Earnings call transcript: Nokian Tyres’ Q3 2025 profit surges 427%, stock climbs 9%

Nokian Tyres reported a significant boost in its Q3 2025 financial performance, with operating profit soaring 427% and net sales increasing by 10.8% in comparable currencies. According to InvestingPro data, the company’s revenue growth over the last twelve months stands at 11.32%, showing consistent momentum. The company’s stock responded positively, rising 9.02% following the earnings announcement, now trading near its 52-week high. Despite the impressive results, the earnings per share (EPS) and revenue forecasts were not provided, preventing a direct comparison with analyst expectations.

Key Takeaways

• Operating profit increased by 427%, highlighting strong financial performance.
• Net sales grew by 10.8% in comparable currencies.
• The stock surged 9.02% post-earnings, reflecting investor confidence.
• The company maintained its 2025 guidance, with no new capacity investments planned.
• The Romanian factory is now operational 24/7, targeting 1 million tire production by year-end.

Company Performance

Nokian Tyres demonstrated robust performance in Q3 2025, with a notable 427% increase in operating profit. This growth was driven by a 10.8% rise in net sales in comparable currencies. The company’s strategic focus on innovation and operational efficiency contributed to these results, reinforcing its strong position in the market.

Financial Highlights

• Revenue: €65.4 million EBITDA, representing 19% of sales.
• Segment operating profit: €32.4 million, a 6% increase.
• Year-to-date sales growth: 9.4%.
• Positive operating cash flow targeted for 2025.

Market Reaction

Following the earnings release, Nokian Tyres’ stock experienced a notable 9.02% increase, closing at €8.15. This rise reflects positive investor sentiment, driven by the company’s strong financial performance and growth prospects. InvestingPro analysis reveals the company maintains an impressive 30-year streak of dividend payments, with a current dividend yield of 5.7%. The stock’s movement positions it closer to its 52-week high of €8.98, with relatively low price volatility compared to peers.

Outlook & Guidance

Nokian Tyres maintained its 2025 guidance, with expectations to grow and improve segment operating profit percentages. The company does not plan additional capacity investments over the next two years, focusing instead on optimizing existing resources. The Romanian factory is expected to reach a capacity of 6 million tires by the end of 2026.

Executive Commentary

CEO Paolo Pompei emphasized the company’s strategic focus, stating, "We are now guiding €180 million investment level at the end of 2025." He added, "It’s now time to harvest what we did in the last three years and to make sure that we are able to saturate our existing capacity." These comments underscore the company’s commitment to leveraging past investments for future growth.

Risks and Challenges

• Market Saturation: Potential challenges in expanding market share in a stable European passenger car tire market.
• Declining North American Market: Gradual decline in North American markets could impact future sales.
• Agricultural Tire Market: Continued downturn in this segment may affect revenue streams.
• Inventory Management: Slight volume decline due to inventory management could pose a risk.
• Potential Job Cuts: Negotiations for cutting 80 permanent white-collar jobs may impact operational dynamics.

Nokian Tyres’ Q3 2025 results highlight a strong financial performance and a strategic focus on optimizing existing capacities, positioning the company well for future growth despite potential market challenges.

Full transcript - Nokian Renkaat Oyj (TYRES) Q3 2025:

Annukka Angeria, Investor Relations, Nokian Tyres: Good afternoon from Helsinki and welcome to Nokian Tyres Q3 2025 results webcast. My name is Annukka Angeria and I’m working at Nokian Tyres Investor Relations. Together with me in this call, I have Nokian Tyres President and CEO Paolo Pompei and Interim CEO Jari Huuhtanen. As usual, Paolo and Jari will start by presenting the results, and after that there will be time for questions. With these words, I will hand over to you, Paolo. Please go ahead.

