Nokian Renkaat Oyj

Earnings Release • Apr 29, 2024

Nokian Tyres plc Interim Report January–March 2024, April 29, 2024 at 1:00 p.m. EEST

Nokian Tyres plc Interim Report January–March 2024: Building the new Nokian Tyres on track in a challenging environment

January–March 2024

• Net sales were EUR 236.6 million (January–March 2023: 236.4). With comparable currencies, net sales increased by 1.4%.
• Segments operating profit was EUR -15.1 million (-14.1). Operating profit was EUR -26.2 million (-18.8). EUR -11.1 million (-4.7) was booked as non-IFRS exclusions.
• During the quarter, there was negative impact coming from the Red Sea crisis and the political strikes in Finland, causing loss of production, delays in shipments, and increased logistics costs.
• Earnings per share were EUR -0.18 (-2.59).
• Cash flow from operating activities was EUR -87.3 million (-57.6).
• In March, Nokian Tyres' President & CEO Jukka Moisio informed Nokian Tyres' Board of Directors of his intention to retire from his position during 2024. The Board of Directors has initiated the process of finding a successor for Moisio.

Guidance for 2024 (unchanged)

In 2024, Nokian Tyres' net sales with comparable currencies and segments operating profit are expected to grow significantly compared to the previous year.

Jukka Moisio, President and CEO:

"The first quarter net sales and segments operating profit were at previous year's level. The car and tire market continues to be demanding due to economic uncertainties and low consumer confidence. During the first quarter, we faced additional disadvantages due to the Red Sea crisis as well as the political strikes in Finland. Due to the strikes in February–April, we lost in total approximately three weeks of production in Passenger Car Tyres and one week in Heavy Tyres. The negative financial impact of the political strikes and the Red Sea crisis is approximately EUR 20 million in EBITDA, of which more than half in Q1.

Despite these setbacks we continue building the new Nokian Tyres according to our plans. Important and exciting milestones will be reached in 2024, when we celebrate the 90th anniversary of our innovation, the winter tire. Our new and the world's first zero CO2 emission tire factory in Romania will start production, US investment phase will be completed, and new innovative products will be launched.

We are taking firm steps forward in sustainability. During the quarter, we scored an A- from CDP for our actions aimed at reducing greenhouse gas emissions and mitigating climate change-related risks. Scores A and A- represent leadership level. In February we also announced a long-term purchase agreement for recovered carbon black with a tire recycling joint venture. The agreement will help Nokian Tyres reach one of its key sustainability targets, which is to increase the share of recycled and renewable raw materials in tires to 50 percent by 2030.

Tire sell-in is expected to grow in 2024, and with our increasing capacity and competitive product portfolio, we are ready to seize this opportunity. Due to seasonality, the sales growth and segments operating profit are expected to be generated in the second half of the year. Our strong balance sheet enables us to both continue executing on our clear growth strategy toward EUR 2 billion net sales with strong profits and reward our shareholders."

Key figures

EUR million	1–3/2024	1–3/2023	2023
Net sales	236.6	236.4	1,173.6
Net sales change, %	0.1%	-26.8%	-13.1%
Net sales change in comparable currencies, %	1.4%	-25.1%	-9.2%
Operating profit	-26.2	-18.8	32.1
Operating profit, %	-11.1%	-8.0%	2.7%
Result before tax	-31.6	-22.5	14.2
Result for the period	-25.5	-357.7	-325.5
EPS, EUR	-0.18	-2.59	-2.36
Segments EBITDA	12.5	11.2	170.5
Segments EBITDA, %	5.3%	4.7%	14.5%
Segments operating profit	-15.1	-14.1	65.1
Segments operating profit, %	-6.4%	-6.0%	5.5%
Segments ROCE, %*	4.0%	-1.4%	4.0%
Equity ratio, %	57.6%	67.8%	58.0%
Gearing, %	29.7%	3.3%	16.6%
Interest-bearing net debt	395.1	46.8	223.6
Capital expenditure	69.7	34.4	252.1
Cash flow from operating activities	-87.3	-57.6	82.4
* Rolling 12 months

In addition to IFRS figures, Nokian Tyres publishes alternative non-IFRS segments figures, which exclude the ramp-up of the US factory, the preparations for the Romanian factory ramp-up and other possible items that are not indicative of the Group's underlying business performance.

Following the completion of the Russia exit in March 2023, Nokian Tyres has excluded Russia from its IFRS and non-IFRS segments figures as of January 1, 2023.

FINANCIAL RESULTS IN JANUARY–MARCH 2024

Net sales in January−March 2024 totaled EUR 236.6 million (January−March 2023: 236.4) and were at previous years' level. With comparable currencies, net sales increased by 1.4%. Currency exchange rates affected net sales negatively by EUR 2.9 million.

