apologises for having cheated in the past
26 Feb 16
According to the company’s CEO, this company has not produced specific tyres for tests run by the car media in recent years. However, it has apparently been common practice by tyre producers to provide the car media with products that were specifically made for the desired purposes. Management stresses that ‘the Board has never decided on such … schemes that would have encouraged cheating in tests …’. Nevertheless, the company apologises and regrets the mistakes that have been made in the past.
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.
N+1 Singer - Small-cap quantitative research - Momentum screen refresh + 10 focus stocks
12 Jan 17
We have refreshed our momentum style screen for the first time since inception on 26 July 2016. As before, the screen selects the 25 stocks exhibiting the most extreme momentum characteristics, according to our measurement method. From these we have selected 10 to focus on. Since inception the screen has underperformed both the main small-cap and micro-cap indices against a background of generally rising momentum. We have noted a subset of the basket, where decelerating momentum at the time of measurement appears correlated with significant share price falls since selection. We shall monitor this factor with the new screen, albeit there are only two such stocks showing this pattern, namely Lamprell (not rated) and Gear4music (not rated).
N+1 Singer - Morning Song 12-01-2017
12 Jan 17
As anticipated, the second half has again been stronger than H1 and results will be broadly in line with expectations. In line with this, the order book has continued to grow and is at record levels. This confirms that significant progress has been made in the Group’s shift towards its Technology Products division which, as targeted, contributed c.60% of group revenue in FY16. The small acquisition of Cable Power also gives a complementary boost to the product range. It is also worth noting the significant reduction in net debt, £1.0m ahead of our forecast. We remain supportive of the Group’s strategy and continue to see a bright future as this transition towards a design led technology solutions business continues. We look forward to more detail in March at the final results.
10 for 17
09 Jan 17
As always at the start of a year, there are significant uncertainties about the year ahead but I think in 2017, the level of uncertainly has decisively moved up a gear. In fact, a leading economist at the LSE, Ethan Ilzetzki, was recently quoted as saying “I view the current global economic environment as the most uncertain in modern history”. Wow.
Conviction List Q1 2017
05 Jan 17
Since its inception in 2010, the Conviction List has outperformed the market in 11 of 19 periods and a reinvested Conviction List would have returned 260% against a Small Companies index that would have returned 194%. Our Conviction List returned 0.4% over the last quarter; this was set against the benchmark UK Small Companies index that returned 4.0% over the same period.
Positive momentum on trading and cash
10 Jan 17
Trading for the four months to end December continued the positive trend of the first two to October. We understand that both constant currency trading and exchange rates have been favourable. Cash has also grown encouragingly, reflecting net receipts from the strong sales in late FY16 as well as early FY17. Recent softness in the shares represents excellent medium-term value for a niche market leader with positive growth.