Nokian Renkaat Stock

Good afternoon, everyone, from sunny Helsinki and welcome to Nokian Tyres Second Quarter 2026 Results Call. I am Annukka Angeria from Nokian Tyres Investor Relations. And joining me today are President and CEO, Paolo Pompei; and CFO, Timo Koponen. Paolo will begin with an overview of the second quarter group level results. And after that, Timo will take us through the business unit financials. And as usual, after the presentation, we will be happy to take your questions. And with that, Paolo, please go ahead.

Thank you, Annukka, and thank you, everyone, for joining this quarterly call this afternoon. We start with the headline, strong profitability improvement driven by higher sales volumes and enhanced pricing. We are going to comment a very good quarter, I would say, in both dimensions, sales development as well as profitability. Moving to the agenda. We will start obviously with the quarterly highlights and the financial performance, then Timo will comment the business unit performance as well as the cash flow and the financial position. And now we will close the call with the assumption and guidance. And then finally, we will have our Q&A.

Moving to Slide #3, quarterly highlights and moving to Slide #4. Before to start, we would like to highlight 2 important recognitions that we received during the quarter. The first one is about our -- both of them are about our sustainability journey. And the first one is about the financial time who was ranking Nokian Tyres as the first tire company in the sustainability in the climate change leadership. and we were the highest scoring tire company in this ranking, and we were ranked globally 39 among 600 companies that were selected.

The second recognition came from the Time Magazine and also identifying Nokian Tyres as one of the best sustainable companies. We were ranked 100 among the top 750 companies around the world. These 2 recognitions are very important to us because they highlight the strong effort of our team and our Board in delivering sustainable operations and in improving our performance in the sustainability area day by day and year after year.

Moving to Slide #5, let's comment together the highlights of quarter 2. Operating profit improved significantly by over 130%, supported by higher sales volume, price increases as well as lower manufacturing and raw material costs. We were able to grow sales in all the regions and in all the businesses and reflecting the high consumer trust on our brand. We had also good presales in June, in particular, when we talk about winter tire in the Nordic with the presales of the Nokian Tyres Hakkapeliitta 01. So we are very pleased about the development of this new flagship that is now part of our product portfolio. And then, of course, we keep improving our operation through efficiency improvement plans, and we are progressing with our own initiatives in line with our own plan.

Moving to Slide #6 and Slide #7. Let's first look at the market performance. The market in Europe was the replacement market quite stable in the first half of the year. While in North America, we experienced a negative market trend, minus 5% in the replacement channel. Passenger car tire business is in some way recovering when we talk about Western producer, and there is some decline coming in particular, due to the tariff imposed by the European authorities to the Chinese production. Truck tire business is also developing well in Europe in the aftermarket. We understand the market was up by 10%. And we see a slight recovery of the agricultural and forestry business, plus 5% both OE replacement in the first half of 2026.

Moving to Slide #8, going deeply in the numbers. We had quite a good growth in terms of sales in quarter 2 with a 10.6% sales increase or 9.7% in comparable currency. We were able to grow in all our regions, outperforming the market, and this was obviously driven by higher sales volumes and also price. We had also a good improvement of the segment EBITDA, plus 34%, reaching EUR 76.8 million in the quarter. And this is representing 20.2% of net sales that is not far away from our medium-term target of 24%. Segment operating profit increased significantly by 71% over EUR 45 million reach compared to EUR 26.3 million in 2025 quarter 2, and this corresponds to 11.8% of net sales compared to last year of 7.7%.

As we said at the beginning, improvement was driven by higher sales volume, price increases and lower manufacturing as well as material costs. Finally, operating profit. We more than doubled our operating profit in the period, reaching EUR 34.8 million compared to EUR 14.8 million in 2025.

Moving to Slide #9. We are very pleased to highlight the sales growth of the passenger car tire business overall, reaching almost 14% in comparable currency. But also Heavy Tire was able to reach 2-digit growth with 10.1% compared to the same quarter of 2025, while Vianor was remained pretty stable in terms of sales. I want to drive your attention to the significant growth we had in Central Europe. We are very pleased about this growth because it's also supported by the good improvement and improved output of our new factory in Romania. So everything is developing in this area according to plan.

Moving to Slide #10. We are improving in terms of mix development. We were able to grow in many segments where we operate. However, we have been able to grow significantly in the all seasonal weather segment that, as you know very well, is growing significantly in Europe, in particular, and we were able to increase our sales also supported by our new product range of Season Proof 2. Winter tire was able to grow as well, but at a lower speed compared to the all-season business, in particular in Central Europe. And this is why the percentage is slightly lower in terms of total sales compared to the same period in previous year.

Mix is improving also in terms of dimensions. We reached 50% of our sales in the segment 18 inches plus. This is also an important achievement that is highlighting how Nokian Tyres is able to focus on the premium range and obviously, in the more demanding applications.

Moving to Slide #11. More or less, there are some numbers we have been already analyzed together. What we want to highlight the attention to is probably the net sales year-to-date are now up by 7.6% and the segment EBITDA is now up by 54%. Operating profit turned positive from a negative level of previous year year-to-date. Last but not least, in the bottom of the slide, you will see that in terms of capital expenditure, we were very disciplined. Of course, we have a lower level compared to previous year when we were still ramping up our operations in Romania, reaching a year-to-date EUR 24.5 million, which is significantly lower than the level of previous year that was EUR 90 million at this stage. Timo will comment shortly about the cash flow development.

Moving to Slide #12. We are expecting for the full year CapEx to be significantly lower than the previous year, reaching in some way a level between EUR 100 million or even below than EUR 100 million at this stage. This is our estimate as of today.

Then I hand it over to Timo for the comment about the business units.

Thank you, Paolo. And let's start with the Passenger Car Tyres, which obviously was one of the main drivers behind the strong performance. And Passenger Car Tyres continued very strong performance also in Q2. Net sales was up by 13.7% in comparable currencies. Prices were further improved as well as the transfer to the bigger rim sizes as already commented by Paolo. In segment operating profit, the percentage was 15.1% for the quarter, which is almost then money-wise doubling or more than doubling the profit from previous year same quarter.

In H1, the net sales grew by 11.6% and the segment operating profit stood at EUR 45.7 million. Then when breaking the performance on Page 15 to various components, in the net sales, the volume component contributed EUR 22 million or 10.5%, which, of course, is the main driver there. But that combined with the continued positive price/mix, EUR 6 million or 3.1%, we saw a very good volume or net sales development for the quarter.

Then in segment operating profit, the lower material cost, as already highlighted, was the biggest lever by EUR 10 million. And the other significant elements is the lower -- the positive price/mix and the lower materials. Some negative development in terms of the supply chain and SG&A, but the main picture in this picture remains very, very green.

Then looking at quarter-by-quarter, we can see now that the volume indeed increased by 10.5%. And the volume price/mix, we saw a fifth -- actually sixth consecutive quarter with a positive development, which we are extremely proud of. And currencies neutral for this quarter, some negative development in North America, but that was offset by positive development in the Nordics.

Moving to Heavy Tyres on Page 17. Heavy Tyres, as mentioned, already returned to growth in the quarter, going up by 10.1%, and that was driven basically by Agri, but we saw positive development across all the end user segments. Segment operating profit improved to EUR 10.1 million, representing 15.0%, driving also the H1 then to be still above 15%, which has been the target level. And this has been supported, as we already commented in Q1 on a very disciplined pricing as well as tight cost management.

And then at Vianor, top line, more or less flat. But then in terms of the profitability, we were suffering still of the cost inflation and somewhat the quarter was impacted by the early start of the spring season, meaning that the season started already the March, which then aid a little bit the volumes from Q2 as we have commented in the report.

Then moving on to cash flow and financial position. Cash flow, very strong. Two main elements there, of course, the improved EBITDA as well as then the significantly lower CapEx. And when looking at the free cash flow, the improvement was roughly EUR 97 million, which then also enabled us to decrease the debt levels. The only area where we saw basically growth on a wrong direction was the working capital where the initiatives that we have had ongoing in terms of capital efficiency in inventories or on the liability, the payable side are progressing as planned.

And then finally, on our net debt, there, the net debt decreased by EUR 49 million in the quarter. Liquidity remaining on a very healthy stable level. And then at the end, still a reminder on our debt maturities during the quarter, we made arrangements and executed extension on a revolving cash facility of EUR 100 million as well as then another extension on a EUR 300 million bilateral term loan facility.

Handing back to Paolo.

Thank you, Timo. And let's move on the assumptions and guidance. Moving to Slide #23. We are not expecting major changes in the second half of the year. We are expecting the passenger car tire replacement market to remain pretty stable between plus/minus 2%. This is the visibility we have at the moment, while we also maintain a positive outlook when we talk about truck tires between 5% to 10% positive as well as agriculture and forestry tires, where we see the market to be between 0% to plus 5%. So a modest growth in particular, in Europe at this stage.

Moving to Slide #24, we confirm our guidance for the year, where we say that we will grow and we will land with segment operating profit as a percentage of net sales between 8% to 10%. So no changes in the guidance at the moment for 2026.

So moving to Slide #25 and completing our presentation of the quarterly results. So just a quick update about the strategy execution that is, as you can see also from our financial result is delivering the expected results. We keep pushing our premium positioning, strengthening our brand with strong marketing investments with new products and in particular, with better prices. Also, I have to say we are really proud of our team who was able to execute efficiently our continuous improvement plan across in the organization, and this is driving significant profitability improvement. So we are very well done from -- for our team that has been able actually to focus on what really matters to influence our improvement in our P&L.

We have new products coming up. They are driving growth in our selected segments. I'd like to remind you that our selective segment remain winter tire, all-season and all-weather tire as well as agricultural and forestry tires. We have completed the investment phase. So we are creating a foundation for a stronger cash generation. We landed in quarter 2 at EUR 24 million CapEx compared to EUR 90 million last year. So you can clearly see that now we are moving forward with an efficient renewed manufacturing footprint, and we can now focus on growth.

We can now move to question and answer. Going back to Annukka.

Yes, we are ready to take the questions.

[Operator Instructions] The next question comes from Artem Beletski from SEB.

So I actually have 2 to be asked. And the first one is relating to PCT. First, a clear profitability improvement, what you have shown in the quarter. And could you maybe comment whether these new products, as you have been commenting, for example, regarding Hakkapeliitta 01, so that preseason sales has been exceeding expectations, whether these new products have been supporting profitability of the business in the quarter? Or do you expect some of this impact to be visible, for example, in Q3? So this is the first question.

And the other question is relating actually to raw materials. So could you maybe comment how you see H2 in terms of upward pressure on that front and whether you are still comfortable that you would be able to compensate the pressure through price increases when it comes to raw materials?

Thank you very much for those 2 important questions. The first one is about the new products and the profitability improvement. Clearly, we've been investing a lot, as you know, in 2025 and at beginning of 2026 in new products that are covering not only winter tire with the Hakkapeliitta 01 and Snowproof 3P in Central Europe, but also in the old season, and we had also with the season Proof 2 in the Central European market. Of course, those new products are positioned better than the previous one. So they are driving the improvement in profitability. Hakkapeliitta 01, obviously, being a product dedicated to the Nordic markets and to Canada is exposed to the presales as well.

So clearly, we should expect that the new positioning will be obviously kept moving forward, and we are very pleased about this development. About the raw material, this is a complicated question in the way that, obviously, raw material will be at this stage, higher in end of quarter 3, beginning of quarter 4. It's a little bit of roller coaster, as you can appreciate, going up and down depending on the geopolitical situation. But of course, as always, we say that the task of the company is to make sure that we are able to compensate the raw material trend. So it's more a matter of understanding what will be the development in particular at the end of the year at this stage.

And maybe just a quick follow-up relating to raw material situation and pricing conditions. Is it fair to assume that antidumping duties by EU against Chinese products should be helpful and basically, we could see some impact from this topic already during this year?

It is helping to, in some way, select to reduce the pressure coming from Tier 3 and Tier 4. It's also true and we need to acknowledge that the larger part of the production made in Asia is today produced in -- outside China, talking about other countries like Thailand, Cambodia, Vietnam, so -- and now even North Africa. So obviously, we could expect a sort of rebalance of the market because obviously, there are new sources where the tires are coming from. This is not really -- I mean, I think we should look at our journey. It's a different journey. It's in a sort of premium brand segment. So obviously, we are obviously watching these dynamics, but we need to simply focus on our own segments. And as you know, our own segments are also less exposed to the mass production of the Chinese tire, in particular, when we talk about summer tires. So this is making also our strategy a bit different because we are focused really on segments where we can deliver added value and where we can be -- where we can provide a different value proposition to our own customers.

The next question comes from Thomas Besson from Kepler Cheuvreux.

It's Thomas from Kepler Cheuvreux. I hope you can hear me.

Yes, we can.

Great. First, congratulations on this quarter. I have a few questions, please. If that's okay, I'd like to ask them one by one. Firstly, I would like to start with the volume growth, which I think is impressive. Could you help us understanding what has been driving that? Talk about the ramp-up of your Romanian capacities and the potential decline of your offtake contracts. Can you maybe make some qualitative comments about that to start?

Sure. Thank you for the question. I mean the volume growth is a combination of different elements. One, as we said, is new products available in the market. Those are providing obviously good support to our sales growth. The second element is related to the possibility then to leverage our new manufacturing footprint. I keep repeating, I keep reminding everyone, the manufacturing platform is a tool, but sales is about branding and positioning and creating consumer demand. So new product, I would say it's extremely are extremely important in our strategy to drive growth. And then, of course, recovery. Don't forget, we lost a significant amount of sales when we didn't have the possibility to leverage our manufacturing facility in Russia at the end of 2022.

Now obviously, we are approaching the market with a new spirit, regaining market share in all the key markets where we believe we can be successful in our own segments. And this is obviously -- it's the big effort of our sales team globally in order to make sure that we are able to promote our new products and value proposition successfully in all the key markets where we operate.

Okay. So no comment on contract manufacturing. Have you reduced that or...

We reduced the manufacturing. But as we said always, we keep 10% of our overall sales always made by manufacturing partner, in particular to producing in -- with those manufacturing partner segments or sizes where we believe those sizes are not strategic for us or where we believe we don't have a specific competitive advantage. So we will keep always our relationship with our manufacturing partners.

I move to my second question. When I look at your operating profit breakdown and I look at the contribution from passenger cars, heavy cars and Ben and others, I noticed that the others has become substantially bigger. It was in the first half last year, EUR 7.5 million negative. in the first half this year, EUR 19.4 million negative. So can you explain that big jump? I don't think historically, there has been such a big other element. And I mean, to some extent, it does also positively impact the margins you're reporting for passenger cars and EBITDA. So I would like to understand that better, just to also know what we should model for the future in terms of relative offset of your manufacturing performance through this line.

Thank you, I mean. Basically, those operational eliminations, you are mentioning this one, I guess, are related obviously between the selling activities between Vianor and the passenger car tire sales. And obviously, more Vianor is reducing the stock, more the interlamination will be lower and the vice versa. I think this is what you are referring to or is there anything else? Yes, it's more about the sell-in and sellout of Vianor. We are eliminating obviously the sales in order to not double count the same sales in our P&L.

Understood. So it's really linked to the decisions you're taking at Vianor level then?

It's not really about decision. It's part of the dynamics. Vianor is acting as a sort of independent chain. So obviously, it's all about the movement of stock that we have in Vianor while selling out Nokian Tyres products.

Understood. I have 2 questions to finish about the cash flow, please. You've made comments about the CapEx to be somewhat lower. I mean I think it's clear when we see what you've spent in H1. I think initially, the comment was it was going to be a triple-digit million figure for the year. Now it's probably going to be -- it looks like it's going to be a double-digit million figure. Can you give us even a range for CapEx? Is it going to be like more EUR 50 million, EUR 60 million, EUR 80 million, EUR 90 million, something like that? Or you let us guess?

No, yes, I think last quarter, we said around about EUR 100 million. And now Paolo said that it's going to be probably below that. So not going to give you an exact range, but it's lower than EUR 100 million, and then you can pick the number.

Okay. I will pick a number. Last question, your receivables have jumped substantially. It's partly a reflection of your higher volumes, but the increase in number of days of sales is quite sharp. Can you help us understanding that? Are you coming back to the Nokian of the old times being the bank of your dealers? Are you taking any risk? Or is that completely safe? And that was my last question.

Yes. It is completely sales growth driven. Definitely, we haven't done any payment terms weakenings or change that to a worse direction. On the contrary, actually, -- but it is definitely only growth related. And we have to remember that the -- when looking at inside the quarter, it was very much driven by the June sales, so which also have an effect on that. So end of June balance sheet is rather a snapshot and indication of a longer trend line.

The next question comes from Christoph Laskawi from Deutsche Bank.

The first one, I'm sorry to come back to that, will be on raw materials again. Obviously, in the year-to-date bridge in pass cars, you're showing a EUR 19 million tailwind. And I think the overall market expectation also from other companies will clearly to be negative in H2. Could you provide a comment if it should be more like neutral for the full year or how it should trend in Q3, Q4? I guess, with the sourcing that you already did, you should have decent visibility on that? And related to that, also, how should we think about the price to cost phasing in Q3, Q4? Will any potential negative in materials be directly offset in Q3 already? Or is it more ramping up towards Q4, and then potentially overcompensating there?

And then another question just on tariffs, actually. Is there any EFR benefits that you expect to book? Or have you booked one already year-to-date? And my last question will be basically a housekeeping one. Could you just confirm again that the contract manufacturing volumes that you have with your China are not subject to antidumping tariffs and potentially also not produced in China itself?

Thank you very much. I think we can reply to all the questions. First of all, when we talk about the raw material, please remember what we presented also during the Capital Market Day. Raw materials are obviously moving up and down depending on the market trend, but also we made a very important internal review of our raw material supplier at the end of 2025, beginning of 2026, and we've been able to achieve significant saving resourcing or working very closely with our team in this area. So the improvement that you see are partially driven by the market trend, partially driven also by our own effort to reduce and to improve the cost through the homologation of new suppliers. The trend is expected to go up, as I said, in our P&L because we need to think about there is always a time lag when we talk about the moment we buy and the moment we sell, but it's expected to go up in quarter 4.

