Hello all InderesTV listeners and viewers. Nokian Tyres held their CMD today in Helsinki and I have here the company CEO, Paolo Pompei for interview. Hi Paolo.

Good afternoon.

Hi. So you are a new face to the InderesTV interviews you have been leading Nokian Tyres now a bit more than a year. So can you just start by uh saying Shortly about your background.

Well, I mean I spent all my life in the tyre industry, almost thirty years in the tyre industry, working in different uh multinational companies. Tyres is the only thing I know. I don't see anything else more attractive than tyres. And so obviously this is my background really. I joined Nokian Tyres at the beginning of two thousand twenty-five and has been a great and very fast journey uh and we were uh very happy to be here today in the capital market day.

Hmm.

presenting our refreshed, I would say, strategy, because obviously we have a lot of news, a lot of new products. I was very excited about the way forward.

Yeah, so let's jump to that. You released some news yesterday and then talk about it more here in the CMD today. So if we start from the strategy point of view and your main division passenger car tyres, what are you aiming to achieve there in the coming years? What are the main points of the strategy?

Yep. We move really from a period of rebuilding the manufacturing footprint, not the company. For some reason people talks about the company. Hmm. But in reality we are not rebuilding the company. We have one hundred twenty eight years of history, we have excellent product innovations, an excellent team, excellent people. So for us it was really about rebuilding the manufacturing footprint uh because the company is not a factory but it's simply Hmm. the the footprint is already helping you to to to be more efficient and more effective. So we move from this phase and now to a phase of developing being profitable growth. In the segments where it matters, Mm. in the segments where we can be different, where we can provide added value, in the segments where we can provide innovation. And this is what we discussed today really. We keep, we will refocus the company on winter tyre. Uh we have already a leading position, we want to reinforce our leading position on winter tyre. Uh all season and all weather for North America is also an important growth in business growing in two-digit year-on-year an important grow in business grow in two-digit year-on-year Hmm. in both markets. And this is where we have a strong heritage as well, uh being a company was able to manage extreme weather condition and and uh being a company was able to provide safety to drivers uh in extreme weather condition. We feel that in those two segments we can really make the difference when we talk about passenger car tyres.

Same, yeah. Alright. And what about the heavy tyres side then? What are the key

In points heavy tyre we are market leader, as you know, in forestry tyre business. We live in a country where the majority of the OE's are located uh and uh and obviously we are close to our customers. We understand what is important when managing the forestry industry. And uh and we will keep obviously reinforcing our position in the forestry business, and we will leverage the opportunity to grow in the agricultural tyre business as well. as well, of course as a niche player, uh but we are estimating almost two-digit CAGR year-on-year in the agricultural tyre business. We developed a new range that is mainly uh developed for high-horsepower machines, for uh those who need an extra performance, extra productivity, extra efficiency. This is what we are and this is what we want to develop even further our business.

Mm-hmm, alright alright. And uh what would you say are the kind of key These changes, if we think back in twenty-three, the company presented uh those strategy after they lost the Russian business, what are the key changes here to compare to that one?

Well I simpl I simply believe that the company in the last three years had different priorities and the priorities was uh how to be how fast uh we were able to rebuild uh our alternative and our new manufacturing footprint. I think the company and the team made an excellent job. record record uh in record time, I would say. Uh and today actually it's really time to refocus on uh profitable growth. Uh there there I would say the last three years we are really to focus on uh rebuilding the Mm. platform. Now it's really about focusing on profitable growth. Mm. Um we don't feel the pressure of uh simply gaining market share because this is not our target, Mm. and our market share is to deliver value for our shareholders. so we feel the pressure to deliver profitable growth and today also we have assets that are providing the company with much more efficient and productive operations and and of course as I stated during my presentation our business model of today is by far less vulnerable than what it was before. It is a typical case where we transformed a problem in a new opportunity.

Mm.

And for instance we are extremely happy to be in US for US, extremely happy to have a factory fully dedicated to European market, and to keep our strong presence with the factory in Nokia that is supporting the Nordic the Nordic markets.

Yeah, yeah. And then you also updated the the final s financial targets for the company although they were mostly the same as as before. But important but if you can re recap the the main points from that as well.

We uh I should say that the financial targets are more or less the same as they were before. We were a little bit flexible on the top line, on the revenue so indicating one point eight to two billion. And that is important, it was also my message during all two thousand twenty-five, uh we rather uh we are not running for uh two billion as such. We are running for profitable growth. So uh we are running for a profitability that will be above over 24 percent when we talk about EBITDA, for a profitability that will be above fifteen percent when we talk about segment operating profit. Mm. Uh I would like to underline that the segment EBITDA will go back to the level pre-war. Mm. Uh while obviously the segment operating profit will be a little bit lower because of the depreciation obviously that we have due to the fact that we invested over a billion in the last uh in the last four years. Uh when we talk about the net debt, The ratio net debt to EBITDA will be lower than two. Uh so clearly we will get in the balance sheet in much better shape. I think you have seen the improvement we did in two thousand twenty five, delivering two hundred million uh additional cash compared to previous year. So we are also now feeling the that we are getting the full control of our balance sheet

Hmm.

and uh the emergency. It's something that is related to the past.

Yeah, yeah. Indeed, uh the fifteen percent margin target is quite a bit higher than what you recorded for last year. I think it was six point three six. So you had presented some plans with aiming to improve the EBITDA by two hundred million. So can you talk a bit about what were the building blocks of that earnings improvement in Yeah. that in the strategy?

It's a journey. We say this is 2029. Yeah. We have already guided 2026. so that the margin will be between 8 to 10 percent. Mm. And what we like of the strategic plan that we built is that a big part of the improvements are coming from our own actions, Mm. from things we control and things we can manage. There is a lot in term of operational efficiency that is coming from our own factories. There is a lot about efficiency coming from procurement, raw material as well as indirect. procurement and there is a lot about reducing obviously waste scrap and there is a lot about obviously being able to reduce our costs uh and to reduce our SG&A. So this is what we really like. That half of this improvement are really coming from things we control. Yeah. Then of course the other remaining part of the it's really coming from pricing and repositioning. I think we have been proving in 2025 that we have a strong strong pricing power. Mm. With almost 60 million it passenger car tire uh achieved in term of price uh repositioning and then of course growth. Mm. Uh clearly Eco like any plan has been made in order to consider whatever can go extremely well and Yeah. can if whatever can go also wrong. Mm-hmm. So in the way that we build, I would say, a safe plan uh up to 2029.

Mm-hmm. And on that not note who what would you say are the key key risks for you for the execution of your your plans?

I think uh uh the main uh not risk, but obviously the the most difficult part of any business Mm-hmm. in the world it's about selling more at the price that you want to sell. Yeah. That is the the the exciting Mm. I think part of our Mm-hmm. job, I mean I was mentioned during the capital market day that sales is the most difficult job that look easy. Hmm. And that is a fact, I mean at the end of the day uh uh this is why I wanted to be uh extremely clear that there is a range uh in term of sales between 1.8 to 2 billion Euros because that is the variable part

Hmm.

in our plan.

Yeah. Yeah. Good, very clear, Paolo. And the full CMD is uh available under this TV so that

Absolutely.

its viewers can watch there more if you want some details. But thank you for this, Paolo. Thank you very much. And good good luck for the execution.

Thank you very much. We really appreciate it. Thanks a lot.