Paolo Pompei, President and CEO, Nokian Tyres: Thank you, Annukka. And good afternoon also from my side. Let’s start this presentation with our headline, which is a stronger operating profit improvement in Q3 driven by enhanced pricing in Passenger Car Tyres. Actions ongoing to further strengthen our financial performance. We are closing an important quarter and I have to say that I’m very pleased to tell that we are really moving in the right direction. As we said in the headline, our operating profit increased significantly and obviously this is very encouraging for the future journey that we have ahead of us. What we are going to do this afternoon, we are going to talk about our quarterly highlights, the financial performance. Jari will comment on the business unit performance and then, of course, we will close the presentation with assumptions and guidance. Let’s go to the quarterly highlights.

In slide number 4, we had double-digit sales growth. We were able to grow in all the regions. The sales growth was 10.8% in comparable currency. The operating profit improved significantly, plus 427%, and this was mainly driven by our effort in improving our pricing in the Passenger Car Tyres. We still have a lot to do. There are still a lot of actions going on in order to improve our financial performance. We’re also very pleased about our ramp-up of the operation in Romania that are progressing extremely well and we are now actually running 24/7. In the month of September, we were also expanding our product offering and brand partnership. We’ll tell something more in a minute. Of course, there is also, starting from the 1st of September, a favorable tariff development in North America for Nokian Tyres.

Moving to slide number 5, let’s talk about our new factory in Romania. We’re very pleased to say that we are in line with our plan. We will reach 1 million pieces by the end of this year and we started now operating full shifts 24/7. We have now all the people we need to carry on our journey and to make sure we will be able to achieve the target of this year of 1 million pieces. We also released a few weeks ago a new product line that is completing the summer product range at this stage after the all-season range that we released only a few months ago with the startup of the operation in Oradea. Moving to slide number 6, this is also an important step forward for the factory, but also for Nokian Tyres in particular for our business in Central and South Europe.

We released our Prowler Proof 2 a few days ago. This is our premium offering in the ultra high-performance segment summer tire. This range is performing extremely well, has been certified in thermal performance and tested by TÜV SÜD, and we were able to launch this new product in the beautiful scenario of our test center in Spain, Aca Ring, together with more than 160 customers and journalists coming from Central and Southern Europe. This obviously will support our growth in the Central European market together, obviously, with our winter tire range as well as our all-season tire range.

Moving to slide number 7, we’re also pleased to tell you that we received once again several testimonials of our premium performance in the winter tire segment, in particular in the Nordics, where we were able to be tested in several magazines or by several associations, being scored as number one tire or on the podium when we talk about studded and non-studded winter tires. We keep our leadership and we still have new projects coming up in the next few months that will actually reinforce our leadership in the winter tire segment. We have also some good news related to the heavy tire business. We will receive in a few days the silver medal for our Intuito 2.0 smart tire technology that is going to be fitted in our agricultural tires.

This is a very important step forward in terms of connecting the tire to the machine and the operator of the machine, measuring the load of the machine or the pressure, and optimizing the operating performance of the machine at the right pressure. Moving to slide number 8, we’re also reinforcing our effort in terms of communication. We signed an important agreement for two years with the IIHF, which is actually a federation, sorry, which is actually going to support the world competition in the ice hockey segment in Switzerland in 2026 and in Germany in 2027. We’re very pleased to be partners of these important sports because it reflects our value and also it is giving the possibility to Nokian Tyres to be visible to millions of ice hockey fans that are obviously happy to view and to support this nice competition.

Moving to slide number 10, we are going to look at our performance. Quarter 3 was in some way stable in Europe, a little bit down in North America. When we look at the performance now, year to date, we have the market pretty stable in Europe, and we see the market gradually declining in North America when we talk about Passenger Car Tyres. The market in truck tires or in the agri tire has been stable in truck tires, while in the agricultural segment it’s still down compared to previous years, both in the replacement market as well as in the original equipment market.

