Good afternoon from Helsinki and welcome to Norges Bank Investment Management's Q1 2025 research webcast and conference call. My name is Anu Kangasrääty and I'm working at Norges Bank Investment Management. Together with me in this call, I have our President and CEO, Paulo Pombey and our CFO, Mikko Harju. As usual, Paolo and Nico will present the results. After that, there will be time for the questions. Without further ado, Paolo, please go ahead. Good afternoon, all from my side. I'm Paolo Pompei, I'm the President and CEO, and I will guide you through our quarterly one interim report this afternoon. I start from page one. The headline is strong sales growth in all regions, actions accelerated to improve financial performance. Moving to slide number two, the agenda of this today call will be the financial performance in quarter one. We will go through the numbers of the business unit. There will be some reflections from my side, and at the end, we will also address the situation of the tariff in North America as well as the guidance for 2025. Moving to slide number three, quarter one financial performance. Let's move to slide number four. We had strong sales growth in quarter one. This is continuing our journey and strong sales growth that we had also in quarter four and quarter three last year. This was succeeded in all market and all region. Our Romanian factory is proceeding according to plan. We were starting to deliver tires already at the end of March. We had an extremely good performance in a declining market for the heavy tire division. And obviously, we are not fully satisfied actually with the financial performance. We have accelerated actions to improve our financial performance in the next quarters. The tariff, of course, are causing some disturbances and some uncertainties in North America, but of course, with our local to local strategy, we are working hard to mitigate any kind of impact. Moving to slide number five. The market has been pretty stable in North America when we talk about passenger car and light truck tires and has been actually growing by 5% in Europe. The truck tire market has been stable in the aftermarket in Europe, while the agri tire business was actually declining both in the replacement market by 7% as well as in the ODOE segment by minus 20%. We are pleased to see that Nokian Tyres in terms of sales outperformed the market in all the segments where we are operating today. Moving to slide number six, net sales at 269 million was growing by 14.2% with comparable currency. We had a positive development in all the business units and we improved our market position in all regions. Our segment EBIT was stable at 12.5 million euros. and our percentage, 4.6% of net sales was declining compared to previous year. Our segment operating profit was minus 18.5 million compared to minus 15.1 million previous year at 6.9% of net sales, minus 6.9% of net sales. The declining was mainly driven by the higher raw material and obviously the necessary SG&A cost to reinforce our market position in the growing market areas. We have implemented price increases in quarter one, which are obviously intended to offset the increased raw material cost, and this will be reflected in our quarter two onwards results. Moving to slide number seven, you will see that we were, Anticipated able to grow by almost 6% in the Nordics, where we have already a leading position. We've been growing fast in Central Europe once again by 34%, and we were also growing fast in North America by 15%. Moving to slide number eight, I will ask Nico to comment the following slides. Thank you, Paulo, and welcome on my behalf as well. From the key figures, I want to point out the net sales, as Paulo said, we increased the net sales by some 14% compared to previous year. But at the same time, I need to say that the profitability is not where we want to be, and we must continue our tasks in order to improve the profitability with more control and a quicker way. As everybody knows in this call, we are still final year in our investment phase. So the major investments to build on our new Nokia ON will be done by the end of this year. Within these three years period, we have been investing close to 800 million euros. And that's a cross number. I want to highlight as well that the Romanian state aid approved by EU that will be paid by Romania is not reflected in any of our numbers. And as said in the earlier calls throughout last year as well, we'll see that it will be in our cash flow in the next three years to come. Also, we are returning back to the more maintenance type of investments, i.e. the maintenance CapEx, estimating that to be around 120 million euros starting next year, so clearly below our depreciation. From the business units side, we'll start with the passenger car tires. So their sales, once again, were on a good level, but the profitability was weakened mainly due to the higher raw material costs and the SGNA. and we see that the inventories are on a lower level, so more healthier than in the previous or comparable Q1 last year. From the sales bridge, there we can see that the volume plus 31 million euros was then fairly neutral on the price and mix side in terms of net sales. And then when you look at the segments operating, those same elements there, i.e. 10 million euro coming from the volumes, 1 million euro from the price and mix, and then the materials and the supply chain as well as the SGNA. were negatives in terms of the profitability. Slide number 13, this is the sales and the quarterly change is there volume, but I would like volume up by close to 22%. But really, I think what is good is the price and