Net sales by geographical area

				CC*
EUR million	1–3/2024	1–3/2023	Change	Change	2023
Nordics	126.9	127.6	-0.5%	1.0%	671.7
Other Europe	49.2	40.8	20.6%	22.2%	226.0
Americas	60.0	64.9	-7.5%	-7.1%	268.7
Other countries	0.5	3.1	-82.8%	-82.8%	7.2
Total	236.6	236.4	0.1%	1.4%	1,173.6

* Comparable currencies

Net sales by business unit

				CC*
EUR million	1–3/2024	1–3/2023	Change	Change	2023
Passenger Car Tyres	143.1	133.3	7.3%	8.7%	653.4
Heavy Tyres	55.1	68.2	-19.3%	-18.5%	257.1
Vianor	55.9	55.5	0.7%	2.3%	344.0
Other operations and eliminations	-17.4	-20.7	15.6%		-80.9
Total	236.6	236.4	0.1%	1.4%	1,173.6

* Comparable currencies

Raw material unit costs (EUR/kg) in manufacturing, including inbound logistics costs, decreased by 15% year-over-year, containing currency impact. Raw material unit costs were at the same level as in the fourth quarter of 2023.

Operating profit was EUR -26.2 million (-18.8). Non-IFRS exclusions were EUR -11.1 million (-4.7), of which EUR -9.0 million (-4.7) were related to the US factory ramp-up and EUR -2.1 million (0.0) to the preparations for the Romanian factory ramp-up.

Segments operating profit was EUR -15.1 million (-14.1).

During the quarter, there was negative impact coming from the Red Sea crisis and the political strikes in Finland, causing loss of production, delays in shipments, and increased logistics costs.

Segments operating profit by business unit

EUR million	1–3/2024	1–3/2023	2023
Passenger Car Tyres	-2.8	-4.6	36.7
Heavy Tyres	6.3	9.6	32.8
Vianor	-15.9	-13.5	3.4
Other operations and eliminations	2.7	-5.6	-7.8
Segments operating profit total	-15.1	-14.1	65.1
Non-IFRS exclusions	-11.1	-4.7	-33.0

Financial items and taxes

Net financial expenses were EUR 5.4 million (3.7), including net interest expenses of EUR 4.6 million (2.1). Net financial expenses include an expense of EUR 0.9 million (1.5) due to exchange rate differences. Result before tax was EUR -31.6 million (-22.5) and taxes were EUR 6.2 million (3.7). Segments result before tax was EUR -20.6 million (-17.7). Result for the period was EUR -25.5 million (-357.7, including the result for discontinued operations, i.e. Russian exit). Segments result for the period was EUR -16.7 million (-351.8). Earnings per share were EUR -0.18 (-2.59).

Cash flow

In January−March 2024, cash flow from operating activities was EUR -87.3 million (-57.6). Working capital increased by EUR 89.3 million (increased by 66.8). Inventories increased by EUR 23.5 million (increased by 36.4) and receivables increased by EUR 26.2 million (decreased by 9.7). Payables decreased by EUR 39.6 million (decreased by 40.1).

Investments

Investments in January−March 2024 totaled EUR 69.7 million (34.4). Depreciations and amortizations totaled EUR 30.4 million (27.3).

Nokian Tyres is building a new passenger car tire factory in Romania to expand its manufacturing footprint and rebuild capacity. The factory will be the world's first zero CO2 emission tire factory. The construction work is proceeding as planned, and the first tires are estimated to be produced in the second half of 2024. Commercial tire production is expected to start in early 2025. The annual capacity of the factory will be 6 million tires with an expansion potential in the future. The site will also house a distribution facility for storage and distribution of tires. The total investment is estimated to be approximately EUR 650 million.

In January−March 2024, Nokian Tyres also continued actions to finalize the ramp-up of the US factory, which is expected to reach its full capacity in 2024.

During the quarter, the company initiated a review of alternative ownership structures of its test center in Spain, where Nokian Tyres intends to remain an important user also going forward.

Financial position

EUR million	March 31, 2024	March 31, 2023	Dec 31, 2023
Cash and cash equivalents	283.2	357.1	414.9
Interest-bearing liabilities	678.4	403.9	638.5
of which current interest-bearing liabilities	182.5	202.8	142.9
Interest-bearing net debt	395.1	46.8	223.6
Unused credit limits	793.0	795.1	831.3
of which committed	330.2	305.3	330.3
Gearing, %	29.7%	3.3%	16.6%
Equity ratio, %	57.6%	67.8%	58.0%

In March 2024, one-year extension options were exercised for a total of EUR 300 million in long-term bilateral sustainability-linked term loans. Consequently, the maturity dates for these facilities were extended from April 2025 to April 2026. Additionally, the EUR 100 million bilateral sustainability-linked term loan due in May 2024 was refinanced with a similar three-year term loan that includes extension options of up to two years.

The average interest rate of interest-bearing financial liabilities was 4.5%.

The committed credit limits and the EUR 500 million 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.

Personnel

	1–3/2024	1–3/2023	2023
Group employees
on average	3,647	4,167	3,754
at the end of the review period	4,025	3,531	3,433
in Finland, at the end of the review period	2,145	1,873	1,767
in North America, at the end of the review period	576	457	558
Vianor (own) employees, at the end of the review period*	1,891	1,639	1,387

* Included in Group employee figures

BUSINESS UNIT REVIEWS

Passenger Car Tyres

EUR million	1–3/2024	1–3/2023	2023
Net sales	143.1	133.3	653.4
Net sales change, %	7.3%	-40.3%	-19.4%
Net sales change in comparable currencies, %	8.7%	-38.9%	-15.8%
Operating profit	-13.5	-9.3	4.1
Operating profit, %	-9.4%	-6.9%	0.6%
Segment operating profit	-2.8	-4.6	36.7
Segment operating profit, %	-2.0%	-3.4%	5.6%

In January−March 2024, net sales of Passenger Car Tyres totaled EUR 143.1 million (133.3). With comparable currencies, net sales increased by 8.7% due to higher sales volumes driven by increased product availability. Average Sales Price with comparable currencies was at previous year's level.