Moving to slide number 11, despite the, I will say, difficult market condition or stable market condition when we talk about Europe, we are very pleased to say that we were able to grow by 10.8% with comparable currency in the quarter, and we were able to grow in all the regions. We did really an exceptionally good performance in the North American market in a declining market environment. We are finally doing extremely well in North America, and we are very pleased about the journey that we have done so far. Our EBITDA as well has been increasing up to €65.4 million. This is actually now 19% in percentage of sales, and our segment operating profit has been growing by over 6% to €32.4 million.

It’s very important to remember that the comparability when we talk about segment operating profit is heavily affected by €13.3 million exclusions or write-down related to the write-down of the contract manufacturing product that we did last year in Q3 2024 that are in some way impacting the comparability. This is why we are very pleased about the extremely important growth of over 427% in the operating profit performance that is reflecting really the performance of the company at 360 degrees. Moving to slide number 12, as I mentioned before, we are growing in terms of net sales in all the regions, in Europe by 4.6%, in Central Europe and Southern Europe by 9.2%, and we’re growing by 27% in North America, supported by good pricing and mix. Moving to slide number 13, we move to the cash flow in particular. We were able to improve our cash flow performance.

This was mainly driven by lower investments, but also by improved working capital, as we will see in the next slide. Overall, year to date, we are growing in terms of sales by more than 9.4%, and of course we are improving our segment EBITDA as well as our operating segment operating profit. Looking a little bit deeper into the cash flow, you will see that obviously the improvement of cash flow was coming obviously from the EBITDA improvement of €33 million. Of course, by an improvement of the working capital, we’ve been able to grow, reducing our inventory level in our operations. We are also obviously investing less. We are getting step by step to a normal level of investments, and of course we have higher financial expenses, and obviously we had a lower dividend, but obviously higher debt.

Overall, year to date, we are improving, and obviously our target is to become cash positive, meaning generating positive operating cash flow already next year. As we mentioned, we are now guiding €180 million investment level at the end of 2025. This will basically close a long cycle of approximately three years that was necessary to reinforce our operations and to build our new manufacturing footprint, in particular with the latest investment we did in Romania in Oradea. The CAPEX are expected to return again next year to a normal level. As you know, we are entitled to get state aid from the Romanian government up to €100 million. We are expecting to receive the first part of this incentive by the end of the year or in Q1 next year.

Moving to slide number 16, I would like to pass the stage to Jari for the performance of the business units.

Jari Huuhtanen, Interim CEO, Nokian Tyres: Okay, thank you, Paolo, and good afternoon. I’m moving to page Passenger Car Tyres. In third quarter, we continued sales and profit growth. Net sales was €234 million and the increase in comparable currencies was +13.2%. Our average sales price with comparable currencies improved and the share of higher than 18 inches tires increased significantly. Segment operating profit was €38.9 million or 16.6% of the net sales. The segment operating profit improved due to price increases and favorable product mix. Moving to page 18, here we can see Passenger Car Tyres’ net sales and segment operating profit predictions in third quarter. Net sales improved from €210 million to €234 million, and clearly the biggest positive contribution is coming from the price/mix, +€35 million. Sales volume was slightly down compared to last year, -€7 million, and in addition, we had some currency headwind coming mainly from U.S. and Canadian dollars.

In segment operating profit, you can see that there are two components which are clearly becoming visible. First of all, this positive price/mix, €35 million. On the other hand, in supply chain, we have a negative impact of €25 million. Here, the reasons are mostly related to non-IFRS exclusions we had in last year, third quarter. Contract manufacturing, inventory write-downs, and data on ramp-up related exclusions. In material cost, we still had slightly negative impact, -€3 million. However, we can say that we are very close to previous year cost level at the moment. Sales volume -€3 million, but otherwise, it’s very stable performance compared to prior year. Moving to page 19, Passenger Car Tyres’ net sales components, quarterly change is in price/mix. We can see a significant improvement compared to last year, +16.5%. This is due to implemented price increases and better product mix compared to last year.