Clearly, we cannot comment about our future pricing due to the competitive rules, the competition rules. But of course, our policy is always about compensating whatever additional cost in positioning our product in compensating the additional cost.

Moving to the second question about tariff. Clearly, I'm not sure what you mean when we talk about benefit. Tariffs are obviously redirecting the market flow, as I said, to other countries. At the moment, China has been obviously subject to tariff up to 50% actually from June. But as I said, a larger part of the Asian products are coming from other countries, including -- and we go to the question number 3, our offtakes that are not coming from China at this stage, but they are coming from other countries. So we don't see at this stage any risk of new tariff in our existing offtake contract manufacturing activities.

One follow-up, if I may, just then on the Q2 pass car tariff. How much of the price/mix benefit that you show would be linked to mix and higher than 18-inch tires out of the 3.1%...

The prices have developed really in the right direction. So they are positive. So the overall actually is including a regional mix effect, meaning that, of course, when we sell in Central Europe, the overall margins are lower than in the Nordics. But obviously, now in Central Europe, we reached finally a level of profitability that we are really satisfied with. But in general, I think prices are moving up at a good level and the prices -- and the mix is slightly negative.

The next question comes from Rauli Juva from Inderes.

Rauli from Inderes here. Just one question from me. I was wondering, given the increase in raw material cost in the spring, has there been any kind of advanced ordering or stock building visible from your clients or in the dealer network in general?

No. I mean, we obviously don't disclose the procurement practices because obviously, we don't want to give any advantage to anybody. But in general, I can say this time that there is not really -- there is not much to say because obviously, there is -- there are no real speculation. At the moment, it's very difficult for everybody, I think, to make any kind of speculation about the future trend of the raw material because as you can appreciate, every day is a new day at this stage. So I think it's very important, at least for us to do what we can do always in this kind of situations to monitor the market and to make sure that we take daily decisions that are not exposing the company to high risk for the long term.

Or did you, Rauli, mean that the anticipation of the potential price increases, then the sales would be advanced for more...

Yes, exactly Yes, that is what I was striving to, yes.

No, we don't see that, I mean, from the customer point of view.

The next question comes from Miika Ihamaki from DNB Carnegie.

This is Miika from DNB Carnegie. So given the strong passenger car tire margin improvement in Q2 and presumably even stronger margin contribution in H2, given the larger weight of winter tires in your sales mix, what's really the reason for maintaining your group margin if you also expect to compensate for the raw material pressure? So my question is really, are you cautious that there were actually some pull-forward demand effects or time effects between the pricing and material costs that are translating into a headwind in H2? Or what's really making you cautious into your H2 margin profile, please?

This is a great question. I think we have a very good control of what we can control. The only thing we are not able to control is the market development. So at the moment, we are very cautious in evaluating the market trend in terms of sales because obviously, those are driving also higher or lower margin depending on the magnitude of growth. So this is really the area that is today difficult to predict in the today market. While, of course, we are well under control when we talk about anything else, meaning manufacturing costs, SG&A, efficiency improvement plans. I mean, I think there, we are actually developing nicely, and the team has full under control the execution of all the tasks that we have at the moment ongoing around the company in order to improve efficiency and productivity. The sales side is always difficult to plan. And for sure, we will have a better view closing quarter 3 most probably.

Okay. And then if you can elaborate on how the Romanian factory contributed to your Q2 results. So more specifically, I'm interested in what kind of earnings contribution you expect from this facility in 2026, assuming an additional, let's say, 1 million units are delivered this year. If you can really help us to understand where are we standing in terms of that contribution?

Well, the factory, as we said, is progressing above plan in terms of volume. Clearly, we are talking still about the ramp-up phase. So we are not talking about a factory that has already reached the full capacity. So at the moment, it's absorbing money. But of course, it starts to deliver a very good level of cost and we are very pleased with existing development. So clearly, we don't disclose the margin by factory, as you can appreciate. The only thing I can say is that we are in the ramp-up phase. We are above plan in terms of ramp-up. So the factory is delivering better profit or better results than what we were expecting 6 months ago.

The next question comes from Thomas Besson from Kepler Cheuvreux.

I would like to follow up, please. I understand -- and even if I'm a bit surprised, but I understand you don't want to give much quantitative elements to your answers. But is it fair to assume that your Romanian plant will effectively produce 1 million tons in '26? Or is it going to be more? And can you update us on the evolution of your capacities in your U.S. and Finnish factories as well, please? Can we have a figure for the volume increase you are able to produce in 2026, please?

Sorry, I didn't catch exactly how much you were expecting from Romania. Can you please repeat?

Well, the previous question was assuming that you were increasing capacities in Romania to 1 million. Is that the right number? Can you give us maybe your latest plan for the Romanian ramp-up? So how many cars are going to be produced in that factory in '26 and in '27, if you can share that number? And can you talk about the increase in capacity in the other factories if there is one?

Yes. Romania will produce more than 2 million pieces at this stage. So obviously, Romania, as I said, is going better above our plan. So obviously, we are very pleased about this development, driven by the fact that we are selling more in Central Europe. So as I said, the factory will always adapt to the requested volume by the market. And this 30% growth in quarter 2, obviously, is helping the ramp-up of the factory to happen faster than expected. We don't -- we try to not disclose now anymore the overall capacity. Our competitor doesn't as well. So obviously, in general, obviously, we have, as I said, already during the Capital Market Day, the capacity we need to accomplish our strategic plan.

So when you look at our sales outlook, which is between EUR 1.8 billion to EUR 2 billion by 2029, we are obviously highlighting that we can achieve this level of sales with our existing implemented capacity, including Romania and Dayton and also some improvements in Nokian.

I have 2 follow-up questions, please. One, can you remind us how many tires were produced in Romania in '25, please? And two, can you remind us what is assumed in 2029? Is that effectively 6 million tires produced in 2029? Or at least is it 6 million tires needed to get to your EUR 1.8 billion to EUR 2 billion revenues?

Last year, we disclosed we were producing more than 1 million tires, and we are now disclosing that we will produce more than 2 million tires actually this year in Romania. So we more than doubled the production. And obviously, we will give you an update on the way. to achieve EUR 1.8 billion in 2026, of course, this will -- in 20, EUR 1.82 billion in 2029. This will obviously come also from Romania, but also from the growth we are expecting in North America as well as further growth in the Nordics. But of course, we will have at that time almost full capacity utilization overall around the world. And this will obviously result probably in the next step, which we will be very pleased to take in consideration at that stage.

Understood. I have a last question, please. I've noticed that almost all your growth has been driven by Central Europe in the quarter. And I think that's also where you had lost the most share when you were short of capacities. I think it's fair to say. You also said that this is a less profitable region than the Nordics. Can you remind us your ranking in terms of regions and say maybe whether the Central European margins have made substantial progress in Q2? Is that fair to say that?

I mean Central Europe is delivering at the moment a great margins. Clearly, you need to consider that our position in the Nordics is pretty strong, meaning that you will always see now marginal improvements together with -- we are more following the market trend. When we talk about Central Europe, as you correctly said, we are recovering fast what we lost in the past. And -- but of course, we are also acquiring new customers because not all of the customers were waiting for us to come back. So I think it's a great job done in quarter 2 by our team, again, supported by also a completely new product range that is really premium in terms of performance, very -- performing extremely well versus competition. We start to see also some rewarding when we see independent test moving -- presenting results.

So the opportunity are, as we said, since the very beginning, more in Central Europe than in the Nordics, where we follow the market trend. And the job is difficult because it's about defending our good market share. And then, of course, we have North America. North America, I think we did very well because in a declining market, approximately 5% we estimate in H1, we were able actually to improve our sales. So from the sales point of view, we didn't leverage the market growth, but we were step-by-step gaining position and market share.

The next question comes from Jose Asumendi from JPMorgan.

We cannot hear any questions. Maybe there is a problem with the audio.

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

It seems that there are no further questions. So this ends today's call. Thank you, everyone, for joining us today. We really appreciate your time and interest, and have a great summer, and we look forward to speaking to you soon again. Bye.

Thank you very much. Have a great summer.

Thank you. Bye-bye.

Good afternoon, and welcome to Nokian Tyres First Quarter 2026 Results Audiocast. I am Annukka Angeria from Nokian Tyres Investor Relations. And together with me in this call, I have our President and CEO, Paolo Pompei and our new CFO, Timo Koponen.

As usual, Paolo and Timo will run through the presentation. And after that, we will open the line for questions. But before we start, I would like to ask you Timo a couple of questions. You have been with us only a few days. And first of all, welcome to the company.

Thank you.

It's great to have you here. With the short but intense experience with the company, what are your first impressions?

Yes. Well, it has been very, very busy start as everybody can anticipate that. First of all, I'm very excited to be on board finally. It's been a long wait and kind of looking back when we started discussions with Paolo and the other people in the company, I got really intrigued by the momentum and drive the Nokian has. And obviously, that intriguement remains. And you only need to look at the just ended first quarter, and you see many product launches and so on, and you can really see that we have a second gear on. It's good to be here.

Good to hear. Maybe if you can also briefly say a few words about your background.

Sure, sure. Yes, as I think it was already mentioned in the announcement, I have a long background in a Finnish industrial equipment companies, Konecranes, Hackman, Metos, Wartsila and last couple of years at Normet and have been working in finance as well as in the line management roles both in Finland and overall, France, China and U.K. and now in Finland.

Thank you. And with that, I will now hand over to you, Paolo, for the first quarter results.

Excellent. Thank you very much, Annukka and also from my side, welcome on board, Timo. Let's start immediately with the headlines, where you can see that sales increased across all regions and operating profit improved significantly, driven by disciplined strategy execution. But let's move to the agenda. We will start with the quarterly highlights, moving to the financial performance, then Timo will come in the business unit performance as well as our cash flow and financial position and then we will close this call with assumption and guidance. And of course, at the end, there will be question and answer.

Moving directly to Slide #4. Operating profit improved significantly. This was really supported by volume, price mix improvement and lower manufacturing and material costs. Operating profit improved by more than 50% and we had really good also price and mix improvement during this quarter. effective working capital management, lower CapEx has contributed to improve our cash flow by over EUR 50 million in quarter 1 and this is also important, an important achievement in this quarter.

We keep working on our continuous improvement initiative that are really supporting strongly our strategic plan and our EUR 220 million EBITDA improvement by 2029. And this was also an exciting quarter when we talk about product innovation. We were able -- actually we were releasing 2 important flagship in our product range for the Nordics and the Central European market and also a new tire for EBITDA division, a new line for truck tires.

Moving to Slide #5. As I said, this was an exciting quarter and it's worth really to spend a few words about our achievements because we were able to release once again the new disruptive technology, the Hakkapeliitta 01 with -- start with -- that is actually delivering a tire that is able to operate and to adapt to the change of temperature with start on or start off depending on the driving condition with different temperatures. This is really a great achievement. It's a disruptive innovation. And we're really proud about the achievement of our R&D team and what our company has been able to develop through intense R&D work as well as intense testing in the last few years.

We're also releasing the Nokian Tyre Snowproof 3P. This is also an extremely high-performing product dedicated to the Central and South Europe -- Southern European markets that is beating actually the key competitors in many parameters. And of course, we are extremely excited about our strong improvement in the product performance in a strategic market, a growing market for all of us. We have invited to test our tires solution more than 500 customers during the month of March in our test center here in White Hell in Ivalo. And this is obviously the best way to promote our product to make sure that our customers can really experience the good performance and the good capabilities of our own facilities as well of our own products.

Now let's move to the financial performance. So moving directly to Slide #7. When we look at the market, we see actually market declining, both in Europe and North America. This is making us even more satisfied with our existing journey because, obviously, in passenger car tire, we've been able to outperform the market in quarter 1. So the market is estimated to be at this stage, minus 3% in Europe in passenger car tire and minus 8%, so significantly down in North America.

Truck tire business has been positive actually in quarter 1. And we can say that the agriculture and forestry business was flat, both in the OE and the replacement market in the same period. Moving to Slide #8. We see that net sales increased by 4.9% in quarter 1. I would like to highlight the strong performance of passenger car tire that was plus 9% in comparable currency. We were growing in all the regions, and this is also very important in our existing journey.

We improved segment EBITDA to EUR 30.2 million, so plus almost EUR 18 million compared to previous year, and this is representing finally 2-digit EBITDA, 10.8% of net sales compared to 4.6% in 2025. We improved our segment operating profit by more than EUR 14 million. This is a growth of 70% moving to minus EUR 4.3 million, so very close to the breakeven coming from EUR 18.5 million in 2025. And finally, we improved our operating profit by 50% to minus to minus EUR 17.8 million versus almost minus EUR 36 million in 2025. So the numbers are improving according to plan, and we are really pleased about these developments.

Moving to Slide #9. You will see, as we have anticipated that sales are growing in any region. Obviously, this in comparable currency, we see a growth of 1.4% in the Nordics, strong growth in Central and Southern Europe with 9.1% and also very good growth in comparable currency in North America with plus 7.8%. I remind you in a market that is declining by 8% in quarter 1. So passenger car tire was outperforming the market. Heavy tire, the sales were down by 1.6% and but it were improving -- the profit was improving significantly above 15%, 15.7%. And Vianor was slightly positive with 1.7%. Moving to Slide #10. This is a new slide that we are presenting in this deck that is giving you a better understanding of the mix development of the company.

You will see that in quarter 1 we were growing in terms of a percentage of sales in the all-season and summer tire business, while we were declining from 37% to 30% in the winter tire business. Just a reminder, obviously, quarter 1 is not a winter tire quarter in our industry. And also second reminder is that obviously, we are leveraging this year the product launches that we did last year in 2025 in Central Europe for the all-season and summer tire business as well also in North America for the all-weather.

We are also happy about the progress we are doing on 18 inches plus larger tire diameters when we are reaching -- they are reaching today 51% in value of our total sales. So I would say, from the mix development point of view, we are developing the business in line with the plan and in line with the strategic targets that we released in February 2026.

Moving to Slide #11. Of course, we see more or less the same numbers, but I would like to focus your attention on 3 main KPIs: One, obviously, the reduction of the debt by approximately EUR 45 million, and Timo will tell you more about that, the reduction of the capital expenditure to EUR 7.3 million from EUR 52 million last year, obviously, we say that we were ending a very heavy investment period, and now we'll get back to normal.

And then, of course, the cash flow from operating activities has been also improving by more than EUR 50 million. Moving to Slide #12, you will see that we are targeting this year an investment level more or less in line with the depreciation of approximately EUR 130 million at this stage. So we get back really to a normal investment level which is obviously supporting our strategic plan journey moving forward to 2029. Then I leave the stage to Timo for the business or comments.

Okay. Thank you, Paolo. So as it has already been mentioned a couple of times, we are very pleased about the performance we had in Passenger Car Tyres. Net sales increasing by 9.1% on comparable currencies. At the same time, the pricing continued improving. And very importantly, we operated with the lower manufacturing and as well as material costs and this logically all resulted -- results in significantly improved segment operating profit. And as we can see, we moved from losses a year ago, EUR 6.2 million, up to EUR 10.2 million or 5.5%.

Moving on to Page 15, when looking at different components in the Passenger Car Tyres in net sales, volume contributed EUR 10 million of that increase, plus 5.7% and price/mix, EUR 6 million plus 3.4%. Headwind we had related to currencies, minus 2.1% and that comes from mainly from the North American sales.

In the lower part, in segment operating profit level, lower material cost was the biggest lever we had by EUR 11 million. Sales volume and price mix having also a significant positive effect of EUR 5 million and EUR 6 million respectively. And as we already anticipated in the Capital Markets Day during the period may have made significant investments in our brand and marketing. And that shows as a higher SG&A. And it's needless to say the growth always takes some money.

Moving on then and looking at the -- also the picture that we are very happy about sales volume turned to growth after 2 declining coming quarters, growing by 5.7% on quarter 1. And regarding the price/mix we can see the price increase continuing also on the quarter this time by 3.4% and currencies we already commented earlier.

Then moving to Heavy Tyres. There, the net sales decreased by 1.6%, and that was due to lower demand in forestry segment. And this part of the segment that -- despite of that, the segment operating profit improved by EUR 8.6 million, and that is thanks to good [ pit ] pricing disabling. Percentage-wise, as Paolo already mentioned, we are back above 15% level at 15.77%. And as it has been our target already in this business is to fix the profitability, and we are very happy to see that happening.

And then finally, on the business units, the Vianor, there, we had a disappointing first quarter, as already mentioned, and this part of the increased net sales, it went up by 1.7%. The segment operating profit declined and was minus EUR 17.1 million and the main cost there was the 2 factors, basically, the cost inflation and then one-off inventory revaluation, which both had a negative effect.

And then as a reminder, as most of you already know, Q1 is seasonally low for Vianor so nothing new there. And then moving to cash flow and financial positions. positive cash flow development was already mentioned, 2 main contributors there. First of all, thanks to very effective working capital management we were able to improve. And there, the factors are, as we have previously communicated, we have several initiatives ongoing. Improve our position, inventories, payables and so on. Another big improvement compared to a year ago was the lower CapEx. There are some seasonalities on that, but we also have to remember that we have very high scrutiny on new investments, what we are taking in and focusing on improving cash flow.

And then Finally, on a debt position, as already I mentioned, net debt went down by EUR 45 million on the quarter on the liquidity at the moment or end of the quarter, it was EUR 441 million. consisting of cash and then the EUR 304 million undrawn cash credit facilities. And regarding the debt maturities on the right-hand side, as we already commented in the report, during the period, we executed an extension of 1 year for EUR 100 million loan, and that was the only event that we had on the quarter.