Operating profit was EUR -13.5 million (-9.3). Segment operating profit was EUR -2.8 million (-4.6). The improvement was mainly due to higher sales volumes and lower costs.

During the quarter, there was negative impact coming from the Red Sea crisis and the political strikes in Finland, causing loss of production of 11 days in Passenger Car Tyres, delays in shipments, and increased logistics costs.

The share of sales volume of winter tires was 27% (30%), the share of summer tires was 33% (28%), and the share of all-season tires was 40% (42%).

To expand its manufacturing footprint and rebuild capacity, the company is building a new passenger car tire factory in Romania. The construction work at the world's first zero CO2 emission tire factory in Romania is proceeding as planned, and the first tires are expected to be produced during the second half of 2024. In addition, the company continued its actions to finalize the ramp-up of the US factory, which is expected to reach its full capacity in 2024. In addition, contract manufacturing complements own production.

During the review period, the company launched a comprehensive range of summer and all-season tires to the Central European market, including Nokian Tyres Wetproof 1 and Nokian Tyres Powerproof 1 summer tires and Nokian Tyres Seasonproof 1 all-season tire.

Heavy Tyres

EUR million	1–3/2024	1–3/2023	2023
Net sales	55.1	68.2	257.1
Net sales change, %	-19.3%	6.0%	-5.1%
Net sales change in comparable currencies, %	-18.5%	6.4%	-3.4%
Operating profit	6.3	9.6	32.8
Operating profit, %	11.5%	14.0%	12.8%
Segment operating profit	6.3	9.6	32.8
Segment operating profit, %	11.5%	14.0%	12.8%

In January−March 2024, net sales of Heavy Tyres totaled EUR 55.1 million (68.2). With comparable currencies, net sales decreased by 18.5% due to weak market.

Operating profit was EUR 6.3 million (9.6). Segment operating profit was EUR 6.3 million (9.6). The decrease was mainly caused by lower volumes.

During the quarter, the political strikes in Finland caused loss of production of 5 days in Heavy Tyres, delays in shipments, and increased logistics costs.

During the review period, Heavy Tyres introduced an upgraded Nokian Tyres Noktop 21 range and launched new sizes to the Nokian Tyres Tractor King tire range designed for forestry, earthmoving and road construction jobs.

Vianor, own operations

EUR million	1–3/2024	1–3/2023	2023
Net sales	55.9	55.5	344.0
Net sales change, %	0.7%	-2.8%	-5.0%
Net sales change in comparable currencies, %	2.3%	2.7%	1.8%
Operating profit	-15.9	-13.5	3.4
Operating profit, %	-28.5%	-24.3%	1.0%
Segment operating profit	-15.9	-13.5	3.4
Segment operating profit, %	-28.5%	-24.3%	1.0%
Number of own service centers at period end	175	173	174

In January−March 2024, net sales of Vianor totaled EUR 55.9 million (55.5). With comparable currencies, net sales increased by 2.3%.

Operating profit was EUR -15.9 million (-13.5). Segment operating profit was EUR -15.9 million (-13.5). The first quarter is seasonally low in Vianor, therefore negative in profitability. The summer tire season starts in the second quarter.

At the end of the review period, Vianor had 175 (173) own service centers in Finland, Sweden and Norway.

Segments Total to Nokian Tyres Total reconciliation in 1−3/2024

In addition to IFRS figures, Nokian Tyres publishes alternative non-IFRS segments figures, which exclude the ramp-up of the US factory, the preparations for the Romanian factory ramp-up and other possible items that are not indicative of the Group's underlying business performance.

EUR million	Net sales	Cost of sales	SGA	Other operating income/ expenses	Operating profit	Financial income/ expenses	Taxes	Result for the period
Segments Total	236.6	-197.1	-55.0	0.3	-15.1	-5.4	3.9	-16.7
US factory ramp-up		-8.4	-0.5		-9.0		2.2	-6.8
Romanian factory preparations		-1.9	-0.2		-2.1		0.1	-2.0
Total non-IFRS exclusion		-10.3	-0.8		-11.1		2.3	-8.8
Nokian Tyres Total	236.6	-207.4	-55.8	0.3	-26.2	-5.4	6.2	-25.5

SHARES AND SHAREHOLDERS

At the end of March 2024, the number of shares was 138,921,750.

Number of shares (million units)*	March 31, 2024	March 31, 2023
at the end of period	137,87	138,37
in average	137,87	138,28
in average, diluted	137,87	138,28

* Excluding treasury shares

Authorizations

In April 2023, the Annual General Meeting authorized the Board of Directors to resolve to repurchase a maximum of 13,800,000 shares in the company by using funds in the unrestricted shareholders' equity. The proposed number of shares corresponds to approximately 9.9% of all shares in the company. The authorization will be effective until the next Annual General Meeting, however, at most until June 30, 2024, and it canceled the authorization given to the Board of Directors by the Annual General Meeting on April 28, 2022.