mix. So there, the trend is positive. you know, slightly positive, but we have ended the two quarters decline that we had last year, i.e. H2 last year. So that has what was changed in the Q1 of 2025. Heavy tires also, as Paolo pointed out, really solid performance, especially weak OE market, we were able to find new customers in the aftermarket. So even with the low volumes, we're able to make 13% EBIT. So really proud of this, something we need to continue and contribute to the whole of Nokian Tires. In terms of Vianor, the first quarter is always seasonally low and now the Easter was late actually in April. So the profitability was at the last year's level, but this is a constant balance of controlling our costs Of course, the lower inflation will help us, but we need to monitor and be on top of the business at all times. And with that, I hand it back to Paolo and CEO reflections. Thank you, Nico. Right, it's really time to some way, in some way summarize what happened since I joined the company in January 2025 and what are my reflections at this stage? after leading the company for a few months. I move to page number 17. Clearly, we have a really strong foundation to become a leader in this business when we talk about profitability. We have invested a lot. We will complete our investment phase by the end of this year. And then, of course, growth will be as it is already today, an important item on the agenda of all our business units. Clearly, as we, Nico, anticipated, we are not satisfied with the financial performance. We know that the journey is not an easy journey after obviously activated our plan exiting Russia and rebuilding Nokian Tyres outside the territory of Russia. But I have to say that we have initiated activities at the moment to accelerate our financial performance and cash generation for the next quarters. What is really important to say is that who we are. Enochian tires has been a strong player in delivering safe product in extremely demanding weather conditions. And this is very important because this is and this will remain our main asset and our strong heritage. And we will carry on innovating, promoting our products in these applications because this is where we can make the difference and this is where we deliver value to our customers. Clearly, we are a small player. We don't play anywhere and we don't want to play anywhere. We want to play in the profitable niches of the market, which today are winter tires, obviously all season. We are delivering an extremely innovative new range of all season tires and at the end, every tire as well. Those are extremely profitable niches. We are a small market player when we look at even at the addressable market. And of course, we are still a small market player when we look at the global tire market, which is approximately 250. billion euros. So we have plenty of opportunities to grow, confident that we can leverage our value proposition and can leverage our extremely competitive and superior products. So today we can really found our business on a wide offering when we talk about winter tire and all season, but more importantly, we can really build our future on safe and sustainable and high performing products. Our brand is a premium brand in the Nordics, as we know very well. It's a very strong brand when we talk about winter tire in North America and in the rest of Europe. We will obviously need to build the brand in the other application, in the other markets. We have an extremely good and efficient distribution network in the Nordics, which is Vianor, that is helping us to keep our premium position in the market and in the other markets outside Nordics, we have extended our retail network now to 46 countries. And this is also very important to support our future growth. The manufacturing is today the area that is, in my opinion, representing long term, one of the main assets of the company, because now we can say that we have developed a local for local strategy, being less vulnerable than what we were before and being able to service our customers with dedicated product. to dedicated markets. And of course, we are not depending anymore on one giant production source, but we are depending on three strong manufacturing facilities when we talk about passenger car tires that are located in the Nordics, in Europe, in Romania in this case, and as well as in North America. And of course, those facilities are really brand new. We have invested a lot. And this is representing again a strong foundation for our future growth. In Avitide also, we have a leading position global leading position in the forestry industry, but we are also expanding quickly our range in the agricultural tire segment, where obviously we are aiming to grow in the near future. When you look at this page number 20, you will see obviously that our profitability decline due to the responsible decision to leave the Russian market and to immediately focus on the construction of our new manufacturing facilities in Romania, while at the same time building a strong alternative for North America, as well as reinforcing our operation in Finland. Clearly, the Dayton production ramp-up is now completed, so we can now leverage a higher output coming from our factories in North America. And of course, we are at the moment working hard in the deliveries and in the ramp-up of the production and output in Oradea in Romania. Of course, there is plenty of opportunity for us to grow and to improve our performance, in particular when we talk about the commercial positioning in North America and in Central Europe. Manufacturing, of course, we've been focusing on growth. We need now to focus, as