Excellent. Thank you very much, Timo. And let's move now to the assumption and guidance. So if we can move to Slide #23, you will see that we are actually not changing the assumption for this year. We believe the market will remain plus and minus 2% pretty stable, impacting car tire as well as in agri and forestry tires where we see actually the demand pretty stable and low level in the OE market and slightly positive in the aftermarket for the rest of the year.

So moving to Slide #24 and looking at the guidance, there are no changes to our previous guidance. We believe that in 2026, the Nokian Tyres sales will grow compared to previous year. And obviously, operating profit as a percentage of net sales will be between 8% to 10%. The tire demand is expected to remain flat. Obviously, we are continuously watching the evolution of the existing conflict in Middle East. This is an important part of the assumption. But at the moment, we are able looking at the outlook and considering our continuous improvement plan, we are able to confirm that our guidance is pretty strong and stable.

The profitability, obviously, will improve, supported by new products, but also by price and mix, as you can see also in quarter 1 and continuous efficiency in Poland. So I would like to close the -- this quarterly presentation reminding that our long-term objective, we remain focused, and we want to remain fully focused in our leading position in winter -- keeping our leading position in winter time, we are targeting to grow above market level in the old season or weather segment as well as in the agri and forestry tire business.

Three different journeys in -- by geography in Nordic is about strengthening our first position while in Central Europe as well as in North America it's about growing above market average. We will do that always supporting value premium value positioning and mix enhancement. We will do that, expanding our B&L network in Europe and focusing more and more on B2B and B2C, in particular, consumers. We have a strong product innovation in the pipeline.

Actually, we are counting the 2029, I remind you in the Passenger Car Tyres to release a new product in all the segments where we operate, 90% of those new products will be dedicated to winter tire and all-season and all-weather consumer focus to add investments in marketing, in particular, and then we will keep working on operational excellence where we see great opportunities to improve significantly our cost structure.

Our local to local business model will enable us to be less vulnerable in front of geopolitical tensions and of course, we can count more and more in an experienced and engaged team, we will be able to achieve our financial target. So our long-term financial targets remain the same. EUR 1.8 billion to EUR 2 billion within 2029, segment EBITDA above 24% and segment operating profit above 15% reducing the debt level to a ratio between net debt and segment EBITDA below 2.

We can now move on to the question and answer, and thank you for your attention.

[Operator Instructions] The next question comes from Artem Beletski from SEB.

Paolo and Timo, I actually have 3 to be asked. So the first one is relating to raw materials and Paolo, you also mentioned conflict and Middle East. Could you maybe comment whether you have been doing already some price increases due to this topic or have seen competitors acting. And maybe just in terms of time lag, when you need -- when this type of higher oil-related raw material costs will start to increase for you? Maybe I'll start with that one.

Yes. Thank you for the question. This is an important one, really relevant, of course. So when we talk about raw material, there is time gap, as you know very well, I mean, we are estimating to see the impact of the raw material changes more through the end of the year, meaning quarter -- end of quarter 3, beginning of quarter 4.

Clearly, we are not concerned about compensating this effect that will come up. As you can see, our pricing are moving up despite we have a favorable trend at the moment of the raw material trends. So clearly, prices is the tool to compensate the raw material trend long term. Obviously, we don't comment about competitors. But I can only say in 30 years in our industry, the market is very disciplined in transferring this cost, obviously, when they are coming.

Yes. This is very clear. And maybe the second question, what I would like to ask is relating to Heavy Tyres and indeed, you delivered quite nice profitability improvement in Q1. Do you see that this level is now sustainable and maybe you can update us with your view what comes to market recovery. Do you still expect it potentially to happen in second half of this year?

Yes. This is also a very good question actually. The Heavy Tyres business is improving because, obviously, good price discipline. As we said, it's keeping and, of course, some internal operational efficiency actions that we have activated. I think the Heavy Tyres business is now at the end of a very long negative cycle. So we expect the market, obviously, to move up. It's difficult for anyone to say, particularly today with existing crisis in Middle East to say really when the market. The OE market in particular will pick up because the replacement market I think, is already moving in a better direction. It's more about understanding when the OE market for us, as you know, is very important, the forestry market as well.

So my original estimation was the market will improve in the second half of the year. But of course, this, at the moment, is not yet visible. At least we don't have any visibility about this potential improvement already in the second half of the year, but we will keep you updated by step.

Yes, great. And then the last one that I had was relating to SG&A expenses and those went up EUR 6 million in Q1 year-over-year. And I fully understand that it has to relate to this very interesting new products, what you introduced to the market. Is it fair to say that the increase during the remainder of the year will be much smaller given the fact that those product introductions and presumably, big events are behind us.

Yes, of course. Don't forget in quarter 1, 2025, we were coming out from a very, very difficult 2024, building a company, stretching everything at minimum, not really investing too much in our future. And then now we are investing on our future with growing sales force and growing marketing investments and of course, a big product launches that we did in March 2026. Clearly, we will keep investing in growth, but it has to be a profitable growth. So as I said, of course, you should not expect a 12% SG&A increase every quarter, but otherwise, this will not be sustainable, but you should expect that, obviously, we will keep investing on our brand for the future.

[Operator Instructions] The next question comes from Thomas Besson from Kepler Chevreux.

Thank you very much. Good afternoon. I hope you can hear me. The quality of the line was disastrous during the previous question. So I may ask a question for almost the second time, but I'd like to make sure I understood correctly. I think, Paolo, you said that the industry has basically been raising prices to offset higher energy and input cost historically.

But my question was really to try to have a view on what you're assuming in terms of energy and raw materials headwind for the year or Nokian in 2026.

And when these energy and raw materials are going to turn from a tailwind into a headwind? And what kind of price hike you need to be able to offset this assumed headwind. That's my first question. I have more questions that I'll ask later.

I'm sorry if the line was not -- I hope it's better now, but that is an important question. As we said, I mean, the raw material effect of the current situation will probably be visible end of quarter 3, beginning of quarter 4. And of course, this is changing every day, as you know very well. I mean it's depending on different announcements that are happening every day. But let's say, in our assumptions, we consider the existing raw material level, the one that we will see moving forward.

Then the -- obviously, we are expecting to see some impact end of quarter to beginning of quarter 4. I think the pricing action we have in place are able to compensate this raw material effect. I will keep repeating that the problem is not about transferring the cost, it's always about evaluating the consumer behavior at the end. So tire industry, we were always very disciplined in managing price and raw material we tried in the last -- actually in the last couple of years now, 1.5 years to improve also our positioning through new products and through price increases.

But in general, I would say that I will not be concerned about the balance between prices and raw material. We need to see how the demand will evolve. But at the same time, we need to say that our journey is a little bit in particular, outside of the Nordic, it's a little bit independent, meaning that we come from a niche position, a small position. So we still have plenty of opportunity to manage our growth.

Second question, your Q1 volumes in passenger cars were up 5.7%, while your reference markets in Europe and the U.S. were both done. And it comes against Q1 25, where you already had a strong jump in volumes. Can you elaborate on what has been allowing this? Where have you gained share? And whether you do expect to be able to continue to largely outperform your end markets in Q2 and the rest of '26.

Sure. We are growing in terms of market share, as we said in the 2, I would say, new market, we could not even say new because obviously, we were before the crisis in Russia, we were already pretty present in Central Europe. But we are regaining obviously market share in Central Europe, we are growing market share in North America. And this is driven by a combination of elements, as we know very well. First of all, we have a completely new manufacturing footprint that is giving the possibility to have dedicated factories for dedicating markets, meaning that we can really focus on the development of specific market with dedicated manufacturing capabilities.

Secondly, a lot of new products. We are releasing a lot of new products that are giving also the possibility to our team to promote our innovation capabilities. And of course, we are enforcing the team as well at the same time, also exploring new channels, reinforcing our B2B and B2C channels. So it's a combination. Clearly, for us, it's a continuous journey. And -- but it's very important that this journey is going to be profitable.

So in Q1 2025, you saw an important growth 22%, but you didn't see an improvement of profitability. Now if you notice, you see a different journey in the last few quarters, we focus more on profitability improvement at this stage of our life. And then, of course, we are happy to see, like in quarter 1, when profitability and growth are moving together in the same direction because this is really what any healthy company should provide to investors every quarter.

Clear. Can you just say a few words about what you expect in the coming quarters about your share gains, do you think it can continue? Or this was the best outperformance you're going to show during the year?

The guidance is about growth. So what I mean is that we keep guiding single-digit growth, and that is really important. So we are not guiding 2-digit growth, but we are guiding single-digit growth.

Understood. Last question for me, please. You -- I mean, I think it's fantastic, that you barely spent any money in Q1 on CapEx, EUR 7 million. So obviously, driving an unusually big decline in debt over the quarter. Can you explain why this is the case? Are you facing something very slowly? Or do you still think you're going to need to spend EUR 120 million, EUR 130 million for the year? Or did you get some of the Romanian state aid that you wanted?

Timo has already anticipated very well that clearly, when you look at CapEx, you need to see also a sort of seasonality. Normally, for reasons, we do maintenance during factory closing. So obviously, the CapEx level in quarter -- end of quarter 1, beginning of quarter 2 will increase because it's the maintenance period for many of our own operations. As I said, I would consider EUR 130 million, the maximum roof. Actually, we are targeting less than this EUR 130 million. For us, it's very important to be capital efficient, meaning to be able really to invest whatever is needed in terms of maintenance, but also wherever we see a clear and faster return.

So I will not take quarter 1 as a reference. But in general, of course, we have projects, we have maintenance projects. We have a small operational project to complete the Oradea plant that is not fully completed yet. But of course, we are guiding, as I said, at this stage, EUR 130 million and probably a bit less, but we will guide you better in the second quarter.

There are no more questions at this time, so I hand the conference back to the speakers.

If there are no further questions, this concludes today's call. Thank you, Paolo and Timo and all for joining this call. And we wish you a great rest of the day. Thank you very much.

Thank you..

Ladies and gentlemen, hello from Ivalo, Finland, and welcome to the Media Information Call celebrating the launch of the new Nokian Tyres Hakkapeliitta 01, the world's first studded winter tire to feature on-demand grip.

My name is Wes Boling. I'm Nokian Tyres Brand Content Manager. Pleased to moderate this call alongside company leadership as we introduce media to this exciting new studded winter tire. In just a few moments, we will get to a presentation that allows you to familiarize yourself with the product. You should have received a press release about it in the materials bank connected to that press release are photos and videos as well as press releases in a number of different languages if you need those.

At the end of the call, we will have time for your questions, and there will be instructions related to that here in a few moments. But first, let's celebrate the Nokian Tyres Hakkapeliitta 01 with a brief introductory video.

[Presentation]

There are tire launches and there are revolutions, and today represents both. We look forward to familiarizing you now over the next few minutes with the Nokian Tyres Hakkapeliitta 01. First, with a few words from Nokian Tyres President and CEO, Paolo Pompei, about the significance of this moment and how it ties into our business strategy to be a leader in winter.

Then we'll have a product presentation with a mastermind behind the product, development manager, Mikko Liukkula and Director of Marketing of North America, Hans Dyhrman. And then we'll ask a couple of questions of each of them before turning it to you for your questions.

And with that, one reminder again, this QR code here is to access the public press room that contains the press releases. We assume you've seen the press release if you were on this call. But if you need to give this QR code a quick scan, you're welcome to do so. We'll have it for you during the question-and-answer session in a few moments as well.

And now I will hand things off to Nokian Tyres President and CEO, Paolo Pompei.

[Technical Difficulty] Wes. And good afternoon, everyone, and thank you for connecting together with us this afternoon. This is, as West has already anticipated, it's really a sort of a memorable day. It's a sort of revolution. And because our team was able actually to transform a vision in a project that will transform completely the winter type business in the next decade. But I would like to start from our headline when we say that we make unpredictable journey -- an unpredictable journey in a predictable journey in any weather condition.

This is what we are doing every day. We try to work in the direction of providing safety to our customers. And that has been always in the last 90 years our top priority when we talk about winter tire business. And in some ways, related to our own history, when we made an unpredictable journey also recently that was the one related to the war in Russia to an extremely predictable and even more successful journey resetting our manufacturing footprint and building a new platform that is still stronger than what it was before.

We have 128 years of history and a big part of the history has been fully dedicated to the development of winter tires. And when we look at our recent history, and as said, we are moving to a predictable and sustainable future. In the last few years, we have been focusing really on resetting our manufacturing footprint and building what we talk today -- what we call a new Nokian Tyres platform. But now we are really focusing our journey on sustainable value-driven growth journey for our customers.

We have now a platform that is providing lower risk profile compared to the past greater flexibility and, of course, higher added value for our own customers. Also, what we are doing at the moment, we are really refocusing our position where we can make the difference. We are refocusing on the segments that made Nokian Tyres a strong player, in particular, in 3 segments. First of all, we want to reinforce, and we are enforcing our leading position in the winter tire business.

And today is one of those days where we are setting actually a new level in the winter tire driving business. So then, of course, we are expanding our presence strongly in segments that are in some way getting closer to the winter tire business, meaning all season and all weather, but it's very important to deliver products and solutions that are delivering safety to our own customers.

And then last but not least, we maintain our strong leadership in the forestry tire business worldwide, and we are expanding above-market growth in the agricultural tire business. The winter tire business is growing year-on-year. Of course, the weather conditions are changing continuously, but they are extreme weather condition that are requesting safer solution to be delivered to the market. And this is also possible through regulations that are requesting companies like Nokian Tyres really to provide additional safety and to protect even more the drivers while driving in extreme weather conditions.

We've 90 years of history and in the winter tire business. We delivered first winter tire solution in 1934. But more importantly, more than 90 years ago, we developed the first Hakkapeliitta winter tire that was introduced in the market at that time. So we are really the maker of a safer journey when we talk about winter tire application. And today, we are presenting our Hakkapeliitta 01 in our test center White Hell here in the Lapland in the extreme north of Finland.

And we are here since 40 years. So this place is not only a place where to develop tires, but it's a place where we have a lot of know-how, we have a lot of expertise that was transmitted by our own engineer through different years. It's a site with over 700 hectares. It's a site where we test every year more than 5,000 passenger car and every tire every year.

When you look at our journey recently, I mean, we have a [indiscernible] plan, we will deliver approximately EUR 1.5 billion cumulative in the next 4 years and then -- of new products. And when you look at passenger car tire business, 90% of the new products that we are going to release will be actually fully focused on winter tire and all season, all weather. So this is really confirming that we want to remain a strong specialist in the winter tire and all season tire industry. And really, this is where we are investing 3% of our total revenues year-on-year in order to innovate, in order to reinforce our own position.

Thank you very much for this attention, and I will now really leave the honor to my colleagues Hans and Mikko really to describe in more details what Hakkapeliitta 01 is all about.

Thank you so much, Paolo. Very excited to be able to introduce you to Nokian Tyres Hakkapeliitta 01. 90 years ago, Nokian Tyres revolutionized the tire industry with the launch of the very first Hakkapeliitta product. And we've continued that legendary journey right through a new era of winter today, the Nokian Tyres Hakkapeliitta 01, the world's first winter tire with on-demand grip.

Let's go ahead and dive a little bit into the details of what we've built into this new tire. [ Let's begin ] with the tread pattern, the tread pattern is a symmetrical and directional tread pattern that we've used throughout the lives of many Hakkapeliitta products. Compared to the Hakkapeliitta 10, we have smaller tread blocks to provide increased biting edges on the ice, but to be able to support those tread blocks in between each, there's a little bit of a support bar to make sure that they can maintain the high speeds.

In all of the tires 18 inches and above, we have our Aramid sidewalls. Aramid is a cut fiber cord that provides reinforcement and increased durability, making sure that we can improve resistance to cuts and impacts that can otherwise disable the tire. If we dive a little bit further into the tread pattern, we see a number of 3D interlocking sipes. On the shoulders represented by the blue sipes, you can see increased steering precision and snow grip.

Through the middle, there provides close sipes for stability represented by the green color. Looking at the tread compound, we utilized a brand-new Nordic winter tread compound. The engineering team set out on a goal to increase the wet performance of this tire giving it 5% better wet grip compared to the award-winning Nokian Tyres Hakkapeliitta 10.

Now of course, this is a studded tire, and so the stud is a major feature of what we've done to make sure that this is ready to move forward. The pins on each one of the Hakkapeliitta 01s is the same as the Nokian Tyres Hakkapeliitta 10. However, each color has been reformed to make sure that, that pin can have increased by the edge. We continue with our double stud technology represented by the green, where we have the lateral studs that provide increased precision for braking and accelerating as well as the shoulder studs, that are pointed to the center for cornering.

If we look a little bit at the installation process of these studs, each one is placed by a robot in our factory with incredible precision. In this slow motion footage, you're seeing it slowed down 60x slower than real life. And after each one of these tires is completed with its studding journey, each one is scanned and recorded to make sure that the stud is perfectly placed according to our precise standards.

We also have a number of features built into this tire. Our winter safety indicator makes it very easy for consumers to understand the tread depth that they have left on their tire, 8, 6 and 4 millimeters. The info field increasingly important on a winter tire due to the cold air, makes that easy to follow along and make sure you've got it all set. Electric fit is our indication that to the consumers that we have tested each one of these tires on electrical vehicles. We've been testing on electrical vehicles for well over a decade.

And finally, of course, the ice grip symbol in the Three-Peak Mountain Snowflake are our tests according to the standards and meet and exceed winter safety traction requirements. In 24 sizes of the Nokian Tyres Hakkapeliitta 01, we had our silent drive technology and acoustic foam that lowers the noise in the cabin for each and every one of those sizes. But there is a little bit more to this tire than just these smart innovations. There's one more thing. We are excited to introduce a winter tire reinvented. This is the new era of winter, the Nokian Tyres Hakkapeliitta 01 with adaptive base technology.