In April 2023, the Annual General Meeting authorized the Board of Directors to resolve to offer no more than 13,800,000 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 Board may decide to issue new shares or shares held by the company. The maximum number of shares included in the proposed authorization accounts for approximately 9.9% of all shares in the company. The authorization will be effective until the next Annual General Meeting, however at most until June 30, 2024, and it canceled the authorization given to the Board of Directors by the Annual General Meeting on April 28, 2022.

In April 2023, the Annual General Meeting authorized the Board of Directors to resolve on donations in the aggregate maximum amount of EUR 250,000 to be made to universities, institutions of higher education or to other non-profit or similar purposes during 2023 and 2024. The donations can be made in one or more installments. The Board of Directors may decide on the donation recipients, purposes of use and other terms of the donations.

In 2023, based on the authorization given to the Board by the AGM, a donation of EUR 60,000, divided over three years, was made to the Baltic Sea Action Group (BSAG) to support the protection of the Baltic Sea.

The Board did not utilize the authorizations in January−March 2024.

Own shares

No share repurchases were made during the review period, and the company did not possess any own shares on March 31, 2024.

Nokian Tyres has an agreement 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. On March 31, 2024, the number of these shares was 1,052,242, reported as treasury shares (March 31, 2023: 554,507). This number of shares corresponded to 0.76% (0.40%) of the total shares and voting rights in the company.

Trading in shares

A total of 43,111,824 (94,630,478) Nokian Tyres' shares were traded in Nasdaq Helsinki in January−March 2024, representing 31% (68%) of the company's overall share capital. The average daily volume in January−March 2024 was 684,315 shares (1,478,601). Nokian Tyres' shares are also traded on alternative exchanges.

Nokian Tyres' share price was EUR 8.73 (8.81) at the end of March 2024. The volume weighted average share price in January−March 2024 was EUR 8.46 (8.80), the highest was EUR 9.05 (11.62) and the

lowest was EUR 8.04 (7.31). The company's market capitalization at the end of March 2024 was EUR 1.2 billion (1.2 billion).

At the end of March 2024, the company had 97,054 (84,507) registered shareholders. The percentage of Finnish shareholders was 63.2% (53.8%), and 36.8% (46.2%) were non-Finnish holders and foreign shareholders registered in the nominee register. Public sector entities owned 17.4% (16.8%), financial and insurance corporations 5.5% (4.2%), households 32.4% (26.1%), non-profit institutions 2.2% (2.0%), and private companies 5.8% (4.5%).

Changes in ownership

In January−March 2024, Nokian Tyres plc received one notification of change in shareholding pursuant to Chapter 9, Section 5 of the Securities Markets Act. The details of the notification are available at www.nokiantyres.com/company/publications/releases/2024/flaggingNotifications/.

Managers' transactions

In January−March 2024, no managers' transactions were reported to Nokian Tyres plc.

THE ANNUAL GENERAL MEETING 2024

The Annual General Meeting of Nokian Tyres plc will be held on Tuesday, April 30, 2024 at 10:00 a.m. (EEST) at Messukeskus Siipi conference center at the address Rautatieläisenkatu 3, 00520 Helsinki, Finland. Further information is available at www.nokiantyres.com/company/annual-generalmeeting/2024/.

CHANGES IN MANAGEMENT

In March 2024, Nokian Tyres' President & CEO Jukka Moisio informed Nokian Tyres' Board of Directors of his intention to retire from his position during 2024. The Board of Directors has initiated the process of finding a successor for Moisio. Moisio has acted as the President & CEO of Nokian Tyres since 2020.

CORPORATE SUSTAINABILITY

In February 2024, Nokian Tyres scored an A- from CDP for its actions aimed at reducing greenhouse gas emissions and mitigating climate change-related risks. Scores A and A- represent leadership level. This is the fourth consecutive year that Nokian Tyres has received an A- for its climate work.

In February 2024, Nokian Tyres announced that it had made a long-term purchase agreement for recovered carbon black with a tire recycling joint venture. The agreement will help Nokian Tyres reach one of its key sustainability targets, which is to increase the share of recycled and renewable raw materials in tires to 50 percent by 2030. Nokian Tyres started to use recovered carbon black in a commercial product line in 2022, and the made agreement enables its increased utilization in tires accelerating circularity and sustainability in the tire industry.

In March 2024, Nokian Tyres published its Sustainability Report for 2023. The report is available at www.nokiantyres.com/company/sustainability/.

SHARE-BASED LONG-TERM INCENTIVE SCHEME FOR THE MANAGEMENT AND SELECTED KEY EMPLOYEES OF NOKIAN TYRES PLC

In February 2024, the Board of Directors confirmed to continue with new performance periods for the share-based incentive plan for the Group's key employees. The aim is to align the objectives of the Nokian Tyres' shareholders and key employees for increasing the value of the company in the long-term, to retain the key employees at the company and to offer them a competitive incentive scheme that is based on earning and accumulating shares.

The Performance Share Plan 2023–2027 consists of three performance periods covering the financial years 2023–2024, 2024–2025 and 2025–2027. The Board will decide annually on the commencement and details of the performance periods.

In the plan, the target group is given an opportunity to earn Nokian Tyres plc shares based on the achievement of the targets set for the performance periods. Potential rewards of the plan will be paid by the end of April 2026, 2027, and 2028 respectively. The rewards will be paid partly in Nokian Tyres plc shares and partly in cash. The cash proportion of the reward is intended for covering taxes and taxrelated expenses arising from the rewards to the participants. In general, no reward will be paid if the participant's employment or director contract terminates before the reward payment.