I said, several times on the efficiency of our manufacturing facilities. We need to focus on better procurement, enlarging our supplier base, negotiating our existing contract and of course in the SG&A cost competitiveness. And at the end of the day, this will result in a reinforcement on in strengthening our balance sheet. More precisely, when we talk about North America, we need to accelerate our effort, the commercial effort to to gain premium market share in the market while enlarging our sales network. In Central Europe, it's really about growth, but it's also about aligning our positioning to a premium brand segment. Manufacturing, we discussed about Dayton. Dayton obviously is now producing the expected output, but obviously we will need to work on the optimization and on the cost efficiency. this will also result now the increase of volume in efficiency coming from cost reduction through scaling. When we talk about procurement, we will need, we're working hard that we have initiated already plan to reduce our raw material cost and of course to optimize our indirect spending. So we have created the different work streams that are working in this multiple dimension. And by the way, we didn't complete at all the ramp-up in Oradea that will be completed late in 2027. And this is going to be a key item in the agenda of our excellent manufacturing team. The new organization, as you know very well, that has been launched in quarter one is aimed actually to create a stronger P&L and KPI ownership and at the same time clear accountability. so for this reason, we have also created dedicated work stream that are supporting a systematic follow-up and reporting activities that are necessary for all of us and also for you in the future to follow up our progress and to make sure that we are delivering in line with the plan. There, when we talk about our capital allocation, we've been investing a lot. I mean, you can see clearly that from 2022 to 2024, we've been we invested 728 million so far. And obviously, this has increased our net debt position by 472 million. And we had paid in the wild time 224 million of dividends. What we are expecting from this journey, what we are expecting as a result, an improvement of the operating cash flow, the CapEx level, we return back to normal. We don't see at this stage any need after 2025 to further have investment in our business. And since we will be well set to manage the future growth and of course the ratio of one to net debt EBITDA, this will be obviously our target towards 2027. the road is, as I told you already, since the very beginning, the road is bumping. There are obviously there is a lot to do. We are working very hard really to deliver growth and at the same time to improve our financial position. But I believe that obviously we can really position Occitanie growing above the market level with our unique value proposition, safe and sustainable and high performing products in demanding weather conditions. condition. We're obviously targeting a strong improvement of our profitability that will come and you will start to see later in the year. And of course, with our efficient now new manufacturing footprint, we will see that obviously we have, we will allocate lower CapEx and we will then generate more cash and investor returns. in the quarters to come up to 2027. Moving to the final section that is about tariff and guidance. In slide 27, we see at the moment that the passenger car tire and the light truck tire industry will remain pretty stable in Central Europe as well as in Nordics and in North America. While we still see a heavy a weak market in the entire industry, in particular on the OE side. Clearly, when we talk about North America, as you know very well, the situation is at the moment creating some uncertainties. North America represent today more than 20% of our sales as a group, 85% of what we produce in U.S. is what we sell in U.S. is produced in Dayton. We supply Canada from both U.S. and Europe, mainly 100% of winter tires are coming from Europe, so they will not be affected by the tariff. But of course, they also some tires are made in Dayton in U.S. and they are supporting the Canadian market, where today there are import duties up to 25%. Obviously, we see that this tariff can be also at the same time representing an opportunity for us. The market in the US is today made by 60% of imported tires. So the market in the US is today importing more than 50, actually 60% of the tires that are sold in the US. So obviously, for us, having a direct presence in Dayton can represent an extremely good element to play in the near future if the tariff will remain there. I would like to remind you that obviously the tariffs are in place only now at the beginning of May, while in April, obviously the market was still not supporting tariff. There will be some also indirect impact that is generated by raw material cost, obviously some uncertainties in the consumer that today obviously are more cautious in spending money due to different reasons, including currency fluctuations. We as a Nokian Tire, we are very well equipped to manage the future with a flexible supply chain, having the possibility to leverage our European factories, but at the same time being well located in North America to support the North American market with our new brand new factory in in data. Now to Nico, the introduction of the guidance. Thank you Paulo. So the guidance we have kept unchanged, i.e. we are expecting our sales to grow and an operating profit as a percentage from the net sales to improved compared to that of last year. And this is regardless of the tariffs that that's