In sales volume, -3.3% and in currency -1.7% in the third quarter. Moving to Heavy Tyres, in third quarter, we had lower volumes which affected net sales and profitability. Net sales was €55.4 million and the change in comparable currencies was -4.4%. Net sales decreased mainly due to lower volumes in truck and agri tires. Segment operating profit was €5 million or 9% of the net sales. Profitability declined in Heavy Tyres, mainly due to lower volumes and inventory revaluations, which had a positive impact in last year’s third quarter numbers. In Vianor, in third quarter, we reported improved sales and operating profit. Net sales was €74.9 million and the increase in comparable currencies was +7%. Segment operating profit seasonally negative, -€6.4 million or -9% of the net sales. However, we can see an improvement both in operating and business profitability. I’m handing over back to you, Paolo.

Paolo Pompei, President and CEO, Nokian Tyres: Paolo, I believe...

Annukka Angeria, Investor Relations, Nokian Tyres: Anna, please.

Paolo Pompei, President and CEO, Nokian Tyres: Yeah, on mute.

Annukka Angeria, Investor Relations, Nokian Tyres: Please unmute yourself.

Paolo Pompei, President and CEO, Nokian Tyres: Sorry about that. Yes. Moving to slide 23 to the assumptions and guidance. We have very good news in quarter three coming from the North American market. As you know very well, we are exporting all-season tires from our factory in Dayton, in the United States, to Canada. These were obviously counter tariffs implemented by Canada at the end of quarter two. Those counter tariffs have now been removed. Obviously, today we are in the ideal situation to deliver tires from the U.S. to Canada without duties. Anything else remains as it was before. 85% of what we sell in the United States is made in the United States, and this is making the company much less vulnerable, having a business model that is local for local. The winter tire business that is going to Canada is supported by our factory in Nokian based in Finland.

Moving to slide 24, our guidance for 2025 remains exactly the same. We are expected to grow and segment operating profit as a percentage of net sales to improve compared to previous year. We are assuming a stable market to remain at the previous year level. Of course, we are like anybody else, we observe the development of the global economy as well as the geopolitical situation. Since trade and tariffs are creating some uncertainty and may create some volatility to the company business environment. Of course, we follow our own journey. We have opportunities to grow also in a changing market environment, also supported by our new manufacturing footprint in Romania that is supporting our Central and South European market. We close this presentation, and obviously we are happy to reply to all your questions and answers.

Conference Operator: If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Akshat Kacker from JPMorgan Chase & Co. Please go ahead.

Akshat Kacker, Analyst, JPMorgan Chase & Co: Good afternoon, Paolo, Jari. Thank you for taking my questions. Three, please. The first one on price increases that you implemented. Congratulations on a good quarter. If you could just put that into context for us, could you just talk about a few regions or product ranges where you’ve increased these price increases? Specifically, how do you think about the sustainability of these price increases going forward? A couple of your peers, the bigger tier ones, have actually taken down their price/mix assumptions in the last quarter based on the inventory situation and the price/mix trade down that they’re seeing from the consumers in the market. Just the first question on the price increases and the sustainability of that going forward. The second question is on volumes. I noticed on the passenger coverage that volumes have declined by around 3.5% in the quarter.

It’s the first quarter where we’ve seen that volume decline, obviously somewhat explained by the price increases. Could you talk to us about overall expectations for volume growth going forward, given that the business has been in a supply constrained mode? The last one on Passenger Car Tyres margins, please. Again, a very strong development in Q3. Margins have improved to 12% versus the 2% that we saw in Q2. Could you talk about your expectations into Q4? Should we still expect improving mix, improving margins as we go into Q4? Please, thank you so much.