The rewards from the performance period 2024–2025 are based on EBITDA, increase in passenger car tire production volume and reduction in direct CO2 emissions. The possible reward will be paid during the first half of 2027 after a one-year retention period in case the targets set by the Board of Directors for Performance Period 2024–2025 are met.

The President and CEO of the company and members of the Management Team are obliged to hold 50 per cent of the received net shares until the value of the participant's total shareholding in the company corresponds to the participant's annual gross salary. The shareholding amount must be maintained as long as the membership in the Management Team or the position as a President and CEO continues.

The value of the gross rewards to be paid from the performance period 2024–2025 will correspond to an approximate maximum total of 1,760,000 Nokian Tyres plc shares, including the cash proportion. Approximately 150 persons, including the President and CEO of the company and other Management Team members, belong to the target group of the performance period.

Restricted Share Plan 2024

The Board of Directors decided to continue the Restricted Share Plan, using the same structure as in the previous years. The purpose of the Restricted Share Plan is to serve as a complementary long-term incentive tool, used selectively for retention of Nokian Tyres key employees. 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 in shares of Nokian Tyres plc and partly in cash.

The commencement of each individual plan is subject to a separate approval by the Board of Directors.

A precondition for the payment of the share reward based on the Restricted Share Plan is that the employment relationship of a participant with Nokian Tyres continues until the payment date of the reward. In addition to this precondition, a financial performance criterion is applied to Nokian Tyres Management Team. The criterion is a threshold value for segments Return on Capital Employed (ROCE), which must be exceeded for a potential payment of a share reward based on the Restricted Share Plan 2024–2026.

The RSP 2024–2026 within the Restricted Share Plan structure commenced effective as of the beginning of 2024 and the potential share reward thereunder will be paid in the first half of 2027. The possible rewards paid based on RSP 2024–2026 correspond approximately to a maximum of 120,000 gross shares.

Payments for share-based plans that ended in 2023

The Board of Directors approved outcomes of the Performance and Restricted share plans 2021–2023.

Performance Share Plan 2021–2023

The performance measure for the Performance Share Plan 2021–2023 was based on segments Earnings Per Share (EPS) and segments Return on Capital Employed (ROCE), both with an equal weight of 50%. Both targets did not meet the minimum level and thereby, no payments were conducted.

Restricted Share Plan 2021–2023

The three-year restriction period of the Restricted Share Plan 2021–2023 ended after financial year 2023. Some key employees participate in the share-based incentive plan, including a member of the Management Team. The financial threshold value for segments Return on Capital Employed (ROCE) applied for the Management Team member was achieved. The rewards paid corresponded to a total of 4,600 Nokian Tyres plc gross shares. The rewards were paid at the end of March 2024. A precondition

for the payment of the share reward based on the Restricted Share Plan was that the employment relationship of a participant with Nokian Tyres continued until the payment date of the reward.

The total number of shares of the company did not change due to payments for share-based plans that ended in 2023.

The Board of Directors anticipates that no new shares will be issued based on the share-based incentive schemes and that the schemes will, therefore, have no dilutive effect on the registered number of the company's shares.

SIGNIFICANT RISKS, 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 describes the overall business risks and risk management in its annual 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.

• Any unexpected production or delivery breaks at Nokian Tyres' production facilities or those of its contract manufacturing partners would have a negative impact on the company's business. Interruptions in logistics could have a significant impact on production and peak season sales.

• In order to secure tire supply, Nokian Tyres has decided to invest in new production capacity in Romania and increase the share of outsourced production. Delay in these actions could have an adverse effect on Nokian Tyres' financial performance.

• 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. Nokian Tyres continues to expand its supplier portfolio to mitigate risks related to single-source supplying and availability of sustainable raw materials. The non-compliance with 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 is provided at www.nokiantyres.com/company/sustainability/environment/climate-change-related-risks-andopportunities/.

• Foreign exchange risk consists of transaction risk and translation risk. The most significant currency risks arise from the Swedish and Norwegian krona, and the US and Canadian dollar. Approximately 65% of the Group's sales are generated outside of the euro-zone.

• The availability of supporting information systems and network services is crucial to Nokian Tyres. Unplanned interruption in critical information systems or network services may cause disruption to the continuity of operations. Such systems and services may also be exposed to cyber attacks that could cause a leakage of confidential information, violation of data privacy regulations, theft of know-how and other intellectual property, production shutdown or damage to reputation. Risk analyses and projects related to information security, data protection, and customer information are continuously a special focus area at Nokian Tyres.

• 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 October 2020, the prosecutor announced the decision to press charges against a total of six persons who acted as Board members and the President and CEO of Nokian Tyres in 2015–2016. The prosecutor also claimed a corporate fine against the company. In addition, four persons who were employees at Nokian Tyres in 2015 were charged for abuse of inside information. The District Court of Helsinki dismissed all charges and claims by the prosecutor in its ruling in June 2022. The decision is not yet legally binding, and the prosecutor has appealed against the decision of the District Court.