imposed now. We see that the guidance will remain as it was when we gave it in the beginning of February this year. And with that, I hand back over to Anuca. Thank you Paolo and Nico and operator we are ready for the questions. To ask a question, please dial 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial 6 on your telephone keypad. The next question comes from Akshat Kacker from JPM. Please go ahead. Thank you for taking my questions. I have three, please. The first one on your North American business. So starting off on the tariff side, could you please quantify the tariff impacts on the P&L that you saw in Q1? And how do you expect that cross impact to change as we go into Q2 specifically, given your exports from Nokia into the US as well as, as you mentioned, from US into Canada? and secondly, in terms of your North American local capacity, could you remind us what are your planned production levels for 2025 and how quickly could you increase local capacity in that market and what kind of Investments would that entail? That's the first question broadly around North America, tariff capacity. The second question is generally on the marketplace. Could you broadly comment on the channel inventories in Europe and North America, and if you still expect positive sell-in trends to continue going into Q2. And the final question is on pricing. Is it possible to quantify the extent of price increases that you're looking at? Again, in both the markets, please, Europe and North America. Thank you so much. I would take this one. I mean, about the tariff impact in quarter one, obviously the tariff were not really in place in quarter one. So the effect of the tariff will be visible in quarter two. Obviously, we don't disclose the impact, but this will require, what I can say, a lot of discipline from our side. If there is inflation, obviously we will need to face the inflation as well. I think the second market was about the capacity in North America, which we We don't disclose in terms of number of pieces, but we can clearly say that we are reaching this year approximately 80% of our capacity in North America. So we're well positioned to support our growth. I think one of the questions was about price. Of course, we don't comment about the price increase for competitor low reasons and we cannot comment about that. And I think the last question was really about the growth outside of North America, if I'm correct. And of course, we are expecting growth, as we said in our guidance. And this growth is obviously provided by all our markets and all the markets where we operate. And Nico, please compliment if I miss anything in this answer. Nico, you are muted. Yeah, sorry. Yeah, but generally, same answers to Paul, and it was about the market inventories that are at the dealer level. So we see that they are healthier level at the selling as such. will continue and is mainly into Europe side, then to North America we went through what is the situation there. But I think those covered your questions. Thank you so much. Just one quick follow-up. In terms of your overall capacity in the US, could you remind us how quickly could you increase capacity at your Dayton facility and what kind of investments will that entail, please? As I said, we are at the moment planning to reach more or less 80% of our capacity this year in our US factories. This, of course, will be strictly linked also to the tariff situation. Investing in expansion of capacity obviously is not something that is happening in one day. So if there will be a need to go beyond 100%, meaning that we need to invest even more, for our future growth, then of course we will need to estimate that this will not happen immediately, which will happen in some time. But at the moment we are still space for growth. And of course we believe that then whatever is happening, we will be able to face obviously our growth for at least the next couple of years. Yeah, the land plot and the layout would allow us to triple the capacity there, but it's not something that we are planning at this moment. Thank you so much. The next question comes from Artem Beletsy from SEB. Please go ahead. Yes, good afternoon and thank you for taking my questions. I have three in total. So the first one is maybe on price mix versus raw materials outlook for the full year. How do you expect it to look like? Should we think about neutral or positive pictures there? Then the second one is relating to ramp up costs and basically non-AFRC exclusions. So the number was a bit more than 70 million euros in Q1. Are you able to provide some full year estimate? numeric one, so I know that it should be coming down year over year. And the last one is just relating to net debt development and also working capital during the year. So net debt was roughly 800 million euros where do you expect it to peak this year? I guess it should be happening in Q3 as normally. Thank you. I suggest I take the first one, which is about price and mix as we said and as we commented. obviously, we didn't fully compensate the raw material cost increase in quarter one, and we have implemented actions to compensate the raw material cost increase already starting from this quarter. So we are expecting a positive development of pricing mix already starting from quarter two. I would suggest, Nico, that you take the number two and number three. yeah. So in terms of the ramp up cost, they were 70 million, as Artem, you pointed out, we haven't disclosed that. But if, if I give some type of a ball park figure as of today, we are seeing that it will be something between 50 to 60 million Euro in total this year. But then depends on how we are