Thank you, Hans. So I'm Mikko Liukkula, the Development Manager of studded winter tires at Nokian Tyres. So we have created a completely new construction, a so-called adaptive base construction for Hakkapeliitta 01 product. We have protected it with more than 10 patent applications. And the construction is a so-called 3-layer construction, where we have the tread rubber, the lock compound, which locks the stud and -- the waist of the stud and then we have adaptive base. The adaptive base is really the revolutionary part of the product. It is a compound which turns very stiff when the temperature of the compound cools down.

And vice versa, when it warms up, the compound gets soft and sticky to keep the stud in the tread. So the function of adaptive base is the following. When you are driving on the icy road, the ice and snow cools down the stud and adaptive base making it stiffer and making the stud penetrate deeper in the ice and giving better bite to ice providing more ice grip.

Vice versa, when you are driving on the highway, for example, 100-kilometer per hour, the stud hits dry road 14x a second, making -- with the movement of the stud, the adaptive base layer are getting warmer and warmer. And finally, it gets soft, and the stud is retracted. So what is the benefit of the adaptive base, we can maybe start from a new Traficom regulation, where the road wear was limited to 15% less than the previous legislation was. And that means that in the beginning of 2027, all the tires, which are approved to the markets and sales are to be of 15% less road wear.

But we achieved with adaptive base 30% less road wear. And also, we gained 10% better ice grip. So this is really a combination which was not possible even to imagine that this could happen. I think some of our competitors have faced this issue, and they have approached it on a traditional means, meaning reducing number of studs, making the stud protrusion smaller or making the stud smaller which all lead to less ice grip and less safety.

But vice versa, we gained less road wear and much better ice grip. In addition, we got also 1 decibel lower interior noise measured between 60 and 100 kilometers per hour. We have been testing the tire now, the adaptive base technology now more than 4 years. And we have gained a lot of feedback from the test drivers. Of course, according to our recent studies, we have found that it is more likely to get a positive feedback when you give the test tires free.

But still we have gained a very, very good feedback. And when you look the feedback, you notice that everyone are referring to the silence of the tires. So the tires are very quiet and that leads to the same issue that I just explained that when the tire is silent, that means that there is no contact, no heavy contact between the stud and the road, which means that the studs are really retracted and they are not wearing the road as much as the traditional studded tire.

Okay, Hans, maybe you explain the sizes of new Hakkapeliitta 01.

Thank you very much, Mikko. The Nokian Tyres Hakkapeliitta 01 launches to dealers today and will be available to consumers this fall. We're excited to launch with 124 sizes, all EV-ready with 24 sizes featuring our silent drive technology. The new modern size range has 86 sizes that are 18 inch and above. Now let's go ahead and look at a little bit of a summary of all the great things that we've packed in the Nokian Tyres Hakkapeliitta 01.

Of course, we've got our studmode ON and OFF, our electric fit saying it's compatible for EVs, Aramid strong sidewalls and our silent drive technology that gives you on-demand grip, the first winter tire that adjusts to the weather, studs ON maximum safety on snow and ice, studs off bare road precision with minimal road wear and of course, that peaceful precision, ultra-low sound levels.

Now as we launch the Nokian Tyres Hakkapeliitta 01, we view this as the winter tire reinvented. And a lot of you might be asking the question, why did we name it the 01 and not continue forward with 11 or 12 for that matter? Well, we saw this as a revolution in winter tire technology and wanted to make sure that the numbering represented that. Two times in Nokian Tyres past, we've gone to Nokian Tyres Hakkapeliitta 10 and started back over, and we view this as another one of those revelations. As we look at the 0 and 1, the 0 and 1 also represent binary code where the 0 is studmode OFF. And then when we get to the one, it represents studmode ON giving you the Nokian Tyres Hakkapeliitta 01. We're very excited to be able to bring this tire to tire dealers and consumers everywhere.

Thank you, Hans and Mikko for that information. And the deep dive into this product, again, the world's first winter tire with on-demand grip, the Nokian Tyres Hakkapeliitta 01. With that, and before we open it up to your questions, we have a pair of questions to ask each of our leaders here for starting with Paolo. Paolo, quite simply, you talk about our business strategy and one pillar of that is being a leader in winter. How important is this new tire to helping us serve as the #1 company in winter?

Thank you, Wes. It is really important. There is no leadership if you don't have innovation capabilities. And obviously, this new innovation is setting again a new benchmark when we talk about the winter tire industries, and this is very important to us, obviously, being a leader in the industry, the best way we can raise the brand awareness, the best way we can manage -- grow our sales, is really to deliver products and solutions that are making the journey of our customers safer in any winter condition.

And finally, for you Paolo, the 2 primary markets for this product are the Nordics and North America. How is Nokian Tyres planning to position this product in those main 2 markets?

As I said, this product is going to be a premium product for both markets, not only for North America as well as Nordics. I think it's going to be a benchmark for the global market. The position will be premium because obviously, we are delivering added value to our customers and the total value of ownership will increase significantly. So we believe that with this product, we are going to simplify the life of many drivers around the world, and we will make sure they will be safer.

And at the same time, they will have a solutions that are giving them the flexibility to be extremely safe when they are driving both in icy condition as well as in dry conditions.

Thank you, Paolo. And now a pair of questions for the leading mind behind this product, Mikko, over to you. First, can you tell us a little bit more about how this double action stud technology works in practice? This is a new concept for a lot of people. It's a new concept for our industry. How fast do the studs go in and out as the vehicle goes between either dry roads and icy roads or quick changes in temperature?

Yes. Maybe I can approach this by explaining some of our tests we are doing. We have here in Ivalo a test facility where we have a warm garage and right after that, we have an icy surface in a tunnel, which we can do icebreaking and acceleration test. And when we come out with the warm tires and start accelerating and breaking immediately, we still get better results that with the conventional tires we have.

And as well, that explains that when you start from your garage -- warm garage, you don't have to worry about the grip. It is better than with a normal studded winter tire. Then when you go out on the highway and you start from icy road, you can hear the difference when the studs are pressed in, when the adaptive base warms and the studs are pressed in and they don't make, let's say, ignite the air cavity noise anymore. You can feel that difference, and the tire is really, really silent on dry road.

So the time is difficult to say, it depends on various things, how much there is moisture, how much there is ice, how cold the road is, how long you have driven and everything like this affects to that. But anyway, it happens quite fast.

And then finally for you, you mentioned Traficom and some of the changing regulations that, in some ways, may be influence the development of this tire or at the very least that this tire exceeds. Can you provide an example of those regulations around studded tires and explain how this new tire then conforms with those laws?

Yes. So first of all, I have to say that I'm quite pleased of this new regulation because it really put us against the wall. We had to reinvent the winter tire. We had to make the -- reduce the road wear, this 15%. But at the same time, we know that all the traditional approaches will be bad for our customers. They will never accept that our tire will be worse in ice grip. So we had to invent something else. And this Traficom regulation is -- like I said, it is taking place for all tires, which are manufactured after this year.

So beginning of 2027, all passenger car tires, the [ van ] car tires are a bit later affected by this. But it is a very important regulation for studded tire business. Traficom also makes market surveillance every year. They are picking up randomly the tires from market and testing them, which makes every player in the market to follow the rules.

The means how to wear -- measure the wear are the overrun test, and that is -- it's a standardized test by ISO and SFS. So if we can maybe point out 3 points like our President always does. So adaptive base makes the tire 30% less road wear, 10% extra ice grip and 1 decibel less tire noise.

Thank you, Mikko. Paolo and Hans, thanks to you as. Now it is time to go to your questions, and you'll hear some brief instructions before that process begins. [Operator Instructions]

We can say that we have been here at White Hill today, the Ivalo test center testing the Nokian Tyres Hakkapeliitta 01 and exploring its capabilities, and it is a very impressive tire, the studmode ON, very clear on the frozen lake that we -- for multiple frozen lakes that we tested on today, studmode OFF on dry road makes for a very quiet and comfortable ride. Still no questions, and so we may just go ahead and wrap the call here.

Then, a reminder, though, the QR code on the top right of the screen links to the public press room where you can access the media kit and a variety of different languages. There are also images and videos available as well. And we certainly encourage you to reach out to our media team if you have follow-up questions, interview requests.

And we look forward to reading your coverage and appreciate your time, joining us today on an exciting day in the life of Nokian Tyres and in the history and future of winter driving, the Nokian Tyres Hakkapeliitta 01, the world's first studded winter tire with on-demand grip. For all of us here, Nokian Tyres, I'm Wes Boling. Thank you so much for your time.

Good afternoon from Helsinki, and welcome to Nokian Tyres Capital Markets Day 2026. It is great to see so many of you here in Helsinki. And I would also like to warmly welcome everyone joining us online. I'm Annukka Angeria from Nokian Tyres Investor Relations and will be hosting you today.

As many of you know, Nokian Tyres has navigated significant turbulence over the recent years. Today, we look forward, where are we now and even more importantly, where we are heading next. We want to provide you clarity, predictability and to show how Nokian Tyres is positioned for sustainable value-driven growth.

Looking at today's program. Our first speaker will be Nokian Tyres President and CEO, Paolo Pompei, who will discuss Nokian Tyres' updated strategy and the financial targets. He will be followed by our Interim CFO, Jari Huuhtanen, who will focus on the financials. After the presentations, we will have a 10-minute break. In the second session of today, we will focus on Nokian Tyres Passenger Car Tyres business, and we will have 3 speakers: Tron Gulbrandsen on the Nordics, Tommi Heinonen on Central Europe and Chris Ostrander on North America. Following their presentations, we will have a Q&A session with all the speakers. And let me remind already at this point that those here in Helsinki can simply raise their hand for any questions during the Q&A session, and we will bring you a microphone. And those online can submit their questions throughout the whole event.

And before we start, I would also like to mention that there will be a lot of content and details in our presentations, but all the presentation material will be available on our website as well as the recording of this event so that you can revisit the material later.

And with that, let's officially kick off the event. We will start with a short video, and then Paolo, the floor is yours.

[Presentation]

Good afternoon, everyone, and welcome to our Capital Market Day. Thank you for joining us here in Helsinki. Thank you for those who are following us online. I would like today to start with the theme of our Capital Market Day. Clearly, we are extremely excited to be here together with you after the last Capital Market Day that was held in 2023 here in Helsinki. The team of this Capital Market Day is well reflecting our day-by-day job. The team of our Capital Market Day is reflecting what we do every day. We are a Finnish company with a strong heritage that is managing day by day extreme weather conditions. This is what we do. We try to make sure that our customers, our drivers feel safe when they are driving in extreme weather conditions.

And for us, it's really about making unpredictable weather, a predictable journey for our own customers. However, the team of our convention, I like to believe that it's not only reflecting our day-to-day mission, but it's also reflecting our recent history. We made an unpredictable event like a war, a predictable journey. And this is really what we are going to tell you about today. We are going to really describe our journey, our future journey. We were able actually to transform a problem in a great opportunity to become even stronger for the future.

And this was possible because Nokian Tyre is not about one asset. Nokian Tyres is not about one factory. A factory is one of the asset or many assets of the company. We have 128 years of history. We have a long experience in the rubber industry. We are probably one of the oldest tyre company existing in the world. We have extremely good products. We have strong innovation capabilities. We have been always setting a new level when we talk about competition in terms of product performance, developing products in the last 90 years, at least. And we have been extremely strong in reinventing the tyre business in anything we do day by day.

So the strength of the company, the asset of the company was not really a factory, but was really our innovation capability, our know-how and our people and our team and our heritage. So this is why we believe that we were able to transform an unpredictable event in an even more predictable and safer journey for the future.

But let's go to really to the agenda of today. Let's start, first of all, to highlight the key messages that we would like to transmit during the Capital Market Day today. First of all, we are operating in a niche segment. We are a company who doesn't play everywhere. We're operating all in a niche segment. And it's a premium niche segment where we can hold a strong pricing power. We have an extremely strong and robust product pipeline that will give us the possibility to grow and to be successful in the next years. That is also another important point that I would like really you to understand in details. We have a lot of possibility to improve our profitability in our own actions. So we are less dependent in some way on the market development.

We are finally, after strong investments, high investments, a very nice and scalable and efficient and modern platform that we can leverage for the future. And of course, our EBITDA, if you look at the statistics, is getting back to the level where it was before our crisis, delivering cash and higher dividend.

But let's, for a moment, go back to who we are today. Nokian Tyre, we have been publishing yesterday our financial results for 2025. You see we were reaching almost EUR 1.38 billion. We have now more or less 4,000 people today, 4 factories around the world, but located in 3 different geographies: Nordics, Central Europe, mainly Romania as well as now in North America. We operate and we support our sales through 519 service center called Vianor. And then, of course, we sell products in 47 countries.

We have been always investing a lot in R&D. R&D is one of our main strongest assets, more than 3% of our revenues. And of course, we are an industry leader when we talk about CO2 reduction.

You will see today, we'll talk a lot about our geographies and how we are growing in different geographies. Still today, more than 50% of our revenues are coming from the Nordics, while 25% are coming from Central and Southern Europe and 22% from North America. Passenger car tires represent more than 60% of our sales with Vianor representing 26% of our sales and heavy tyre 17% of our sales.

But this is more important. This is really what I would like to deliver as a first message. If you look at our historical sales, if we start to exclude the Russian market that was representing more than EUR 300 million, almost EUR 350 million in 2022. We are now back in our journey to the level where we were before with sales that are very close to EUR 1.4 billion as it was in 2022. Clearly, growing in the Nordics, growing in North America and recovering fast in Central and Southern Europe. And yesterday, we published our recent journey. 2025 was really a strong year of transition where we saw finally the possibility to again go back to become profitable and to improve our financial performance. We were growing in terms of operating profit -- in terms of segment operating profit by 28%. We were growing in terms of operating profit, moving basically from breakeven to almost EUR 36 million. But even more important, we were able to increase our price and mix by almost EUR 60 million. And we were able to improve our cash by EUR 200 million, of course, investing less, but also improving in our working capital, in particular, in managing inventories, payable and receivables.

And I think this was a good improvement that is showing our new trend that, of course, is aiming to drive us in reaching our financial targets. But let's talk about the market because the market is very important. I mean Nokian Tyre is a company that is mainly working in a niche segment. As you can see, we are a very small player in the global tyre industry. And we don't want to be everywhere. We are not aiming to be a market leader in any segment of the tyre industry. We want to play only in the premium segment. When we talk about winter tyre, all weather and all season and some selected summer tyre business, but mainly winter tyre, all season and all weather in a big market. This is really very important when you analyze our profitability.

We play in niches when we can provide added value where really we can be different and we can hold a strong pricing power. And when you look at the market, you know very well, you've been probably watching many Capital Market Days and those trends are obviously common to many tyre companies. But when we look about tyres, I think looking at the technology changes, electrification in particular, when we talk about Europe in particular, but also I would say, digitalization, AI, the vehicle, the market is growing in terms of number of vehicles, and we know that very well.

There are more and more vehicles registered every year and more and more vehicles that are getting older, meaning more replacement market. We will see something in a minute. The mix is changing, more bigger vehicles than smaller one. And sustainability is becoming an important item of the agenda, and it is an important item for Nokian Tyres. We know about the challenges of retaining good people, finding good people. We know about the challenges of actually the opportunity to talk with the educated consumer more and more.

And of course, recently, in particular, we can say that we know very well what the geopolitical risk means and now any company should be able to define a clear strategy to fight against geopolitical risk. But today, I would like to talk about only a few of them just to give you an opportunity to understand where we see strong opportunities. Our job day by day is really to identify opportunities in market changes and try to be a winning company within those opportunities.

I would like to start with the electrification. We can argue if those statistics about 2030, almost 30% of the new vehicles will be electric, if it's correct or not. Maybe it will be a little bit lower or maybe it will be higher. We don't know. I mean, obviously, this is a trend that we will not stop. But for us, the electrification is a great opportunity to sell value. Because those cars, those vehicles are requesting better performing tyres. The transmission of the power on the ground is by far more challenging for an electric vehicle than engine combustion vehicle. And of course, those cars are fitting bigger wheels for us means bigger tyres where really the price premium is coming from.

I like this slide as well that is describing a little bit the automotive market. You will see that in terms of new registration, both Europe and North America, Europe is the green line. North America is the white line. You will see that we are pretty stable. So the market in terms of new registration through the years is not really growing. But what is growing is the age of those vehicles that is above 12 years now, again, means more replacement tyre in the market and for a company mainly focused on the replacement market, that is a great opportunity. But you will see on the bottom, again, green and white that the bigger vehicle are growing. Once again, for us, it's an opportunity because we are focusing on the mix development since many, many years, and this will be an opportunity for us, again, to hold better pricing and better margins.

Mobility. We're all leasing cars, I mean, leasing now and/or renting cars. I find, for instance, extremely -- I come from a city that is extremely crowdy and I found extremely useful to rent cars that are shared cars, as you know, like, for instance, we have many, many companies who are doing this kind of business model today. This is important for us because we are able to talk to an educated buyer who value safety and who value the total value of ownership of the tyre, meaning that it's not looking at the price as such. It's looking at how long I can have that tyre fitted on that car. And this is very important because he understand the premium tyre business better than any other consumer.

Finally, sustainability. We said it in many, in many investor calls, sustainability should not be paid by the consumer. In particularly, in markets like Central Europe or in market like North America, the consumer will not pay one single euro more for sustainability. We need to take it as a fact. But the consumer will prefer the company who is able to provide more sustainable solutions at the same cost. And this is where Nokian Tyres is an excellent player, has been always in the front line when we talk about renewable recyclable material, when we talk about CO2 emission. We are the only company who have a factory who has 0 CO2 emission. And then, of course, when we talk about managing the full supply chain in a responsible way. So for us, those are representing great opportunities to support our future sales.