• A new and more dangerous variant of COVID-19 or other similar pandemics may slow down economic activity, and thus have a negative impact on Nokian Tyres' operations and supply chain as well as the demand and pricing for the company's products.

• Building a diverse customer base and fostering strong relationships help mitigate sales risks associated with relying on a limited number of large customers and create long-term stability for the business.

• Nokian Tyres' success relies heavily on employing the right individuals in the right positions. Failing to attract competent and committed professionals, coupled with an inability to create a motivating work environment, may have an adverse impact on the implementation of Nokian Tyres' strategy and the achievement of its financial targets.

• Various aspects of corporate sustainability, including product quality, safety, the environment, and human rights, are increasingly important. Non-compliance with the growing number of new laws, regulations, and standards, particularly those related to environmental, social and governmental (ESG) issues, or a lack of full comprehension regarding their impact on the company's business and disclosure requirements, can potentially result in fines and cause damage to the company's reputation.

• In January 2024, the European Commission initiated an unannounced inspection at Nokian Tyres plc's headquarters in Nokia, Finland. The European Commission has expressed its concerns that the inspected tire manufacturing companies may have violated EU antitrust rules that prohibit cartels and restrictive business practices. Nokian Tyres does not have information on the outcome of the inspection, and it cannot comment on the ongoing investigation. Nokian Tyres is fully co-operating with the authorities.

Tax disputes

There are no ongoing tax disputes in Nokian Tyres entities. Routine tax audits in Nokian Tyres Group entities may possibly lead to a reassessment of taxes.

ASSUMPTIONS FOR 2024

Sell-in in the replacement tire market is expected to grow in 2024. However, weak economic development in Nokian Tyres' main markets is expected to continue, which together with the low consumer confidence may have a negative impact on tire demand. In heavy tires, OEM demand may decrease due to high interest rates, which have a negative impact on machinery investments.

After peaking in early 2023, raw material cost is expected to moderate in 2024.

GUIDANCE FOR 2024 (UNCHANGED)

In 2024, Nokian Tyres' net sales with comparable currencies and segments operating profit are expected to grow significantly compared to the previous year.

Helsinki, April 29, 2024

Nokian Tyres plc Board of Directors

***

The information hereinabove contains forward-looking statements relating to future events or future financial performance of the company. In some cases, such forward-looking statements can be identified by terminology such as "may", "will", "could", "expect", "anticipate", "believe", "estimate", "predict" or other comparable terminology. Such statements are based on the current expectations, known factors, decisions, and plans of the management of Nokian Tyres. Forward-looking statements always involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Therefore, future results may even differ significantly from the results expressed in, or implied by, the forward-looking statements.

***

Interim condensed consolidated financial statements

This Interim Report has been prepared in accordance with IFRS compliant recognition and measurement principles and the same accounting policies as in the most recent annual financial statements, but it has not been prepared in compliance with all requirements set out in IAS 34 'Interim Financial Reporting'. The interim report figures are unaudited.

NOKIAN TYRES CONDENSED
CONSOLIDATED INCOME STATEMENT	1-3/24	1-3/23	1-12/23	Change %
EUR million
Net sales	236.6	236.4	1,173.6	0.1
Cost of sales	-207.4	-198.6	-932.5	-4.4
Gross profit	29.2	37.8	241.1	-22.6
Other operating income	0.7	0.6	3.7	3.0
Sales, marketing and R&D expenses	-37.4	-36.8	-143.1	-1.5
Administration	-18.4	-20.6	-71.1	10.7
Other operating expenses	-0.4	0.2	1.4	-334.2
Operating profit	-26.2	-18.8	32.1	-39.3
Net financial items	-5.4	-3.7	-17.8	-48.3
Result before tax	-31.6	-22.5	14.2	-40.8
Tax expense	6.2	3.7	-1.7	64.8
Result for the period, continuing operations	-25.5	-18.7	12.5	-36.0
Result for the period, discontinued operations	-	-338.9	-338.0	100.0
Result for the period	-25.5	-357.7	-325.5	92.9
Attributable to:
Equity holders of the parent	-25.5	-357.7	-325.5
Earnings per share from the result attributable
to the equity holders of the parent:
basic, euros	-0.18	-2.59	-2.36	92.9
diluted, euros	-0.18	-2.59	-2.36	92.9
continuing operations, euros	-0.18	-0.14	0.09	-36.4
discontinued operations, euros	-	-2.45	-2.45	100.0

CONSOLIDATED OTHER COMPREHENSIVE

INCOME	1-3/24	1-3/23	1-12/23
EUR million
Profit for the period	-25.5	-357.7	-325.5
Other comprehensive income, items
that may be reclassified subsequently
to profit and loss, net of tax:
Gains/Losses from hedge of net
investments in foreign operations	-	-	-
Cash flow hedges	-2.3	-5.7	-8.9
Translation differences
on foreign operations	7.5	-27.0	-33.5
Reclassification of discontinued operations	-	366.3	366.3
Total other comprehensive income
for the period, net of tax	5.3	333.6	323.8
Total comprehensive income
for the period	-20.2	-24.1	-1.7
Total comprehensive income
attributable to:
Equity holders of the parent	-20.2	-24.1	-1.7