ramping the, the already up. But that's the kind of the ball part. nothing that, that we have printed out, but that's the ballpark number. Then on the net debt development. So, so as you pointed out once again, so it will reach its, its peak in, in Q3 and then Q4, we have the, the major inflows from the receivables coming in. So, so it will then, then start to low, lower towards, towards the more, more desire for levels as well. And of course we are doing utmost with the networking capital as such. But Q3 is the peak in terms of net debt. Okay, that's clear. Thank you. The next question comes from Posi Veisannen from Nordia. Please go ahead. Thanks. This is Posi from Nordia. When looking at the profitability, the first question is related to your supply chain. What is exactly a problem there on your supply chain and now creating more costs than expected? You have been buying raw materials quite a long time and prices should not be a surprise. Secondly, when looking at this situation in North America, how many tires you are actually shipping from Dayton to Canada. So would it be even over 1 million tires on annual basis? And lastly, regarding your financial targets. So would it be possible to reach this 15% EBIT margin by having this 2-3 million of take agreements still ongoing with Chinese tires? Thanks. Thank you for the question. Obviously, the first question is about our supply chain, which is including obviously the manufacturing cost. I think this is part of the journey that we need to consider. Again, we had completely lost our manufacturing footprint two years ago, two or three years ago, and then of course we started to rebuild. our supply chain from the beginning is true that we didn't do it at the speed that we were supposed to do it, especially when we talk about building the growth in North America. But of course, now I believe we are on the right track really to follow this growth. Our supply chain costs are really also related to the fact that we are working very hard on different dimensions. The growth in Dayton, which is extremely good growth in quarter one, of course, is in some way increasing our average cost. And you mentioned about the raw material. Of course, we knew about the raw material coming, and now obviously we have implemented actions to compensate the raw material. the second question is about Dayton to Canada. We don't disclose exactly. We just say that the old season tires that we sell to Canada today are made in Dayton. It is, I would say, part of the business. But we have, in this case, two possibilities. In case Canada and U.S. will find an agreement, obviously everything will run as normally in case Canada and US will not find an agreement, we can leverage our European manufacturing sources, delivering tires to Canada. The third question is about the financial target. I will leave it to Nico to follow up on this question. Yeah, so it was that we are able to generate the 15% EBIT market. So this is our view today on the longer horizon, we haven't changed the long-term financial guidance as such. So we are targeting the 2 billion euro sales and then the plus 23 to 25% EBIT and 15% EBIT and at the same time, between one to two times netted to EBIT. So those are all intact and that's what we believe in. Yes, I hear you. But coming back to this Chinese offtake agreement, are the volumes something between 2 to 3 million for this year? The volume are lower than 2 million at this stage. And then, of course, we disclose that we will keep always a percentage of offtake in our product portfolio that is around 10% because we believe our suppliers we'll be able to compensate the gaps that we have in our manufacturing development, as well as be able to support us in the production of product line that we believe is not strategic or convenient to keep in-house. But at the moment, we can say that the volume are just below 2 million pieces. Excellent, I do understand. That was all from my side. Thanks. The next question comes from David Shaw from Tire Industry Research. Please go ahead. Oh, hi, and thanks for taking my call. I've got a couple of questions. The first one was about a spurious announcement about the EU potentially imposing tariffs on car and truck tires from China, an investigation starting later on this week. Can you tell us any more about that? And the second question is about manufacturing flexibility. As I understand it, you are due to install in Russia a very flexible modern manufacturing system, and that is now potentially available to go into Romania. Again, can you comment on that, please? Okay, great. The first question about the tariff study made by the EU. Obviously, this is true. This is potentially ongoing, but obviously we are not influencing those things. And of course, I don't think we can comment about it. I mean, this is an initiative. As you know, there are already some duties on the truck tires. And I think the authorities are simply investigating if there is any activities or any dumping activities in this direction, but we are not able really to comment about it. About the flexibility of our operations, I want to be clear and loud that when we talk about Romania, we are talking about an extremely advanced manufacturing facilities. I've been myself 28 years in the business and I can tell you that the investment we've made in Romania is really status of the art, not only giving us an extremely high level of automation and at the same time keeping extremely sustainable operations with zero CO2 emission, but it's also a factory that is providing us the same flexibility, of course, in a lower scale at this stage that we had in Russia. So we really count on