So we live in a market that is expanding. We live in a market that is growing in terms of premium segment as well. And we live in a market that is shifting from small tyre to bigger tyre where we can differentiate with better performance. And this is leading me to talk and to anticipate our strategic journey from now to an horizon that at the moment, we define up to 2029. Annukka has described very well. We come from a very transformation period where obviously, we had to reset the company footprint and to build a sort of new Nokian Tyres platform, not new Nokian Tyres as a company, but as a platform to a sustainable value-driven growth. This is really what we are trying to build. If you look at our journey in 2025, we were focusing on sustainable value-driven growth. We didn't really care about how much market share we were going to gain. We were really caring about building a sustainable value-driven growth through great products, good pricing and good positioning.

So we are, in some way, refocusing. We are not inventing the wheel again. We are refocusing on what made this company great and what really matters for us. And this is really winter tyre. We want to keep our leading position in the winter tyre business. We want to grow above market level when we talk about all season and all weather. All season and all weather are 2 segments that are closer to winter tyre than summer. You don't fit an all-season tyre to face hot summer conditions. You fit an all-season tyre to manage snow many times or heavy rain. And then, of course, we are already a strong leader in the forestry industry. We want to grow above market level in forestry as well as agricultural tyres.

Vianor will represent a strong and important channel for our sales in Europe. And then, of course, we will leverage as we do today, the classic B2C and B2C and B2B channels as a key enabler of our own business. But let me give you more information about our journey in the way that you will be able also to understand better our margin growth.

First of all, let's talk about winter and all season. You will see that the pricing and the price position that we have when we talk about winter and when we talk about all season is by far higher than the price positioning of the summer tyre business. This is very important. We have still possibility to upgrade our pricing in the all-season and all-weather business as well. But summer, as you know very well, is the -- especially in Central Europe, is still the majority of the market. So obviously, we want to play in those niches where we can differentiate in terms of pricing.

And we are also presenting you our future journeys where you will see the winter tyre business will always represent more than 50% of our own sales. And the all season and the weather business will be the dominant part of our growth. So this is really very important because this is where we are focusing our innovation and our R&D capabilities and of course, our go-to-market day-by-day approach.

And the winter tyre business is growing. I received a lot of questions about is the winter tyre business growing or not. Well, it's growing. It's growing slowly, 2% year-on-year, but it's growing fast. And this is driven by many things, regulations, first of all. Obviously, regulations are supporting the treatment of winter tyre in many, many countries in the world now because obviously, those are safer. But also extreme weather conditions. I'm glad we have the Capital Market Day. Today, middle of the winter, you see outside is near in Helsinki, it's snowing again heavily. The temperature has gone down. So winter is there and winter is very important to make sure that we feel safe while we are driving day by day in these winter conditions. And then, of course, winter for us represent really the front line of the innovation. I mean, if you are able -- we always say that if you are able to perform in the winter tyre business, then, of course, you are able to perform anywhere else.

But the all season and the all-weather business, just to be clear, all weather is the old season business in North America. So in North America, historically, Nokian Tyres introduced the all weather was actually one of the first companies to introduce the all-weather segment in North America. So when I talk about all-season and all weather, I talk about Europe and North America. You see that has been growing 2 digit year-on-year since 2019. And this is really where we are at the moment, enjoying a faster growth, obviously, also because this is a great opportunity for a company with a strong experience, know-how and heritage in the winter tyre condition or in extreme weather conditions.

The heavy tyre business is presenting more or less -- sorry, we talk about mix first. The mix is presenting huge opportunities for us. As you can see, whenever we sell tyre above 18 inches, we obviously make margins that are by far more attractive than when we sell smaller rim sizes. And you can see from this slide on the left or right, extreme right, you will see that our development plan for the next few years and our sales plan is focused really on developing product and tyre and rim sizes that are obviously above 18 inches. I will give you more information in a few minutes.

When we talk about heavy tyre, you will see more or less the same trend. Clearly, the gross margins we make when we sell forest, agricultural tyres are by far higher than the margins we make when we sell everything else, like, for instance, truck tyres. And of course, our growth is planned to be pretty strong in the agricultural segment, less strong in the forestry tyre business because we are already a strong player, meaning that we will follow the market trend more than beating the market. But in the agricultural tyre business, of course, we have the greatest opportunity to grow even further.

But that is really an important message that I would like to address today. We have an extremely strong development plan. EUR 1.5 billion revenues will be generated between 2026 to 2030 from new products. And when you look on the left on the passenger car tyres, more than 90% of this new product will come from winter, all-season, all-weather tyres. When we talk about agricultural tyres, 75% of the new product will come from agricultural and forestry tyres. So this, I think, slide is very powerful in describing the potential opportunity we have to grow revenues through innovation and new products.

Of course, we are extremely proud to see that day by day, more and more independent tests are supporting our premium positioning, indicating Nokian Tyres as a leader in the premium market in terms of performance. This is happening for winter tyre. This is happening for all-season and all-weather too. And we are also extremely proud to be rewarded for our solutions, in this case, for our digital capabilities. We were awarded in the Agri Technica for the Into that is basically a smart tyre that is connected with the end user, giving important information like pressure of the tyres or temperature, all important information that are driving or giving the possibility to the driver to become more productive and more efficient while driving an agricultural tractors or a heavy vehicle machine. But it's not only about past, it's also about future. And I would like to anticipate our future with a very, very short video.

[Presentation]

This was our brand ambassador, as you know, Kimi R�ikk�nen that is cooperating with us. And I think in a few days, you will see something that is completely new, disruptive in the industry. So we will set again a new level in the competition because we have a new disruptive technology to introduce in in March and is going to be released in the market. This technology is about winter tyre. This technology is about winter tyre for obviously, the Nordic market, but also Central Europe as well as North America. Please be connected with us, and we will tell you more at the beginning of March. We are extremely excited and proud because again, I repeat, I think we will set really a new level when we talk about winter tyre business.

You have seen as well that it's very important to generate consumer demand, and to generate consumer demand is not enough to work on social media. You need to be visible and loud. So we are investing significantly. We will keep investing significantly in our branding, in our name. We have signed important partnership. In this case, for instance, with IHF Federation. We will do a very important product launch now in Ivalo starting in March, presenting different products, in particular, 2 flagship in the winter tyre business, we will obviously keep working together with our brand ambassador that is Kimi R�ikk�nen that is well reflecting our values and our ambition to become a leader in the segments where we operate.

Vianor, it's an extremely important vehicle for us to support our brand, our sales and our premium positioning in the market. We will keep rebuilding because we had quite a significant presence. We keep rebuilding our Vienor network. We have today more than 500 service center partners or own equity distributed between the Nordics and Central Europe. And this is really, as I said, an important tool for us to promote Nokian Tyres in the market, to give service to leasing companies, to rental companies and at the same time, obviously, to hold a premium positioning.

Obviously, now after great investments, we have a platform, extremely modern and efficient platform that will give us the possibility to support our growth. We are not planning in the strategic plan period to invest more. We have enough capacity to support our growth, and we have great facility to support our improvement in terms of efficiency and productivity because we have now in place extremely automated and efficient technologies that will give us the possibility to be cost efficient for the future.

And this manufacturing footprint is also important from the geopolitical point of view. We have now finally a local-to-local business model, which we didn't have before. This is what I mean when I say we transform a problem in an opportunity to become even safer and stronger in the future. Because now we have a dedicated factory for the North American market. We don't care about import duties anymore. We have a dedicated factory for Central Europe who can support the Central Europe day by day. And we have, of course, our historical strong platform in the Nordics that is supporting both the passenger car tyre as well as the heavy tyre business.

So we reduced the uncertainty. We reduced the risk related to supply chain. We reduced the risk from currency fluctuations. Now we produce in dollars and we sell in dollars. So the depreciation of the dollar for instance against the euro is not representing a big risk for us anymore. And of course, never forgetting the lower environmental impact, having goods that are traveling less around the world. This is also a strong competitive advantage.

And step by step, we will have also a strong opportunity to be more efficient in terms of cost. Clearly, more we are saturating our facility, more our cost will be going down. But also, we have plenty to do now having a new platform to improve optimizing our efficiency through lower waste to higher productivity in particular.

I move then to the updated financial targets. You have been probably able to see those in the press release of yesterday. And you will see that the updated financial targets are not too far or are not so different than the one we published in 2023. Clearly, there is one message in those financial targets. And the message is revenues can be EUR 1.8 billion, can be EUR 2 billion. We don't know yet because we are not going to run behind sales as such. We are going to value profitable growth.

So our margin will be in terms of EBITDA above 24%, our margin in terms of EBIT segment operating profit. And I want to anticipate, obviously, segment operating profit and EBIT will be actually close because obviously, this is -- we are not planning any exclusions in 2029. But our margins will go back in terms of EBITDA to the level where they were before the crisis we had with the exit from Russia. And of course, our segment operating profit will be higher than 15%, below the level before the crisis in Russia, but simply related to the fact that we have higher depreciation and higher financial costs. So the capital structure, we will have a ratio between net debt and segment EBITDA that will be lower than 2.

But I would like to give you also an additional information. Our progress will come -- that is more than EUR 200 million EBITDA, will come not only from, obviously, our growth and our better prices. It will come -- half of it, it will come from our own actions, from something that we can control. And this is really very important. So EUR 100 million, EUR 120 million more or less will come from improving our position, in particular in the new market through partnership, but it will come from consistent price positioning and price realization. But anything else, when we talk about operations, when we talk about tyre design, raw material, in terms of procurement, but also in terms of development and application or utilization of different raw materials and our fixed cost in terms of anything we pay day by day to run our own business. Well, this box will represent the additional EUR 100 million, EUR 110 million that are needed to get to our financial target. So half of the improvement will come really from something that we can control and we can control 100%.

The profitability will improve. You will see in this slide that our segment operating profit above 15% is the final target. We closed 2025 at 6.6%, as you know very well. And we gave a guidance yesterday to land 2026 between 8% to 10%. You see that we are already above target when we talk about Passenger Car tyre Nordics together with Vianor, just to prove how Vianor is important to keep our strong pricing power in the market. We are already at target level when we talk about Central Europe. So the growth in Central Europe can only provide additional margin. And we are below target level in heavy tyre, as you know, and we are below target level when we talk about North America. But I'm glad to be here with the leader of the passenger car tyre business of Nordics, Central Europe as well as North America to show how this journey will improve the profitability of all the business we have around the world. So this is very important. This will up through pricing. This will happen through new products, obviously, volume as well, but also through operational improvements.

We are confirming our, what we call, nonfinancial targets, in particular, when we talk about renewable recyclable material, for instance, we are in this dimension. I would say, the #1 in the tyre industry. We are setting a target that is extremely ambitious to get 50% renewable and recyclable material by 2030, while you will see the average of the market is 10 years late. Last year, we were at 28%.

In terms of CO2 emission, well, I think with the new factory in Oradea, we are setting really a new level, and we were extremely strong and efficient to reach already 38% in 2025 when we are supposed to be at a reduction of 42% baseline is 2022, obviously. So we are already close to the target of 2030. And then, of course, we can improve in terms of safety. We improved significantly last year from 4.6% to 3.7% when we talk about LTIF. But of course, we have new facilities. We -- our target is to get to 1.5 to create a safe environment for our own employees. Not forgetting then the sustainability and meaning working with our supplier in a sustainable way as well as obviously as the continuous improvement necessary to have -- to engage and to keep motivated people who value equal opportunities within the company.

So summarizing, we believe that Nokian Tyres is an attractive long-term investment. I think the journey 2025 is now proving that we are back. We are back strongly, and we are in a good position to succeed. Focus, winter tyre, all seasonal weather, agricultural and forestry tyres. 3 different challenges in the Nordics is about defending our premium position; in Central Europe, it's about rebuilding; in North America, it's about building. And I'm glad that my colleagues will be now able to describe this journey that is different for all of them.

We will win through premium positioning and mix enhancement. We will win through Vieno in particular, and then, of course, traditional channel like B2B, B2C. We will win through strong product and innovation, EUR 1.5 billion is the pipeline of the new product coming from '26 to '29. consumer focus, branding, a lot of branding, a lot of activities, increasing the brand awareness of our consumers, operational excellence. A very solid local-to-local business model. And last but not least at all, an extremely experienced team, people who knows exactly how to be successful in the segments where we want to be and people who knows better than anybody else how to achieve the financial targets that we have. And of course, the financial targets are the one that you see in the slide there. But I would like to conclude this presentation with also our brand ambassador that will tell us how we are going to reach our financial target. He has contributed as well to build our own strategy.

[Presentation]

You can leave me the microphone for a moment. Of course, it's a more pragmatic way to be successful, but I'm sure it's going to be a great journey. And we are really confident that this is going to be a successful journey for the all Nokian Tyres teams.

Having said that, I would like to call on stage my colleague, Jari, who will talk more deeply about the financial targets. Thank you very much for your attention.

Thank you, Paolo. Good afternoon, and welcome to Capital Market Day. My name is Jari Huuhtanen. I'm heading Finance in Nokian Tyres as an Interim CFO. And in next about 10 minutes, I will shortly go through how Nokian Tyres is driving a solid financial progress in the coming years. And especially what are our key drivers for the profitable growth.

Paolo already confirmed our updated financial targets by 2029. Personally, I want to highlight, again, this profitability part, segment EBITDA higher than 24% and segment operating profit higher than 15%. And why also EBITDA is important. Our depreciations comparing to net sales are relatively high at the moment, mainly due to high investments to our factories in Dayton and Oradea.

Capital structure, net debt to segment EBITDA target is below 2x. And we can confirm also the dividend policy, which is unchanged. Nokian Tyres will pay dividend at least 50% of its net earnings.

Here, we can see the same financial targets from the historical point of view. We can proudly say that year 2025 was a turnaround in many ways. And there is a solid progress ongoing towards our financial targets. And by 2029, we are returning back about the same net sales, same EBITDA levels where Nokian Tyres was earlier before the crisis. Also net debt to segment EBITDA, we have now reached the peak. The peak was in 2024. And also that ratio is steadily coming down.

For us, this might be one of the most important slides. This is our way to segment's EBITDA higher than 24%. This frames what Paolo was describing earlier in his presentation about those ongoing commercial and operational initiatives to improve our profitability. And this is a relative indication of those same actions. EBITDA improvement is a combination of volume growth and various different profitability actions. We will grow in volumes, especially we want to grow in volumes in North America and Central Europe. However, when we are growing volume-wise, we want to -- that every tyre, what we are selling are on average more profitable than today. And this will happen in 2 ways. We want to increase our high-value sales mix and also increase our premium price positioning. And at the same time, we want to manage our operational cost so that tyre cost will be lower than what they are today.

And in order to support volume growth and profitability, we want to allocate some money back. We want to allocate money to our stronger brand to our product development and also to our improved sales capabilities. Our investment phase, it is now completed and the CapEx is normalizing. In the past 5 years, company has invested about EUR 1 billion. Of course, biggest ones are the factories in Dayton and Oradea.

Our next year's CapEx level is aligned with the depreciation. In practice, that means that our annual average CapEx level will be about EUR 150 million.

Improving EBITDA will also provide a good basis for the cash flow. Our free cash flow is getting stronger. And what is also important, our cash flow will be more predictable. We will continue to optimize the working capital, especially our new local-to-local business model will give us more opportunities to manage our working capital in an efficient way. And if you look at our 2025 cash flow, you can see already there some good development.

CapEx, I already mentioned, CapEx is normalizing. And then on top of that, some financial expenses and taxes as well.

Our capital structure is stable. Now after the investment phase, our interest-bearing debt is about EUR 800 million. We want to leverage our stronger cash flow and our stronger balance sheet and the debt level will go down to the level which is aligned with the target of net debt to segment EBITDA lower than 2x.

Our debt portfolio is balanced. All the needed main backup facilities are in place. For us, it's more to extend the maturity. And later, we have also more opportunity to balance between different financing sources.

In this strategy period, Nokian Tyres will allocate its capital primarily to our own profitable organic growth. We want to invest to our stronger brand, our R&D and our sales capabilities and capital investments supporting our efficiency improvements, digitalization and factory maintenance. And at the same time, we want to provide an attractive shareholder return with growing dividends according to our dividend policy.

As a summary, this is shortly how Nokian Tyres is driving a solid financial progress in the coming years. We want to focus on profitability, profitable growth, cash flow and growing dividends.

I want to thank you and handing over back to you, Annukka.

Thank you, Paolo and Jari. Next, we will have a short 10-minute break, after which we will focus on Nokian Tyres Passenger Car Tyres business. But now a short break, and we will be back shortly.

[Break]

Welcome back. In this second session of today, we will take a deep dive into Nokian Tyres Passenger Car Tyres business. We will start with the Nordics followed by Central Europe and North America. Tron, please go ahead.

Thank you, Annukka. My name is Tron Gulbrandsen. I'm heading the passenger car tyres in the Nordics. And I will, for the next 10 minutes, talk to you about the concept of strengthening our already #1 position in the Nordics within the passenger car tyres. We kick it off -- we started off with the Nordics in a nutshell. Within the premium sector, we are the market leader, which is obviously -- this is our home market. And we have a solid ground for basically all our product categories. But especially within the winter tyres, we are the clear #1 and the winter tyre expert in the market, and that's where we want to be as well.

We have 174 owned Vianor service center, which brings volumes and products to the market and also enables a premium positioning in the market, which is very, very important for us. Some bullet point at the right-hand side of the slide there. We bring a pretty stable and predictable volume and sales. Since the turbines after the Russia exit, we have been climbing back and picking up market shares, and we are pretty predictable in terms of sales and volumes.

We see a future potential both in gaining more market shares and growing in that aspect, but also when we look at the larger rim sizes and the development that is going on in the market. I will get a little bit back to that on the next slide as well. And then we have been bringing high profitability to this company for years, and we will continue to do so as well for the next period. We do 53% of the group net sales from the area of the Nordics.