Paolo Pompei, President and CEO, Nokian Tyres: Excellent. Yeah, thank you very much for your question. Obviously, I’m happy to reply to at least the first two questions. Talking about price increase, this is a journey that we started already at the end of quarter one, as you may remember. It was necessary, first of all, to compensate the raw material cost increasing in quarter one compared to previous year. That was mainly valid for all the regions, in particular for the Nordics. Of course, we combined these price increases also to necessity to gradually reposition our products in Central Europe as well as in North America. The question is if this is sustainable. Of course, we cannot keep increasing pricing. It was extremely important for us, again, to compensate the increasing rising raw material costs and at the same time to gradual repositioning our in Central Europe and in North America. Is this affecting volume?

Going to the second question. In reality, in a very small part. What I mean is that this important improvement is also related to the strong write-off and consequent sell-out of a lot of tires that we did in quarter three last year. This is what is affecting the comparability at segment operating profit, but at the same time, it’s improving significantly our profit. This 3% in reality is extremely, if we take away the action that we did last year in order to release quickly the slow-moving inventory accumulated due to the crisis in the Red Sea, we can still calculate an important growth for the company. That is really where the volume effect is coming from.

We are not expecting the price increase to affect volume at this stage, and the minus 3% is well justified by the comparability with the previous year due to the action we made in order to release the slow-moving stock that we have accumulated due to the crisis in the Red Sea channel. The margins are improving, obviously. We’ll keep improving because at the same time we are not only improving in terms of prices, but we are also operating more efficiently with our own factories. Obviously, and now we are moving to the last part of the season, meaning that we will sell in this quarter more winter tires. By definition, our margins will keep improving in quarter four. I hope I replied to all your questions.

Akshat Kacker, Analyst, JPMorgan Chase & Co: Yes, that was great. Thank you.

Conference Operator: The next question comes from Thomas Besson from Kepler Cheuvreux. Please go ahead.

Thomas Besson, Analyst, Kepler Cheuvreux: Thank you very much for taking my questions. I’ll have three as well, please. The first one is on your planned adjustment measures, the personnel negotiations that may lead to 80 permanent white-collar job cuts. Could you put that in perspective? Is that part of your better or more efficient operations? Or is that coming on top of what you were describing with the new Romanian plant and the substitution of your off-take by your own production? Second question will be on the $180 million CAPEX guide. Could you confirm that it does not include any Romanian state aid that may or may not happen in 2025? Finally, you had a tough quarter for your ag and trucks business, what I would call the specialty business or industrial tire business.

Could you tell us whether you already see a trust coming for that business and when that would be or whether it’s still not visible yet when that would be? Thank you very much.

Paolo Pompei, President and CEO, Nokian Tyres: Thank you very much for your question. We start with the negotiation. Obviously, this is part of our journey when we want to improve efficiency and productivity. This is necessary to support the company in this journey, in particular when we talk about SG&A development. We start the negotiation and obviously we will inform you about the progress. In general, it’s part of our journey to improve our efficiency and productivity within the company. When we talk about the state aid, I confirm that within the $180 million, there is nothing about the state aid. At the moment, we are not including the state aid in any calculation when we talk about CAPEX as well as cash. About the agri and truck business, this is a million-dollar question. I believe the agri business in particular is subject to cycles. Cycles can be long or short.

In general, obviously, we are now landing at the end of the second, I would say, almost second years of downturn. Obviously, I’m expecting the agri business at the OE level in particular to recover pretty soon in the next 6 to 12 months. This is not scientific. I’m just observing the history and the cycle that were affecting the agricultural, in particular, tire business in the last 20 years. You will see there is a growing trend if you take the last 20 years, but this growing trend has gone through up and down with cycles that were lasting in a positive or negative way two or three years. I hope I replied to all your questions.

Thomas Besson, Analyst, Kepler Cheuvreux: Thank you.

Conference Operator: As a reminder, if you wish to ask a question, please dial the pound key five on your telephone keypad. The next question comes from Artem Baletsky from SEB. Please go ahead.