what we built in Romania, We really believe it's a great asset for the company to develop our future growth, our positioning, and obviously our business expansion. Thank you. The next question comes from Rowley Juva from Inders. Please go ahead. Yes, hello, it's Rowley from Inders. There are two more questions left from my side. So firstly, coming back to the North American production platform regarding the volumes you are now shipping from Europe to the USA, what kind of investments and time frame would it require for you to actually produce those in the US sector as well? And then the second question is just technicality of the depreciation. Was the Romanian plant already kind of fully in the depreciation figures for Q1 or will there be a step up in Q2 as the shipment started in late March? Thank you for your question. I mean, about North America, the volume that are going from Europe to U.S. are extremely limited. So we don't see really this issue when we talk about the flow from Europe to U.S. of course, there are some product segments that are still supported by Europe, but again, we don't see that as an issue and that can be relatively quickly implemented in Dayton in North America in cases needed. About the depreciation, Nico, can you please answer to this one? The depreciations, we didn't include depreciations in Q1 in terms of Romania. All right, can you give any ballpark what will be like the depreciation in Q2 once, once there, I guess there will be no all the depreciation for the, for the equipment installed as of now. I, I don't want to give a number now. I will come back to, to Q with the Q2 numbers that, that what is that? It's still under, under investigation, so to say. Okay. All right. Thank you. That's all for me. Thank you. the next question comes from Thomas Besson from Kepler Cheuvreux. Please go ahead. Thank you for taking my question and apologies if I ask about things that have been mentioned on the call. I was listening to another call until very recently. Can you please confirm your annualized capacity is at the end of March for each of your plants and what you do expect to have in terms of annualized capacity is at the end of 25. And as a result, also confirm the planned offtake volumes for both 25 and 26 and remind us the origin, at least the geographic origin of the tiles you're using in offtake contracts. But the first question, the second, could you confirm the CapEx for 25? I think I remember you were talking about 150 million euros, but you spent 52 in Q1. Is that still 150 or should we count on a bit more than that with tariffs and potential adjustments in local capacities? And lastly, your cash and cash equivalents kind of melted substantially. Can you remind us where you, well, what kind of liquidity position you feel comfortable with? Remind us your key maturities. and remind us how much flexibility you have with your balance sheet and your net debt going up, apparently still until the end of Q3. Thank you. Thank you very much for your question. I will take the first two. The first one about capacity. Obviously, we don't disclose externally our total production capacity. We have disclosed a few important information for you to give you some guidance. the first one is that in Oradea, we will be able to produce 6 million pieces by the end of 2027. So you can clearly see that obviously we have an important addition in terms of capacity compared to the today's situation that is coming from Oradea. We also disclosed that we keep more or less 10% of our total volume in of take again supporting the gaps where we believe it's more strategic for us to use external partners more than produce internally specific product line. I kindly ask Nico to answer about the CapEx and the cash. In terms of the CapEx, we have guided 200 million cross Aid, once again repeating myself, so not including the potential part of the 100 million Euro state date from Romania. So 200 million Euro is the Copex that we see for this year. And then in terms of the net debt asset that it will peak in highest number in Q3 and as a backup facilities, we have the commercial paper program and then the committed credit limits. And those credit limits are not in use. So in terms of the cash position or liquidity, we are on the safe side, so to say. Okay, thank you. Can I ask just a quick follow up? your passenger time margins in absolute and in percentage terms deteriorated further. And I think this Q1 was the weakest quarter you've ever posted. Can you give us an indication on when we are going to see the lowest figure in absolute or in percentage terms for passenger time margins, as much as you've indicated that peak debt would be end of Q3? Thank you. Yeah, I mean, the main issue I would say in our margins in quarter one was the ratio between price and mix and raw material as it is visible from our bridge. We had the raw material increase coming in and we were not compensating the raw material increase. However, we have initiated actions to compensate this gap in quarter two and following in H2. 2025. So I will say that this quarter was some way an exceptionally quarter where obviously we had also to follow many other priorities at the same time. So I'm pretty confident that you will see the margins moving up in, in the second half of, of the year. Okay. Thank you very much. no more questions at this time, so I hand the conference back to the speakers for any closing comments. If there are no further questions, it is time to end this webcast. Thank you, Paolo and Nico and all the participants on the line. And we miss you. Nice rest of the day. Bye. Thank you very much for participating to the call. Thank you.