CONSOLIDATED STATEMENT OF

FINANCIAL POSITION	31.3.24	31.3.23	31.12.23
EUR million
Non-current assets
Property, plant and equipment	941.4	727.5	885.2
Right of use assets	128.3	124.6	124.7
Goodwill	61.2	61.9	62.3
Other intangible assets	15.2	13.7	13.8
Investments in associates	0.1	0.1	0.1
Non-current financial investments	3.0	2.9	2.9
Other receivables	13.2	9.2	14.1
Deferred tax assets	62.9	34.3	55.0
Total non-current assets	1,225.3	974.3	1,158.1
Current assets
Inventories	494.7	468.1	471.7
Trade receivables	233.4	211.3	224.2
Other receivables	70.4	65.0	56.3
Cash and cash equivalents	283.2	357.1	414.9
Total current assets	1,081.6	1,101.5	1,167.1
Total assets	2,306.9	2,075.8	2,325.2
Equity
Share capital	25.4	25.4	25.4
Share premium	181.4	181.4	181.4
Treasury shares	-16.6	-12.3	-16.7
Translation reserve	-9.2	-10.2	-16.7
Fair value and hedging reserves	-0.7	4.8	1.6
Paid-up unrestricted equity reserve	238.2	238.2	238.2
Retained earnings	909.9	980.7	934.3
Total equity	1,328.5	1,408.1	1,347.6
Non-current liabilities
Deferred tax liabilities	22.5	4.6	26.7
Interest-bearing liabilities	495.9	201.1	495.6
Other liabilities	0.9	0.8	0.5
Total non-current liabilities	519.2	206.5	522.7
Current liabilities
Trade payables	153.0	119.7	155.9
Other current payables	121.9	133.3	154.4
Provisions	1.8	5.5	1.8
Interest-bearing liabilities	182.5	202.8	142.9
Total current liabilities	459.2	461.2	454.9
Total equity and liabilities	2,306.9	2,075.8	2,325.2

Changes in working capital arising from operative business are partly covered by EUR 500 million domestic commercial paper program.

Interest-bearing liabilities include EUR 92.1 million of non-current and EUR 41.4 million of current lease liabilities.

CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS	1-3/24	1-3/23	1-12/23
EUR million
Result for the period	-25.5	-18.7	12.5
Result for the discontinued operations	-	-338.9	-338.0
Adjustments for
Loss on sale of discontinued operations	-	336.5	335.6
Depreciation, amortization and impairment	30.4	27.3	114.9
Financial income and expenses	5.4	3.7	17.9
Gains and losses on sale of intangible assets, other changes	-0.6	6.0	0.8
Income Taxes	-6.2	-3.7	1.7
Cash flow before changes in working capital	3.6	12.0	145.4
Changes in working capital
Current receivables, non-interest-bearing, increase (-) / decrease (+)	-26.2	9.7	-4.0
Inventories, increase (-) / decrease (+)	-23.5	-36.4	-40.5
Current liabilities, non-interest-bearing, increase (+) / decrease (-)	-39.6	-40.1	1.0
Changes in working capital	-89.3	-66.8	-43.5
Financial items and taxes
Interest and other financial items, received	3.0	1.9	10.8
Interest and other financial items, paid	-2.4	-2.4	-21.0
Income taxes paid	-2.1	-2.3	-9.3
Financial items and taxes	-1.6	-2.8	-19.5
Cash flow from operating activities (A)	-87.3	-57.6	82.4
Cash flow from investing activities
Cashflow from discontinued operations	-	199.2	199.2
Acquisitions of property, plant and equipment and intangible assets	-69.7	-34.4	-252.1
Proceeds from sale of property, plant and equipment and intangible assets	0.0	0.1	0.3
Other cash flow from investing activities	0.0	0.0	0.0
Cash flow from investing activities (B)	-69.7	164.8	-52.7
Cash flow from financing activities:
Purchase of treasury shares	-	-	4.4
Change in current financial receivables, increase (-) / decrease (+)	0.1	1.1	1.2
Change in non-current financial receivables, increase (-) / decrease (+)	0.0	0.0	0.0
Change in current financial borrowings, increase (+) / decrease (-)	36.8	3.7	-161.3
Change in non-current financial borrowings, increase (+) / decrease (-)	-0.2	-0.3	398.8
Payment of lease liabilities	-11.3	-10.1	-41.2
Dividends paid	-	-	-72.1
Cash flow from financing activities (C)	25.3	-5.6	129.8
Change in cash and cash equivalents, increase (+) / decrease (-) (A+B+C)	-131.6	101.6	159.5
Cash and cash equivalents at the beginning of the period	414.9	259.0	259.0
Effect of exchange rate fluctuations on cash held	0.0	-3.5	-3.6
Cash and cash equivalents at the end of the period	283.2	357.1	414.9

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

• A = Share capital
• B = Share premium
• C = Treasury shares
• D = Translation reserve
• E = Fair value and hedging reserves
• F = Paid-up unrestricted equity reserve
• G = Retained earnings
• H = Total equity