Artem Baletsky, Analyst, SEB: Yes, hi. Thank you for the presentation and taking my questions. I also have three to be asked. The first one is relating to price/mix development in Passenger Car Tyres. I guess it’s also volume-related given the fact that it was a bit messy comparison from last year. I think you agree with it. Maybe just a question on the pricing side. Could you maybe comment whether there have been some further price changes, what you have done, for example, during Q3, which are not yet visible in the numbers? The second question is related to net debt. I understand that Q3 seasonal is a peak, what we always see in your case. Maybe you can provide us with some type of indication where you see net debt landing by the end of this year. The last one is just relating to winter tire season.

How have you seen the demand picture so far, what comes to Europe and also North America? Thank you.

Paolo Pompei, President and CEO, Nokian Tyres: All right. Thank you for the questions. I start with the first question about price and mix development. I agree with you. Obviously, the comparability with last year is affected by the write-off and consequently by the sale of the slow-moving tires in the Central European market. However, we can say that the price and mix development was good for the company also without this effect. Clearly, we have implemented pricing action in quarter two and in quarter three. There will be a carryover in quarter four, and that is pretty clear. Of course, we will not make any comment about future price development for obvious competition rules. The third question was about the net debt. As you know very well, considering our seasonality, quarter three is always the period of the year where obviously our debts are getting to a higher level.

We are expecting the level of net debt to go down in the next quarter. About the winter tire season, we can say that obviously the weather was actually a little bit too warm, let’s say, in September. Now it’s getting colder, both in the Nordics as well as in North America. We are expecting the winter tire season to basically start, as I speak, in this moment in November. We had also good pre-sales activities, obviously, in the previous month. We see the market is still growing. Obviously, we are pretty positive about the development of the winter tire sales.

Jari Huuhtanen, Interim CEO, Nokian Tyres: Okay, that’s very clear. Thank you, Paolo.

Paolo Pompei, President and CEO, Nokian Tyres: Thanks a lot.

Conference Operator: The next question comes from Thomas Besson from Kepler Cheuvreux. Please go ahead.

Thomas Besson, Analyst, Kepler Cheuvreux: Thank you. I’ll take the opportunity to ask some follow-up questions, please. First, I’d like to discuss a bit about your working capital, if that’s possible. I mean, your inventory has declined, but receivables increase. Could you indicate whether you see any risk of write-down? Could you talk about your exposure to ATD, whether it’s new, how much it increased? I mean, this company went under recently. Did you have any exposure as it moved into Chapter 11 or not? When I look at your payables, they’re higher than usual. Could you explain why and whether this will be a headwind on the working capital front in Q4? My last question will be on your net interest charge. I mean, your net debt obviously has gone up the last three years because of your investment program.

We’ve seen the net interest charge in your P&L and your cash flow statement going up. Could you give us some indication about what we should expect for 2025, both on the P&L and on the cash flow statement, and whether it will already be declining in 2026 or be flat in 2026 or 2025? Thank you.

Paolo Pompei, President and CEO, Nokian Tyres: Okay, thank you. I will reply to the first one, and maybe Jari can also support the discussion on the last two topics. About the working capital, the working capital is improving with growing sales year to date. We are very pleased about this development. Obviously, this is really driven in particular by the reduction of the inventory that we have implemented basically during the whole year, in particular now in quarter two and quarter three. The receivables are growing because we are growing in terms of sales. About ATD, obviously, it is a new partnership. I think ATD today is very well supported by strong equity funds, extremely strong from the financial point of view. Of course, our exposure is relatively low since we are at the beginning of the journey. We will grow together with ATD, and we will support ATD will support our growth in North America.

They are by far the largest national distributor in North America, and they are able actually to very well support our sales in any corner of that country. Payables are higher, obviously, because we are growing in Oradea. Please, Jari, would you like to comment the payable and net interest?