Talking shortly about the market. It's -- the Nordics is quite solid and a quite stable market. It's about 17 million tyres. The growth in the market in terms of pieces, the market is quite flat. So we are looking at an estimation of the growth from 0.5% to 1% as a CAGR. So that's not where they are like the real beef is. There is potential to do to do higher shares within that market as well. And if you look at our seasonal mix, the majority of what we are selling is winter tyres. So about 75% winter tyres and about 25% summer tyres. And we expect that share to be quite consistent for the coming years as well.

And one of the obvious reasons for that is, of course, that we are stronger within the winter tyre segment and also because we have a fairly high share of new complete winter wheels that are going to new car sales as well. So therefore, also the higher share in the winter tyres.

The very interesting part here is, of course, the growth in the larger rim size development. If you look at some historical figures back to '21 up to '25, we have been growing with 14 points from 18 inch and bigger from the shares. And that development will continue. And we have carefully estimated that to grow with another 10 percentage points for the coming period. And I think that is quite carefully done. And this is not something that we hope will happen because we know that this will happen because we know that what cars has been sold for the last years, we know what cars that are being sold this year. And we see that all the new cars that are put on their own almost have 17, 18, 19 inches on their new cars.

So we will also sell a big share to the new cars being put on the market, and those cars will also give an increased replacement market in the bigger rim sizes. So this market will grow in the coming years. Our main focus is, of course, winter tyres. And as I said here, we would like our portion of the large rim sizes and the development that is ongoing there. And then we want to position our products as premiums in the market. That's what we want to target.

One of the big reason -- main reason why we have this position as we do and that we've had success in the Nordics is because of the great products that we offer to the market. I think our products with the innovation, it drives the premium sales mix and when the premium sales mix is driving, then the margins also are driving. We have a pretty attractive product portfolio as it is today with, of course, winter as the flagship in what we do. And we have a long -- as Paolo also mentioned, we have a long experience in this market, more than 90 years of winter tyre experience. We have highly skilled people in-house. We have a very, very competent R&D team, which makes the -- they make the unpredictable predictable, but they also make the impossible possible. And I think Paolo gave you a teaser of what is coming up. So keep your eyes and ears open in the beginning of March.

We will -- in the coming period, we will renew our product portfolio, 100% we will renew everything. And we will, of course, have focus on the larger rim sizes, as I said, to capture that part of the market. I have been working in Nokian Tyres since 2006. And I have to say that every time we launch a new product, especially the winter tyre product and we bring that to the market, it sets a new standard in the market. We are able to launch new product with new innovation that kind of becomes the new benchmark and drives the whole market, I would say. So really, really excited about not only the coming months, but also the coming years in terms of new products that we are putting on the market.

Also, Paolo was mentioning the test wins, which is, of course, important in this market. It's important for the manufacturers. It is important for the dealers, and it's important for the end consumers as well. And for the last years, and I'm sure that we will continue to do so, we've had very, very nice results in magazine test in a broad demand of the magazine test and also year-by-year showing consistency. And it gives a pull effect from the market. It keeps our dealers happy. And I think on the consumer side, it creates loyal consumers, and it really gives a strength to the brand. And surveys that we do show that we are seen as the winter tyre expert #1 in all 3 key countries and also that we are -- have the brand awareness #1 in all 3 countries as well. And that's exactly the position that we want to have. We have that today, and we want to continue to have that.

Bringing new products to the market, they also need to have a channel to go through basically. And we have very strong sales channels today, which is supporting our premium growth. We have been having a solid position in this market for quite a while. We want to be an attractive partner in the market for our customers and our partners. We want to bring them a good earning potential on our products. We want to place our product as a premium brand and premium product. We think that we will create a pull effect that our dealers will get the benefits from. And I think also today, if you want to run a tyre dealer chain in the Nordics, positioning yourself premium, you somehow need to find a place to have Nokian Tyres in your product portfolio somewhere.

And then we want to be a reliable and trustworthy partner, of course, delivering tyres when the customer need them, trying to be predictable, having tyres in stock during season and so and so. And today, we have a strong presence in all -- basically in all the sales channels. If you look at car dealer business, where we sell -- have a fairly high share of the complete winter wheels that goes with the new cars. So there, we are in a good position. We are selling to traditional tyre dealers, wholesalers and then, of course, Vianor with a key role, securing our premium position and then bringing products to the market basically.

On top of that, we are having efficient operation, which drives a consistent performance. And we have a Nordic footprint. We have the factory in Nokian, which has, of course, it's close to the market. It has a huge know-how, short distance to all the key countries and so and so. And we have efficient operations. As I started with, we are pretty predictable in the sales and the volumes and what we forecast to happen and everything. And that makes us -- it makes it easier for the production to run the production efficiently when they get good forecast on what to produce and everything. So that combination is quite good.

And then we have a very, very efficient supply chain optimized for seasonal Nordic business. And what do I mean with that? I mean we know approximately how big the presales will be. We know when it will be delivered. We know what kind of inventories we need to have for the seasonal business when the replenishment is coming. We have central warehouses and we have local warehouses in all key markets supporting the business.

And then to wrap this up, Paolo said, Nordic defend. I will say Nordic strengthening our #1 position in the premium sector. That is the target. We want to be in the premium winter as the main focus. We want to have our share of the bigger rim size development that is going on. We want to have the innovation of leadership when it comes to the new product. We see that when we get new products on the market, we have constantly a competitive advantage. And as I said earlier, it kind of drives the whole business when we put new products to the market. And then we need to have a superior go-to-market execution, of course, meaning that we -- with our partners, we see the demand. We have quite good visibility. And then we need to be a reliable partner supplying what is needed in the market, basically. And I think those things stated here, when you combine those together, it's a very powerful package. It's a very solid strategy. And I will say it's quite unique and it's quite hard to copy as well.

So those will be my ending words. And I will say thank you for your attention. And then I will invite my colleague, Tommi Heinonen from Central Europe to the stage. Thank you very much.

Good afternoon also from my behalf. My name is Tommi Heinonen, and I've been leading the Central and Southern European passenger car tyre region since the summer of 2022. Now the term Central Europe refers to markets from Denmark, South to the Mediterranean countries and then from Portugal and France, all the way east to Ukraine.

Now I want to start by looking at our net sales journey for the last 5 years. So if you look at the graph in the middle, you can see that our net sales was heavily impacted in years 2022 and '23 due to the sale of our Russian factory. In fact, as a company, we lost a major part of our production capacity in a relatively short period of time. And unfortunately, the Central European market was impacted the most. But since then, we have effectively increased our capacity and supply and have returned to many of those markets that we had to withdraw from due to the lack of supply.

Now today, we have sales in over 22 countries, representing already 25% of the group sales. For the important branded retail reach, we work together with close to 200 Vianor partner stores and also 900 Nokian authorized dealer locations, which form an important part of our sell-out reach to the Central European consumers. Now I would like to mention that Nokian Tyres is not the owner of these points of sale, but we work in a contractual collaboration with third parties.

Now we are back on profitable growth, and we have quite strong customer base. This market offers great growth potential for the company. And we are set to deliver higher margins with increasing price positioning and increasing larger rim sizes as well as we go forward. Now this market opportunity is quite sizable for us. In total, the market is about 350 million pieces as a replacement tyre market for passenger car tyres. And if you look to the left-hand side of this slide, you can see that the winter segment of this market have had a CAGR of 3% between years 2021 and 2025. Now that's not the fastest-growing segment, however.

The second segment to highlight is the all season. And this has grown with an impressive 11% between years -- in CAGR-wise between the years 2021 and 2025. Now this segment offers quite a lot of convenience for the consumers. And also, this trend has been supported by some relative mild winters recently, but also tougher economic times. Now if you look at us today in 2025, you can see that the winter share of the business is the largest. This is what we are most well known for as a company. And after all, we invented the world's first winter tyres some 90 years ago.

Looking into the year 2029, we project a 12% CAGR for the winter business. And this is largely highly supported by the new innovations that are coming up in the pipeline. But even faster than that, when looking at the all-season segment, we project a plus 13% CAGR. And you can see this -- Paolo was referencing this a bit that this all-season segment can be seen as a natural extension to the winter business. We approach this more from the winter point of view, maybe some competition from the summer point of view. But without tyres, you can truly drive in any weather 365 days a year. And then looking into 2029, the all-season and winter combined are expected to represent some 83% of our total. Now we do intend to grow in summer, but we do that more selectively in a definitely profitable way.

This is our fast-developing product portfolio for the Central European market. And as you can see, we offer tyres for passenger car tyres, SUVs and delivery vans. And for all these three, we offer winter tyres, all-season tyres and summer tyres. And the current size portfolio, this represents covers 90% of the total volume sold today in the Central European market. Like Paolo said, the R&D is really at the heart of this company, and we are quite proud of the work that has been carried out by the company in the decades already. And we work hard in making these tyres the safest tyres for any Central European weather condition. They help us to turn the unpredictable to predictable as well. The latest additions for the portfolio, you can see they are marked with these green labels.

And if I want to make -- if I would like to make one highlight from this portfolio for you today, I would pick the Seasonproof 2, our new all-season flagship tyre. Now we had the commercial start with this tyre in the summer of 2025. And I'm happy to share with you that this tyre has the perfect test win track record against any premium competitor. And I'm not sure if you know this, for example, but we use Aramid fibers on the side walls, sides of the tyre. So Aramid is a fiber used in the bulletproof west to stop the bullet. So we take these fibers and we put it on the sidewall of the tyre to make it extremely durable for the everyday use. So for me, these type of innovations provide value to the consumer on everyday basis.

Now let's run a short video on this product, please.

[Presentation]

This product has been extremely well received by the customers and consumers alike.

Now the Central European tyre market is changing. And one of the drivers behind the change are the increasing number of electric vehicles. These vehicles require larger tyre sizes. And if we look at the past 5 years, for example, and approach this from the rim size point of view, you can see the smaller rim sizes fitting smaller vehicles between 14 to 17-inch rim size tyres have actually declined in their share. But when you look at the larger tyres with rim sizes of 18-inch or larger, the CAGR has been over 8%. And this trend is expected to continue.

Now if you look into our plan up to 2029, we project for the 18-inch and larger tyre segment, a CAGR of 24%. And these tyres will provide increasing commercial value for us. And starting this spring, we will launch tens of new large rim sizes to the market covering the winter, all-season and summer segments. And these are enabled by our new production platform. This is highly important for the future of the business in Central Europe. Now it says on the slide that we have increased our market share in recent years, and we have continued to do so.

Now a few words about our go-to-market. Now looking firstly into the distribution. Now we continue to grow with local market-leading distributors. Now many of them nowadays already have retail stores of their own. And this is what the term hybrid here refers to. But in addition to this type of customers, we also work with the pan-European distributors to make sure that our reach covers all corners of Europe. Now we -- in this strategy period, we increasingly shift our focus towards retail. And we continue to grow with large retail chains like Point S, for example. But in addition to this, we will expand our local business with new premium chains in the key countries. And when it comes to the point of sale, we expand our branded retail reach, for example, in markets like Germany with a significant number of new Nokian authorized dealer locations. Digitalization is highly important, and we focus on digital Nokian Tyres authorized dealers, especially for brand building in countries, for example, like France.

Now our plan is based on 4 pillars. The first one can be summarized as a value-driven mix. So we'll introduce new models into the market with innovations, but the sizes also grow towards the larger rim size. The premium positioning. Now we keep optimizing the pricing in connection with the innovations that we bring to the market. This is a very important part of the plan.

Stronger brand. Now we've laid out the foundation to build and increase our brand awareness and preference across the Central Europe. Now Kimi, as the new brand ambassador is a very well-known person across Central Europe, that will be a great addition to the arsenal, but also we keep improving our performance in social media and invest more into digital marketing. One of the examples of the digital marketing is our advertising that we do in the renowned online streaming services like Netflix and Amazon Prime Video.

And last but not least, the local production. This enables highly cost-effective direct deliveries for us, and it's a very important part of the local-to-local business model, as Paolo explained earlier.

Now if I were to summarize this short presentation for you with 5 points. The points would be that we accelerate the already profitable growth. We focus on winter and all season. The mix evolves towards larger rim sizes. We work hard to improve the brand awareness and preference during the coming times. And the local-to-local business model, having a state-of-the-art modern production facility inside EU, close to our customers will enable a very good competitive advantage going forward.

So with this being said, I would like to thank you for your attention and invite to the stage my colleague, Chris, who will talk more about the North America business. Thank you.

Okay. Good afternoon, everyone. I'm told by my colleagues that we may need an interpreter for me because my English is not -- the accent is not like my colleagues over here, so I apologize about that. Now just a quick introduction. My name is Chris Ostrander. I've been with Nokian Tyres in the operations running the North American business since September of 2025. And prior to that, I was actually a Board member here for Nokian from '21 through '25, most recently as the Chairman of the newly formed Investment Committee. So looking forward to continue to drive what we've come here to do, which is deliver the growth and the results that Paolo was talking about at the beginning.

A couple of things that we'll talk about today for North America is diversification, especially in the U.S. market, what we need to do there to grow in the U.S. market and then outgrowing in the premium segments in both Canada and the U.S.

So if you look at this graph, this is a quick overview of the distribution of sales for North America. As you can see, 2022 was the peak of our sales in the Canadian and the U.S. market, primarily driven by Canada. 2023, it was a year where the disruption started to occur with the Russian support and not having the product support coming into the U.S. market at that point. But you can see that we've gradually started to rebound the sales. And in 2025, had a pretty solid year in terms of the growth of the market. So the North American market today makes up about 22% of our overall group sales. And this is primarily driven by -- from a unit sales standpoint, primarily driven by winter in the Canadian market and our Northeast business and our all-weather tyre sales as well, which make up about 63% of our total unit sales for the North American market. And that is really anchored, again, by our positioning in the winter tyre sales, primarily in Canada and the Northeast part of the United States.

In addition to that, over the years, we've started to really start to see some growth in both the Canadian market, the Northeast market and now more so in the snowbelt area with the number of retail stores that we have a point of sale, and I'll talk about more here in a little bit as to what that means and how important that is to our brand.

So if you look at it from a little bit of a history for the North American business, it's not a long history here from the current state. But prior to 2020, we were 100% import business for the most part. Everything came from Finland and Russia. In 2020, we started to build the factory. Unfortunately, during 2020, we had a little thing called COVID. And while we were building the plant and constructing the plant and getting the equipment and stuff in there, we weren't able to get the manufacturing engineers from Finland over here over to the U.S. to support the ramp-up.

We weren't able to get our suppliers into the U.S. to support that ramp-up. So unfortunately, we had a little bit of a hiccup there in terms of the timing of how quickly we were able to ramp up the plant. And then we started getting the plant ramped up and then 2022 hit with Russia invasion of Ukraine. So that put another damper on the ramp-up of the Dayton plant because we had to absorb a lot of the products that were being made for the North American market that were being made in Russia were then moved over to the Dayton plant, and we had to retool the plant. So certainly, that whole 2020 to 2023 time frame was a transition for that plant, trying to build it up and then manufacturing products that we hadn't planned on manufacturing.

So moving the clock forward into 2024, we've started to see some stabilization in the manufacturing side of the business. We added a finished goods warehouse that was not originally in the plan in order to really streamline our logistics. So that finished goods warehouse is actually on site in our Dayton, Tennessee plant, which holds over 300,000 tyres. And what that allows us to do is service customers directly from our plant, which reduces our cost, reduces the logistics cost to our customers and gives us better availability for the clients rather than sending it out to our satellite warehouses.

In 2025, you've heard the importance of the R&D side within Nokian Tyre, and we're no different. We localized our -- started localizing our R&D team in the U.S. and Canada in 2025 in order to make sure that we had the focus on the attributes necessary to be successful in the North American market as we launch new products going forward, which we'll talk about here in a little bit. And then in addition to that, in 2025, we brought on a national distributor. We've historically in the U.S., primarily worked through some key clients in the Northeast and some distributor retailers, but we don't have a very good footprint in the U.S. The national distribution enables that footprint, and I'll talk more about that here in a little bit as well.

So ultimately, where we are now in North America from a production standpoint and servicing our clients in the U.S., especially, 85% of our product that is sold in the U.S. is now manufactured in our Dayton facility. So it's quite different than where we were just a few years ago as we were going through the production transition.

So the North American market is a very attractive market for Nokian. We have a very small presence, especially in the U.S. We take a look at the ups and downs of the market. It's relatively stable. Our expectations are that it's going to continue to grow at about a 1% CAGR. But what's especially attractive to the Nokian tyres business is if you take a look at the left side of this graph, there are -- the segments that we want to grow in are the segments that are outgrowing the end markets. And so North America is a very light truck-centric market in Canada and the U.S. So light truck is growing at a 4% CAGR. And the all-weather, which is the European all-season product is also growing at a 4% CAGR during that time. And that's expected to continue through the timing through 2029.

And then the other area that's outgrowing the end markets is the 18-inch and above, similar to my colleagues talking about the premium value and the additional profitability that we get out of the 18-inch, we also see that outgrowing. So why that's important, if you look at the right side of the graph, we expect to improve our positioning in the 18-inch and above by 3 percentage points during that time. We actually have a pretty high percentage currently in the 18-inch and above, largely by the type of tyres in the light truck, but we are going to continue to improve upon that. But the really exciting part for me as I've moved into this role and starting to take a look at our product portfolio and what we need specifically for the North American market.

From 2025 to 2029, we project that over 85% of our product is going to be new to the market and launch within the portfolio of our unit sales within 3 years. So everything in 2029, 85% of our product is going to be new to the market by 2029. So that is really going to change the game here because now we're making products with specific attributes for the North American market. It's really going to help us improve our brand presence. It's going to help us improve our credibility and really importantly, our reliability because some of the disruptions that we saw, especially from the Russian disruptions back in 2023.

So our 3 primary growth areas in North America, this company is built off the snowbelt. And we've been in Canada and the Northeast for a very, very long time, we're going to continue to do that. But we're also going to continue to gain share in those critical markets with Canada and the Northeast. And we're also going to use our winter tyre and our all-weather technology to pull through our all-season and light truck products and to continue to gain share with those strategic accounts that we've got and we've had for so long.