	Equity attributable to equity holders of the parent
EUR million	A	B	C	D	E	F	G	H
Equity, Jan 1, 2023	25.4	181.4	-16.6	-349.5	10.5	238.2	1,343.5	1,433.1
Result for the period							-357.7	-357.7
Other comprehensive income,
net of tax:
Cash flow hedges					-5.7			-5.7
Translation differences				339.3				339.3
Total comprehensive
income for the period				339.3	-5.7		-357.7	-24.1
Acquisition of treasury shares			-					-
Share-based payments			4.3				-5.2	-0.9
Other changes							0.0	0.0
Total transactions with owners
for the period			4.3				-5.3	-1.0
Equity, Mar 31, 2023	25.4	181.4	-12.2	-10.2	4.8	238.2	980.6	1,408.1
Equity, Jan 1, 2024	25.4	181.4	-16.7	-16.7	1.6	238.2	934.3	1,347.6
Result for the period							-25.5	-25.5
Other comprehensive income,
net of tax:
Cash flow hedges					-2.3			-2.3
Translation differences				7.5				7.5
Total comprehensive
income for the period				7.5	-2.3		-25.5	-20.2
Acquisition of treasury shares			-					-
Share-based payments			0.1				-0.4	-0.3
Other changes							1.4	1.4
Total transactions with owners
for the period			0.1				1.0	1.1
Equity, Mar 31, 2024	25.4	181.4	-16.6	-9.2	-0.7	238.2	909.9	1,328.5

SEGMENT INFORMATION	1-3/24	1-3/23	1-12/23	Change%
EUR million
Net sales
Passenger car tyres	143.1	133.3	653.4	7.3
Heavy Tyres	55.1	68.2	257.1	-19.3
Vianor	55.9	55.5	344.0	0.7
Other operations and eliminations	-17.4	-20.7	-80.9	15.6
Total	236.6	236.4	1,173.6	0.1
Operating result
Passenger car tyres	-13.5	-9.3	4.1	-45.5
Heavy Tyres	6.3	9.6	32.8	-33.8
Vianor	-15.9	-13.5	3.4	-15.4
Other operations and eliminations	-3.2	-5.6	-8.2	40.6
Total	-26.2	-18.8	32.1	-39.3
Operating result, % of net sales
Passenger car tyres	-9.4	-6.9	0.6	-35.6
Heavy Tyres	11.5	14.0	12.8	-18.0
Vianor	-28.5	-24.3	1.0	-14.6
Total	-11.1	-8.0	2.7	-39.2
NET SALES BY GEOGRAPHICAL AREA	1-3/24	1-3/23	1-12/23	Change%
EUR million
Nordics	126.9	127.6	671.7	-0.5
Other Europe	49.2	40.8	226.0	20.6
Americas	60.0	64.9	268.7	-7.5
Other countries	0.5	3.1	7.2	-82.8
Total	236.6	236.4	1,173.6	0.1

ADDITIONAL IMPAIRMENT TESTING OF CASH GENERATING UNIT PASSENGER CAR TYRES

The war in Ukraine severely impacted Nokian Tyres' operational environment and production capacity. The company also considers the relationship between its market capitalization and its book value when reviewing for indicators of impairment. The company's market capitalization at the end of March 2024 was EUR 1.2 billion and it was below the amount of equity EUR 1.3 billion indicating a need for impairment testing.

The recoverable amount of the CGU was based on five-year cash flow projections. Cash flows beyond the five-year period were calculated using a terminal value method. The weighted average cost of capital (WACC) has been calculated in the same manner as described in the Financial Statements 2023. Future cash flows after the forecast period approved by the management have been capitalized as a terminal value using a steady 2% growth rate. The goodwill allocated to the CGU Passenger Car Tyres was EUR 60.3 million. The calculations have included the investment in the new production capacity in Europe in accordance with the Board of Directors' decision. The company has committed to the investment and the investment has been substantively commenced. Due to the nature of the investment, a significant amount of the recoverable amount of the cash flow is generated in the terminal value. The recoverable amount in Passenger Car Tyres significantly exceeds the carrying amount of the cash generating unit. As a result of the additional impairment testing, no goodwill impairments were recorded in the income statement.

DERIVATIVE FINANCIAL

INSTRUMENTS	31.3.24	31.3.23	31.12.23
EUR million
INTEREST RATE DERIVATIVES
Interest rate swaps
Notional amount	200.0	100.0	150.0
Fair value	0.9	3.5	1.6
FOREIGN CURRENCY DERIVATIVES
Currency forwards
Notional amount	159.7	212.6	227.6
Fair value	1.8	2.9	1.1
Currency options, purchased
Notional amount	6.4	4.7	6.7
Fair value	0.1	0.1	0.0
Currency options, written
Notional amount	15.0	11.5	15.6
Fair value	-0.1	0.0	-0.3
Interest rate and currency swaps
Notional amount	-	18.4	-
Fair value	-	1.9	-
ELECTRICITY DERIVATIVES
Electricity forwards
Notional amount	10.5	6.7	9.1
Fair value	-1.4	2.7	0.7

IFRS 16 LEASES
EUR million
Balance sheet effects	31.3.24	31.3.23	31.12.23
Fixed assets
Right to use	128.3	124.6	123.8
Total	128.3	124.6	123.8
Equity & Liability
Non-current liability	92.1	93.0	92.6
Current liability	41.4	36.8	36.5
Total	133.6	129.7	129.1
P&L effects	1-3/24	1-3/23	1-12/23	Change %
Reversed rents	12.4	11.1	44.4	12.3
Depreciations	-11.1	-10.2	-41.3	-8.6
Finance costs	-1.1	-1.0	-4.0	-9.9
Total	0.2	-0.2	-1.0	218.7