Jari Huuhtanen, Interim CEO, Nokian Tyres: Yes, thank you. First of all, payables, of course, we have multiple different actions ongoing to get a little bit better performance in payables. Unfortunately, at the moment, we have not been able to see, but of course, work will continue and we want to improve in that respect. I think the second question was related to net debt and interest expenses in our P&L. Of course, we have more net debt, as we discussed earlier, and interest expenses are higher than what we had in last year. On top of that, you can notice from the report as well that we have some heads in costs which are related to our Romanian operation and especially to the project to build a new factory in Romania. It’s quite difficult to comment on anything related to 2026 at the moment, so let’s come back to that later.

Those are the main kind of answers or reasons behind.

Thomas Besson, Analyst, Kepler Cheuvreux: Thank you.

Conference Operator: The next question comes from Rowley Juva from Inderes. Please go ahead.

Thomas Besson, Analyst, Kepler Cheuvreux: Yeah, hi, Rowley from Indiers here. A question still on the Passenger Car Tyres margins. You touched this already, but just want to be clear. You posted in Q3 now around 16% EBIT margin as last year, and then your Q4 last year was really weak. I guess you should be improving from that year on year. How do you see the dynamics on the Passenger Car Tyres margin from between Q4 and Q3?

Paolo Pompei, President and CEO, Nokian Tyres: I think the level of margins that we are reaching today are rewarding really the strong effort of the team globally in improving pricing and at the same time in improving our cost when we talk about manufacturing. They are a natural consequence of what we are doing around the company. Obviously, we should expect that we are improving because this is what we are here for in order to reach our financial targets. Pricing, as I told you already, it has a strong impact, but we should not underevaluate as well the improvement that we are having also from the manufacturing point of view, also considering that last year we were excluding in quarter three the part of the cost that we had in North America in Dayton, while this year we don’t have those kinds of exclusions.

In terms of comparability, I believe that we are really progressing in the right direction and this is really encouraging. You should see step-by-step margins improvement.

Thomas Besson, Analyst, Kepler Cheuvreux: All right. Thank you.

Conference Operator: The next question comes from Akshat Kacker from JPMorgan Chase & Co. Please go ahead.

Akshat Kacker, Analyst, JPMorgan Chase & Co: Thank you for getting me back on the line. A couple of follow-up questions, please. The first one, when I think about your production capacity and your footprint, could you talk about your overall plans for capacity additions going into next year, please? Are you adding more capacity at Dayton or in Finland, please? The second part of the question is, could you just clarify the contribution from the Romanian plant in terms of commercial tires in this quarter? How should we expect off-take agreements to progress going into next year? Just a total overview on overall capacity planning, please. Thank you so much.

Paolo Pompei, President and CEO, Nokian Tyres: Okay. Thank you very much. As I mentioned several times, and this is very important, we will focus as a company on profitable growth. Capacity now is there. We were able to build this capacity. We are very pleased about what we were able to do so far, but now it’s really time to focus on profitable growth. The capacity that we have today, it’s enough to support our strategic term objective for the next three years. We will not need to implement additional capacity at this stage in both Central Europe as well as in North America. Clearly, we will do specific adjustments or specific lines since we are growing, for instance, in terms of mix. We are producing bigger and bigger sizes. We will need to do some adjustments in order to increase eventually the capacity on bigger sizes.

In general, I would say overall, I think it’s now time to harvest what we did in the last three years and to make sure that we are able to saturate our existing capacity. Answering briefly to your question, we don’t see the need to add additional capacity in the next two years at this stage. When we talk about off-take, of course, we are reducing the level of off-take. We have indicated that from the strategic point of view, in average, 10% of our total volume will remain in off-take to keep flexibility and to make sure we will be able to get the support of somebody else for product lines that we believe is not strategic to produce internally within the company. Romania starts to contribute to the sales in the Central European market, and that is already ongoing since May, June this year.

Obviously, we can expect that in the future, more than 80% of what we sell in the European market will be supported by our Romanian factories for Central Europe as well as South Europe.