In addition to that, there are some areas that we're underpenetrated like in Ontario that we're working with our key client in Canada to gain share in Ontario and also into the Atlantic Canada area. And then the other area in the U.S. that we're relatively new to the market in terms of the snowbelt is in the upper Midwest, which we don't have a whole lot of market share. So we're putting a lot of emphasis on the growth in the northern part of the United States.

The second part is our distribution in the U.S. So as I mentioned earlier, we don't have the greatest distribution network. We haven't -- we've targeted customers in the past. We've had some really good clients. We have some super clients, long-term clients, but we don't have the brand presence in the U.S. to really grow the business. So what we recently did was sign a national distributor, which gives us nationwide access to distribution, over 100 warehouses now throughout the U.S. and over 300 salespeople that are actively out selling the Nokian Tyre brand. That then enables us to be able to support the national retail customers much better, again, from a consumer standpoint, helping our brand presence. And then also on the regional retail as well, which there are quite a few of those that I'll talk about here in a little bit. And all of this is going to be supported by the right side of the graph in that premium all-season growth which is majority of our growth is going to come from what's being made in Dayton. Majority of our profit is going to be made from the products that we've historically made with our all-weather and our winter products and the greater than 18-inch.

So a great example of this from a product development standpoint and the need for us to have local R&D in the United States and Canada is the Encompass AW02. And this is a product that was -- is a proprietary product. So it was actually designed and exclusively developed for the largest retailer in the U.S. And that product has taken off in 2025, and it's done a very good job of getting us that brand recognition at the consumer level with the number of retail stores that we now have visibility of our brand out there in the U.S. market. So this is a really key part of our strategy in the -- especially in the U.S. market, is working with retailers on being able to get our brand front and center within their retail screens. And so we got a lot of work to do there, but certainly, this is a great start and gives us a lot of credibility moving forward.

And all of this in order for us to do this is underpinned by one thing, and that is our brand and our brand awareness. So our current brand right now, I would say, is not predictable. The Nokian Tyres business, especially in the U.S., the Nokian Tyre brand, is not a predictable brand. If you ask a consumer what Nokian Tyre is, most consumers will not know what it is. So my goal here and the U.S. goal is to become predictable. We have to be able to get the brand presence out there to become a predictable brand that people know when they walk in the store and you have a retail person trying to sell you a Nokian Tyre, you must have had heard that brand before.

So how are we going to do that? First of all, we're going to leverage some of the global partnerships that we talked about earlier with the IIHF, the hockey partnership that we've got, also Kimi R�ikk�nen from a brand ambassador standpoint. We also have local activation with Alterra through all the ski resorts throughout the United States and Canada and many other things with regards to digital and some other stuff. But the ultimate goal here is to drive premium drivers, premium consumers to our brand in order to ensure that we're not only focusing in on the winter and all weather, but also pulling in a light truck and all season. And then ultimately, the way that we're going to do that is through the retail side. And the retail piece of this is an absolutely critical part of our strategy in that we have got to help our retailers advertise our product, run events with our product. And then ultimately, we have to have our employees, their employees trained to know the value proposition that Nokian Tyres brings to the table.

So if you look at how that all plays out, and you go from left to right, establishing the national distribution was absolutely critical. So we've done that in late 2025. We're just now starting to ramp that up here in 2026 and starting to see some of the benefits of having a national distribution. So this does give us a nationwide presence. And more importantly, from a distributor standpoint, we have a loyalty program called the Pioneer Dealer program, of which from a wholesale standpoint, our wholesaler owns these distributor -- or these retailers, the small retailers throughout the country. And so our national retailer has signed over 40% more Pioneer dealers since we started the program back in October. So we're starting to see the ramp-up of the loyalty program at the small dealers. Then you move to the center part of this graph, and this is where the really exciting part becomes because now the majority of the retail points of sale are located within these national retailers and the regional retailers outside of the independent channel. So where you get your brand presence and where you get your brand recognition is more so from the regional than the nationals, but obviously, the independent channel is extremely important as well.

So what this does by having a national distribution for us is now these retailers have access to our brand without having to carry any inventory. And that has historically been an issue because we have such a low brand presence in the United States. But now they're able to go to our distributor screen and see what our distributor has in their inventory and be able to get that product within a day or at most 2 days access to that product. So now these thousands and thousands of retailers have access to our product that they did not have before because of the minimum order quantities that are required to make it an efficient transaction with the retail.

So what we've done over the last couple of years is actually really impressive. We've doubled our retail presence since 2023. But as you can see here, and we're well down this path already, we are expecting to triple even what we've done in 2025 with the number of retail points of sale going forward here through the 2029 period.

So in summary, it's the North American business historically driven off the snow belt with Canada and Northeast United States. We've got to really accelerate the profitable growth in the United States portion of the business. And the way that we're going to do that, just in summary of some of the things I talked about, we are going to focus on the premium products of winter, all-weather, light truck and the 18-inch and above. This new product development cycle and how quickly we can get those new products to market with the attributes that we need in North America, absolutely essential to our ability to succeed here.

The brand presence is -- we have got the things that I've talked about, but so many other things that we've got to work upon and put the strategy together with how we're going to get our brand more recognized in the U.S. market, especially. And then we have a competitive advantage to reduce volatility now compared to some of our competitors that are manufacturing overseas or in Mexico. We have a local production facility here in Tennessee that gives us a competitive advantage versus some of the others that are out there.

So I'd say, as we look at this, I'm personally coming from the Board into an operations role, I'm super excited about the North American business and where we're going to take this thing. And I see a lot of opportunity here. We've got a lot of work to do. I'll be really honest about that. But I think the -- all the tools are there to get us where we're trying to go to focus on the profitable growth. So just a quick closing. we've had some disruptions in this business, some false starts that kind of hurt our credibility back in '23 and '24 as we started to build this business. And we had some pretty good momentum that kind of got cut out of the knees with what happened. But that's all behind us now. We are focused on one thing and one thing only, and that is delivering the results that Paolo and Jari indicated at the beginning of the session.

So with that, I want to thank you for the time, and I'm going to bring Annukka back up to the stage.

Thank you to all our presenters. And next, we will move on to Q&A session. Those here in Helsinki, please simply raise your hand for any question and we will bring you a microphone and those online can submit their questions at any time. We can start here from the audience.

I have three questions, please. We've heard a lot about high-value mix and mix enhancement. Could you just give us more details or specifics around what portion of your revenues today or in 2025 go from more than 18-inch tyres? Where do you want to get to? Or if it's simpler in top line growth assumptions, how much does that add to your revenue growth CAGR per year in the passenger car business? Just trying to understand the high-value mix opportunity because specifically in Europe, you've given very big numbers like 24% growth. So just putting that into context, please. That's the first question.

Right. If you don't mind if I stand up, it's -- Yes, obviously, we don't disclose, obviously, the number as such, obviously, for competition reasons. But we have -- let me put it this way, we have plenty of opportunity of growth in that area. Clearly, has been our focus for many years, but we are simply accelerating this focus because we have an opportunity, obviously, to now cover the full range. And there is -- I will say that the whole market has been also accelerating significantly with new electric vehicles, with the increase of SUV vehicles.

So we will -- what we will start to do for sure for -- from quarter 1, we will start to -- as many other competitors are doing already, we will start to show our growth versus the market growth to show how we will be able to accelerate the growth. But of course, we are not releasing the absolute value today.

And the second question is the chart that you showed in terms of profit improvement potential over the medium term and the EUR 200 million opportunity. Could you just help us understand how much of that is volumes? How much of that is cost action specifically? And if there's an element of cost efficiency and improvement that is also linked to volumes. So just trying to understand what exactly is self-help that is in your hands versus how much is volume dependent within that EUR 200 million opportunity?

That's a good question. The slide was more or less highlighting that there are more than EUR 200 million EBITDA improvements. And we say that half of those EUR 200 million are coming from operational efficiency and cost improvement. When we talk about cost improvement, of course, out of this EUR 100 million, I would say that the majority, 80% of this EUR 100 million are coming really from improvements that are related to efficiency gain. to better negotiation with supplier, to resourcing, to the improvement in the product specifications. So there is plenty already going on. Actually, we had a lot of actions already going on in 2025 that will carry over in 2026 that are supporting, I would say, at least 80% of those improvements.

Then there is the volume part. The volume part is strictly related to the growth that you see in our strategic plan. And this is, I would say, affecting the remaining EUR 100 million, EUR 120 million that we were describing before. Out of this EUR 100 million, EUR 120 million, an important part is pricing. So again, the volume part, it's significant, obviously. But of course, I would say that more than 50% of what we will gain is also coming from something we control directly. And this is what is making us extremely confident about the future journey because we need to look at the market opportunity. We need to look at growth as an opportunity. But of course, we have plenty to do now with the new manufacturing footprint with our new setup to gain through those kind of activities.

And the last question is on Central Europe. And all the presentations that we saw on the region, Central Europe probably is one of the regions where your revenues and volumes are lower versus 2021 and 2022. And you clearly lost market share or ceded market share when you were in years of supply deficit. So can you talk to us about how do you plan to get those volumes and sales back? Is it as simple as putting that product in the market and there is a market ready to accept that product? Or do you think that would be more challenging in terms of regaining that market share in Europe?

Nothing is simple. This is why I ask Tommi to reply to this question.

Thanks for the question. Yes, it's not simple. So the harsh reality is that when we were supply constrained, many of our customers took in a competitor product to their portfolio because they wanted to continue as part of their business. However, I have to say that since then, we have regained a lot of the business that we had at the time of 2021, for example. There's still a lot of work to be done. Pricing, yes, every day is an important day from the price fight point of view, but we are hard at work. And I see positive progress that we progress towards that level. But I have to also say that the future is different compared to the past in many ways. The portfolio is different, but also the customer base is a little different. We took our time to analyze the customers when we were supply constrained up to find the companies with win-win strategies. What is their approach to online? What is their approach to sustainability and find the companies that we are aligned for the future. And these are the companies that we currently go forward to. Thank you.

Artem Beletski from SEB. Two questions from my side. So the first one is maybe a bit longer relating to price/mix evolution and what type of growth you're anticipating on that front. So what comes to pricing, have you done those repricing actions, what you have been implementing in 2025? Or could there be some further potential? And then in terms of mix, so there are many things happening. You're talking about trim sizes, electrification and also what comes to summer all-season and winter tyre mix. So that will be shifting. What is the net impact on mix front? So how do you see that evolution by 2029?

Thank you. This is also a good question. As you said before, more than EUR 100 million, we are expecting to gain through growth, pricing and mix. We have done a great job, I would say, as you remember, EUR 60 million gain in 2025 in terms of pricing. And of course, we will see this effect carry over in 2026 because the price increases started late in 2025, I would say, May, June of 2025. So we will see a good contribution. We are -- as I said, we have a premium positioning when we talk about winter tyre. We still have some improvement to be made when we talk about all season. And then, of course, there is the mix part that is a significant part of our improvement.

So we are extremely confident that an important part of our journey will be supported by this repositioning and will be supported by the journey that we started in 2025 that gave a significant boost to our profitability, as you know, since we were repositioning the company in the market.

Great. And then I had a second question relating to heavy tyres. And I guess, Paolo, you are the right person to...

I know something about it.

Could you maybe talk about -- a bit about your thoughts around heavy tyre strategy? So is it value-driven strategies in passenger car business? And what is the volume potential from a capacity perspective on that front?

Good questions. It is a value-driven strategy as well. We are focusing actually in a niche forestry business. And today it's really selected part of the agricultural tyre business. And then, of course, we have the truck tyres mainly for the Nordic market today, but also a bit extended in the rest of Europe and very small in North America. The main focus, as I said, is forestry and agriculture.

Today, we have a platform that is extremely competitive when we talk about forestry business because the majority of the OEM that are representing a big part of our -- more than 50% of our revenues are located in the Nordic markets. So we are very close to our customers. We understand the customer needs when we talk about forestry. And I would say when you talk about the technology cut to length, basically 80% of the producer like Komatsu, Joheere,ons are located in the Nordic markets between Finland and Sweden. So we have a perfect platform there.

We can improve our platform when we talk about agricultural tyres. We have been investing, I would say, in growth in terms of capacity in the last few years that we are actually taking in production at the moment, in particular, in radial tyre capacity in Finland. So we have space, I would say, quite some space, obviously, to grow sales and capacity in the agricultural business. You have seen from our slide, this is really where we are expecting the highest CAGR for the next few years, 9% year-on-year because there, we have built additional capacity. We have developed new extremely competitive product, and we have now a better platform and a better efficiency in our factory in Nokian at the moment. Then, of course, we will keep growing. The Central European market is our focus at the moment. So obviously, I will not exclude that we can also do more. But at the moment, we are well set at least for the next couple of years.

We have received Heavy Tyres related question from the online audience. Are you investing in the growing defense sector with Heavy Tyres?

That's a good question. As you know, there are a lot of discussion in Europe about the defense sector as such. We made very clear that for us, this segment can be attractive and interesting, of course, if we are able to reach economy of scale. supporting one individual country, it's not providing those economy of scale. Today, we are already supporting the Finnish authorities with some military tyres. But of course, we will need larger economy of scales in order to be able to invest more. So at the moment, we don't have a clear plan to disclose.

First one real quick on the U.S. footprint. Some of your competitors or larger peers would say that it's difficult finding the appropriate labor in the United States and there's particular cost disadvantages to producing in the United States versus, say, Mexico or elsewhere. I know this is probably not relevant to the story at the moment, but how do you think about sort of the labor availability in the U.S. and cost?

And then second question on Central Europe. I think you showed that the standard market, 17 inches and below has been declining, yet you predict quite strong growth in the 17-inch and below segment. I guess, is that because you're off of a low base? I mean, why even target such strong growth in that particular market when the overall market is declining? Just a little bit of discussion on that would be helpful.

I'll start from the first one and then eventually, Tommi can complete the second one and eventually, Chris can complement what I say. since, I would say, COVID time in North America, the labor market has been challenging, as you know very well. Immediately after COVID, there was -- the market was going up again, and there was a shortage of labor, more than shortage, I would say, a lot of turnover, people moving for higher salaries. I have to say that in the last 12, 18 months, we have been stabilizing a lot our workforce. So the market has been stabilizing. Now the inflation is getting under control. So we are quite pleased about the stability that we are gradually reaching also in North America. That was an important problem, I would say, immediately after COVID when we started the production at that time.

One thing I want to highlight is that automation means obviously less dependency from labor as well. So what I mean is that we built a platform that today has a level of automation that is by far higher than what it used to be. And I would say we have probably the latest technologies available in the market that is giving us the possibility to be less dependent on labor as such. Of course, people is extremely important. Specific skills are required, and we will keep retaining those skills. But of course, I would say the situation is stabilizing and normalizing. I don't know, Chris, if you want to comment, I mean, you live in that market, so.

I would just add a couple of things. We -- when the decision was made -- and this is before our time, obviously, but when the decision was made to go to Tennessee with the plant, there was an analysis done on the labor market there, and Tennessee is a very good labor market for our type of manufacturing. And the state of Tennessee, the local economic development and workforce development has done a great job working with our manufacturing team and ensuring that we've got the right type of people to support that. So we've gotten great support from the local representatives in the state of Tennessee in terms of the incentives in order to build the plant and so forth. But I think as we look forward here, I think with where we're located is a pretty strong location in terms of the amount of turnover that we're seeing, the amount of resources capable of supporting our plants. I don't really don't see that as an issue for ramping up the facility.

And the second question was about the mix in Europe. Obviously, as we say that the mix is improving, this is very good for people who want to deliver the product and solutions that are performing in line with the growth of the mix. So this is really important for us that we are able to deliver tyres that are able to cope with the new requirement, in particularly coming from the electric vehicle or from SUV vehicles. So this is why we are focusing strongly in this area because I would say that the rest of the market remain a sort of commodity market step by step and we may be covered by other people, Asian competitors more in general. I mean. So this is really what is happening in Central Europe at the moment. So I don't know, Tommi, if you want to complement what I said.

The factory we had in Russia was very large and very effective, but the production platform inside it was very good in making perhaps a bit smaller-sized tyres. Now the new factory built in Oradea is built for the future. And in order to be competitive amongst the premium competitors in the style space, you need wide selection of different sizes. And this facility is now built for that purpose. And we use this new brand-new production platform to introduce new sizes for those pockets that are highly important for the future that provide the commercial value to us. And some of them do reside on the 17-inch sector. So we won't go fully into the large end, but that's on the high end, a lot of value exists. Thank you.

Thank you. Let's take the next question from the online audience. Tron, I think this goes to you. How weather sensitive is your Nordic business considering you are heavily winter focused -- considering your heavily winter-focused product mix?

I didn't hear you.

How weather sensitive is your Nordic business considering your heavily winter-focused product mix?

Well, we have -- as I showed earlier, we have about 75% winter tyres, and we, of course, need winter to sell winter tyres. But this discussion has been -- I think I've heard this discussion for years like winter is getting shorter, when is the winter coming and everything. But still, we continue to sell winter tyres, and we will do that for many, many years to come and just look out today, I think. And if the winter comes in October, which it does every now and then, then everyone gets silence. But if it doesn't start snowing until December, then everyone see screens in October and November and then silence comes in December and the sales starts. So as long as there will be winter, we will be selling the winter tyres basically.

Chris, I think this goes to you. What concrete actions are you taking to strengthen brand awareness and consumer pull, especially in the U.S. given your relatively small market presence?

Yes. I think I talked a little bit about this during the presentation, but leveraging what we've done on a global standpoint with the IHF and KII. And then we just recently signed with the ski resorts in the U.S. and Canada with Alterra to get the brand presence and really drive the premium drivers towards our brand. But I think the most significant thing is really getting the brand presence at the retail level. And the more we can get it distributed to the -- at the consumer level for us to have brand visibility, the better off we're going to be and the acceleration of the brand will take off. But we're not going to stop there. I think Tommi indicated earlier about some of the digital advertising and the social media. We're doing exactly the same things. The marketing team, I have a group of marketing folks, about 8 people in our team that pretty much do all of this in-house. We do a little bit of agency work. But for the most part, we handle a lot of the stuff with the events management, the customer support, the customer events. We do a lot of that in-house.