Akshat Kacker, Analyst, JPMorgan Chase & Co: Thank you.

Conference Operator: The next question comes from Thomas Besson from Kepler Cheuvreux. Please go ahead.

Thomas Besson, Analyst, Kepler Cheuvreux: Yeah, thanks. I’m sorry for coming back a short time, but just to come back on the previous question, I just want to make that clear because right now you’re talking about 1 million Romanian capacities, and you said you don’t want to increase capacities, but you still aim to have substantially higher production levels in Romania if you plan to be able to supply 80% of your European sales with Romania. I just want to clarify what you said. You mean you’re not going to have to add incremental CAPEX, but you’re still able to increase the absolute level of production in Romania to three, four million in the next couple of years, knowing that the investment is behind you, right?

Paolo Pompei, President and CEO, Nokian Tyres: Thank you very much. You don’t need to apologize if there are questions. This is really what this section is all about, answering to your questions. We’re happy to do it. We need to distinguish about production and capacity. By the end of this year, we will produce 1 million tires, but we have already capacity to produce up to 3 million tires. Step by step, we will, during 2026, complete this expansion and obviously adding semi-finished product lines more than curing or building machineries. This is why we say the investment in Romania for the next three years will be really limited because we are at the end of a process. In total, we will have 6 million pieces capacity already by, let’s say, the end of next year, eventually. Obviously, this is really how the factory works.

1 million is the production, but the capacity already by the end of the year will be up to 3 million pieces and up to the end of next year, up to 6 million pieces, reinforcing areas that are not strictly related to curing and building, but mainly about mixing and semi-finished products. I hope I replied to your question.

Thomas Besson, Analyst, Kepler Cheuvreux: Yeah, very clear. Thank you.

Paolo Pompei, President and CEO, Nokian Tyres: Thank you.

Conference Operator: The next question comes from Artem Baletsky from SEB. Please go ahead.

Artem Baletsky, Analyst, SEB: Yes, also one follow-up from my end. It is relating to PCT profitability. What we have seen during years 2023 and 2024 and also the beginning of this year is that margins have been extremely volatile on a quarterly basis. Looking ahead, do you anticipate this type of volatility will be clearly lower? Maybe just coming back to past development, what have been the key reasons in your view that margins have been swinging so much in that segment? Thank you.

Paolo Pompei, President and CEO, Nokian Tyres: Yeah, for sure. Thank you for your question. Clearly, again, we need to look at the history of this company in the last three years. We came out from a storm and it was difficult to reach stability when we had obviously the necessity to switch and to change completely our production footprint, moving out from Russia quickly and then building our new footprint, reinforcing our factory in Finland as well as in North America, and at the same time building a new greenfield in Romania. It was really difficult for the team to manage all these transitions. In some way, we are still managing this transition. Of course, we see finally good progress and we see finally a gradual stabilization of our performance and continuous improvement.

Answering to your question, of course, you will see more stability in the development of the margins moving forward because now finally we can leverage our increased capacity. We can leverage an efficient manufacturing footprint. At the same time, we are improving day by day, as I mentioned already, in placing our product in the market and improving pricing capabilities around the company. I hope this will reply to your question.

Jari Huuhtanen, Interim CEO, Nokian Tyres: Yes, absolutely. Thank you.

Paolo Pompei, President and CEO, Nokian Tyres: Thank you.

Conference Operator: There are no more questions at this time. I hand the conference back to the speakers.

Annukka Angeria, Investor Relations, Nokian Tyres: If there are no further questions, it is time to end this call. I want to thank you, Paolo, and Jari, and especially all you who participated in this call. We wish you a nice rest of the day.

Paolo Pompei, President and CEO, Nokian Tyres: Thank you very much, and looking forward to the next call.

Jari Huuhtanen, Interim CEO, Nokian Tyres: Thank you.

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