And then we're actually doing some research right now on content generation and working with a platform that it gives us access to content generators. And the content generators are the ones that they can really exponentially get your brand name out there to the consumers. So that is a work in progress. It's also very AI-driven. And so it's something I think is really exciting to me. A little bit premature to get too excited about it, but I'm pretty excited about it. I think the potential there is really incredible, especially when we're coming from a near nothing in terms of brand awareness in the United States.

On the Canada side, our customers and also in the Northeast, our customers are so fantastic because they own the brand. And so we work with them on brand presence. We do a lot of training at the dealerships. But the one great thing about the Canadian and the Northeast customers that we need to replicate in the U.S. is getting our customers to own the brand and want to sell the Nokian Tyre brand like they've done in those segments of the market.

Sorry. Just another follow-up here. I feel like I'm going to give you guys a chance to address this because I'm sure it's a question I've received often. We're obviously seeing more and more Chinese players come to the European market, right? And oftentimes, I get asked the question, will we see Chinese tyre manufacturers start to impact, whether it's the premium segment or the winter tyre segment perhaps? I have my own answer to this question, but I want to give you the opportunity to answer about the Chinese competitive risk.

That is a good question. I mean Chinese tyre players exist since many, many years. And the name of the game for us is really about any time setting the new limits. I think in general, we are -- this is really where we can win this competition all the time. It's through innovation, new products, innovation, new product and setting new limits. When I say that in a few weeks, we will set a new limit when we talk about winter tyre, I'm really serious about that. I think that it is something that it will be very difficult to replicate from those guys. So I think we need to accept this kind of competition. We like this kind of competition, and we like to make sure that we can always added value to whatever we deliver in the market, setting a new limit and creating a sort of new market segments to leverage for the future. So I think this competition has been growing since many, many years, but I've been covering a part of the market that is not really impacting our own strategy. So we feel pretty comfortable that differentiation and selling added value will be our way to win.

If you can stay still a while. What does it mean to achieve a leading position in winter tyres? And what do you need to do to get there?

I think we have already quite a strong leading position when we talk about branding, technology, innovation. We have a strong position in the Nordics, as Tron has highlighted, we have a strong position in Canada. We obviously have potential of growth, as we say today, in Central Europe, it's more about regaining a strong position we had in the past. And of course, in United States, in particular, in the northern part -- actually in the northern part of the United States.

So we start from already a strong base. But obviously, as I said, there is plenty of opportunities to reinforce our position in the Nordics, to grow in Central Europe and of course, to grow even more in North America. I think we have great products. We have unique production facilities. So we are not really concerned about growing in the winter tyre segment. And also, as I said, next week, we will -- actually in 2 weeks' time, we will set a new standard in the winter tyre industry, and we are really confident this will push and will support our growth and our sales for the near future.

Thank you. We have...

Do I see it or do I stand up?

A couple of questions. The first one is on your investment profile. You've talked about going back to depreciation levels for the next few years, and you say that you have enough capacity. Could you just help us in terms of all the plant and machinery that you have purchased or put up in Romania, what does that mean for theoretical capacity up until 2029 in Romania? That's the first question.

And the second one is actually on your downstream strategy and VNR. So you've talked a lot about point of sales, increasing marketing campaigns and basically targeting growth. What does that mean in terms of your own controlled VNR channel? Could you talk about your strategy separately in Nordics, North America, in Central Europe? Do you want to invest more? Do you think you can free some capital in the Nordics region? How do you think about downstream strategy, please?

Great. Okay. Let's start from the first question that was about the Oradea. Oradea is well set to cover the strategic plan period. As we said since we started the project in Oradea, we have 6 million pieces capacity. We will have 6 million pieces of capacity built. And we -- as we made public last year in 2025, we reached 1 million pieces. So we are talking about a potential growth of 5 million pieces. And it's enough to cover our strategic plan period, and we'll keep Tommi and the team pretty busy in the next 4 years.

The good thing of that factory is that probably one of the most automated factory existing in the world at the moment. So -- and we have the possibility to produce a wide range of tyres in terms of rim sizes. So I think that factory will see just follow-up optimization in the next few years, so we will not require additional CapEx. And this is why we are pretty excited because obviously, we have a full capacity to be utilized to support our growth in the Central and South European market.

The second question was about the -- yes, the Vianor, yes. The second question about Vianor. Well, Vianor has been -- it is today well distributed in the Nordics. Of course, we will not -- we will keep growing in the Nordics. I mean we are still evaluating the possibility to reinforce our position, in particular, for instance, in a country like Sweden that are big market and our presence can be expanded even more, but will be expanded also in Europe. Of course, we prefer to have partnership sort of franchising with our own dealer because this is less capital intensive and is giving us the possibility, obviously, to green loyalty, but at the same time, to leave the CapEx side to our own partners. But we will not exclude also small bolt-on acquisition wherever we don't see the opportunity to grow because we don't find the right partner, and then we want to cover a specific area.

We didn't actually present it today because this strategic plan is what we are building now at the moment, how we can regain and rebuild our existing network. We had, as you remember, a wider network in the past. But for sure, we will have some dedicated time later on to show how this expansion of Vianor will be developed in Europe. In North America, we are not at the moment at all considering the expansion of Vianor. It's a completely different market in terms of distribution. It's a completely different market in terms of go-to-market when we talk about consumer. So at the moment, it's not in the agenda at all.

Then about pricing, could you comment on your embedded price assumption in the targets? Do you assume that -- do you assume to see positive net pricing also versus the market overall? And how does that tie into the volume expectation?

Obviously, for competition rule reason, we cannot really comment about pricing as such. What we can say, as I said, is that we did a big effort in 2025, and we carry on this effort in 2026. We have a lot of new products. As I said, we have EUR 1.5 billion coming from new products. And those new products, obviously, will be positioned better than the previous products that we have. So there is obviously plenty of potential opportunity for us to upgrade our position from the level where we are today, as I said, leveraging the new product pipeline that is upcoming. So of course, it is part of our strategy. It's an important part of our strategy. And -- but of course, we cannot disclose more about pricing for the future.

Thank you. Then next go to Tommi, on Central Europe. What is your strategy to grow in all-season segment in Central Europe? And what is your competitive advantage in this segment?

Okay. As said in the presentation, this segment is growing and has grown fast in the Central European region. It is becoming a very attractive for all the tyre manufacturers, not just for us. But our advantage lies in the R&D, in my opinion, the heritage in winter and the experience on those most demanding weather conditions is what sets us apart in this all-season segment. So with our tyres, you can truly drive in any weather condition that the Central European market may have. And that, in my view, is the #1 competitive advantage when it comes to the product itself. Thank you.

Rauli, please go ahead.

Rauli from Inderes. One question on the larger rim sizes. You put a lot of focus on getting more value and I guess, higher margin through the larger rims. So I was wondering that when the whole market moves to the larger rims, do you see an impact of kind of when the larger rims comes more mainstream, the competition increases and the profit pool there shrinks over time? Or how do you view the development?

Clearly, as you see, the market is moving in that direction in all the segments. We are specialists in the segment where we can be different, meaning winter tyres. So for us, this is winter tyre and all season. For us, this is a priority to be in those segments. The large part of the market is in summer tyre. The good advantage, in my opinion, is that we have the possibility now to accelerate this growth. We have other priorities, as you can imagine, in the last 2, 3 years. And now we are in the position again to accelerate this growth and to be faster than the market in the segment where we play. We'll probably be slower if we talk about summer tyre, but that's not our problem. But we will be faster when we talk about winter tyre and all season. This is really reflecting what I said before, we are refocusing. We are focusing on where we can make the difference and where it matters for us.

All right. And then if we look a bit back, obviously, you were capacity constrained in '23, especially and part of '24. And I would imagine that at that point, you were focusing to the higher margin products and now you are -- have already achieved and are planning to kind of get a quite big price mix positive impact. So kind of was that not the case that you were selling the best margin products back a few years ago? Or why are you able to now push the price mix further so much?

First of all, we have built additional capacity that can get up to 24 inches, which we didn't have before. That is a big release for us. I mean today, we have built -- that was also a great move. I think we built a flexibility that we didn't have in the past. Unfortunately, we were limited in our flexibility due to the capacity constraint. Now we have built a machine, in particular, I would say, in Oradea, but also in North America that is giving also the possibility to reach 24 inches. And we have machines that are able to produce everything. While before in the past, the technology was offering the opportunity to focus the machine to specific rim sizes. Now obviously, we have the opportunity to have machines that are pretty flexible, and they can go from 15 inches to 24 inches. And this is a great advantage for us at the moment.

Paolo, a question from the online audience. And I think you already covered this partly in your presentation, but would it be possible to provide a split of tyres production and tyres capacity in Oradea, Dayton and Nokian as of today and targeted by '29?

Yes. It was in our presentation. You have seen that -- we have more or less, we are at 80% of capacity in North America. So we still have the possibility to improve our position in North America to utilize plenty of our capacity over there. We are almost, I would say, 90% plus in the Nordics. So obviously, we have some capacity still to be utilized in the Nordics, and we have plenty of capacity because, as I said before, we produced 1 million pieces in 2025, and we have a capacity for 6 million pieces in Central Europe. So we have plenty of opportunity to utilize our platform in Romania up to the limit in the strategic plan period.

I keep -- I want to highlight always, this is not a capacity game. I mean, in life, in my country, we used to say sales is the most difficult job that look easy. So our game is not really about building capacity. The capacity is a tool to support your growth. Our game is about building brand, building strong demand, making sure that people see in Nokian Tyre, a player that can be the #1 when we talk about safety on the roads. So our game is really focused on building value. The capacity will be built. If we need to double the capacity, if we will be in the luxury situation that we need to double the capacity, we'll be happy to do it. If the plan in North America is going faster as it is at the moment than what we expect, we will increase capacity in North America. But this is really about commercial branding value game. And this is really where we are focusing more and more at the moment in order to make sure that we build value through for our shareholders.

Nokian Tyres has been a premium brand. But what is your understanding in the future? Will the size of brand premium stay?

Nokian Tyres has been a premium brand, and we remain a premium brand for hopefully the next 128 years. Clearly, this is really what -- it's our job is to make sure that we deliver premium solutions to customers that we provide premium value to our user. So I will say that our main, let's say, opportunity at the moment is to build this premium brand value across all the regions in the world.

Nokian Tyres is recognized as a strong premium brand in the Nordic part of the world. But of course, this is the main mission also of Tommi and the team to make sure that Nokian Tyre will be also perceived as a strong premium brand in Central Europe and for Chris, in particular, in United States.

It's Tim from here. Paolo, two questions, please. If I understood correctly, you mentioned that you were interested in working more with fleet customers to work on total cost of ownership. Is that against the main European players or perhaps against the different segment of the market? And secondly, it hasn't come up today, but do you have anything interesting to say about Euro 7?

Okay. Good question, both of them. We are, of course, we see -- and we already work today with fleets with big companies like Ivance, for instance. And that is we see that an advantage because, as I said before, we have an educated buyer who understand safety, who understand total value of ownership. So it's not a buyer that is thinking only about cost. So it's not a buyer that will take any Asian tyre will say, look, I buy this is a customer who is able to calculate. And this is the ideal customer for us. It's a customer we can speak with. We understand that the tyres may be expensive today, but will support a longer life and will support safety. And for those guys, safety is very important.

Having Vianor, it's also one of the opportunity we have because Vianor, when we meet those kind of customers, we can offer also services. We can offer the possibility to rely on our own network, either through Vianor or either to, for instance, in Europe through the Nokian Tyre dealership partner. So this is where we see an opportunity in growing leasing and sharing cars business because for us, this is the ideal person to speak with.

When we talk about Euro 7, we are obviously following -- we are part of tyre Europe association, we follow together with the European authorities, the development of Euro 7. I think it's going to be an opportunity again for us because Euro 7 is setting in some way some limits in the quality and in the performance of the product. So we fully support the development of the regulation. Obviously, this will require for us to make sure that we set specific standard for the industry, and we are, for sure, within the standard of the industry. So we see Euro 7 as an opportunity for us to, again, to create a sort of, I would say, barrier to products that are not performing in line with the regulations.

If you stay there a while. In your new strategy, you want to reduce exposure to geopolitical risks. Does this mean, for example, reducing dependence on China in the supply chain? Or do you have other concrete measures in mind?

Well, when I say that we are reducing the geopolitical risk because before we had 80% of our production capacity in one country, of course, we didn't consider that country a risk at that time. But now we have our production capacity spread across 3 different regions, obviously, Nordics, Europe as well as North America. We believe in a local-to-local business model because we believe that anything can change any time. And this is why we are extremely happy. We consider actually the disruption we had a sort of opportunity to build a stronger platform because today, if, for instance, North America market will become more protective, well, we are in North America. So we are not really sensitive to import duties as we were before. We are in Europe for Europe. We are in the Nordics, very close to our customer in the Nordics. And we have a very small portion. And actually, I can tell you that this will be almost disappearing in the next few months from China. We buy from other countries. And we said already that this will represent no more than 10% of our total sales. So obviously, we consider ourselves very little exposed to geopolitical issues of the future.

What is the forward dividend policy and the plan for deleveraging?

Is that for you or I mean the dividend you mean -- you want to answer you answer to the dividend. I can relax now.

Yes. Of course, what we discussed today that we have kind of confirmed our earlier dividend policy that Nokian Tyres will pay at least 50% of the net earnings out. So of course, it's for us difficult to give any numbers how dividends will develop in the coming years. But of course, as we have presented today, our free cash flow is getting stronger. And in that way, of course, we can expect that also we are able to pay higher dividends in the coming years.

Thank you. We still have time for a couple of more questions. Is there any one in the audience? No. Then we continue with the online -- questions from the online audience. Paolo, what gives you confidence you can reach your financial targets? And what are the biggest risks that could prevent you from reaching them?

I feel pretty strong about this plan. I feel pretty strong about the financial target that we were presenting today. We have taken in consideration opportunities and risk building this plan. I think, as I said, many times today, we have, in our hands, a lot of actions that will drive our success in the next 4 years. And we are confident that, of course, the extremely good pipeline of new products that we are releasing in the next few years will also provide an important possibility of growth for us. So I think the plan is solid. As I said, presenting the financial target, we've made very clear. It's very difficult today to say we will land at EUR 1.8 billion or we will end at EUR 2 billion, but it's much easier for us because actions that we have on our own control to say that the financial targets are pretty solid. So in terms of profitability target, we are able to get there with our own planned actions.

Then, of course, you are all experts. If the market and the sales will grow faster, then, of course, will be even faster and easier for us to reach the financial target. But we have taken in consideration the necessity to build a profitable growth and not only to run behind EUR 2 billion target because we believe that it's now time really to reposition the company at the level where it was and where it should be.

It is time to take the final question. This is a bit different, but this goes to you. Here in Finland, ice hockey is a big passion for us. And at the current Milano Cortina Olympics, Finnish Coach is leading the Italian national hockey team.

Good luck.

What do you think he has brought from Finland to Italy? And vice versa, looking at your own experience as an Italian CEO of a global company with the Finnish roots and heritage, what have you brought from Italy to Finland?

Well, I was not prepared to this question. And of course, I know everything about tyres because I spent 30 years in the tyre business, but I'm not really an expert on ice hockey. Actually, I'm now becoming step-by-step an expert on ice hockey. And since we have our headquarter in Nokian, I'm still debating if I should be a T supporter or an supporter. But I don't take position because otherwise, I will upset 50% of our own colleagues.

I think I see in all honesty, Italy, the coach of Finland will coach Italy, and it will be a tough job for him. It will be easier for me to be in Finland than for him to be in Italy because obviously, we don't have an heritage in the ice hockey. But it's good that, obviously, we take the best probably people to coach our own people in Italy. I think the experience here has been great. This is really a great company, extremely focused on innovation, extremely focused on customers and added value. So obviously, as I said, the job for me has been much easier than the job of your Finnish coach in Italy because obviously, we need to deal with lack of experience and something that we, as Italian, we need to learn how to play with. But I wish all the best to the Italian team during the World Cup. We had actually the opportunity to watch them recently, and I'm sure they can do better, but -- and I'm sure they will deliver better results in the future. Thank you.

Thank you. And thank you for the participation in Q&A. And Paolo, would you still like to come with me on dates once more, if you -- it's time to wrap up and concluding remarks and...

Good. So we can move to the last slide. Yes. I would like to, first of all, before to start to thank you for being here today despite the weather, I mean, you were here together with us. And I would like to thank my colleagues as well for participating and to support this important presentation, important for us as well because we are so proud and confident about this plan that we were really anxious to present it to all of you.

I would like to say one thing that probably didn't say. I like you had 5 presentation from 4 different nationalities. This is telling you a lot about the ambition of Nokian Tyres to become a global player. And that is really an important element to highlight today.

I would like to recap this presentation exactly from the slide that was concluding my presentation before. I mean, Nokian Tyres is an attractive investment, and I strongly believe on that because we focus on specific niches. And our focus moving forward will be winter tyre, all seasonal weather and agricultural and forestry tyres. We discussed about 3 different challenges: One, to strengthen our position in the Nordics regain the position we had in the past in Central Europe and reinforce it even more. And then, of course, building a stronger presence in U.S. while reinforcing our presence in North America. This is where we play. This is where we want to be successful and where we will be successful in the next 4 years.

It's a value game. It's very important. We understand this. We are aiming to create value through positioning, through mix enhancement, through new products. Vianor will be an important element in our strategy to support our growth in Europe. And then, of course, I hope you will be pleased to see how busy we are with product innovations, releasing new products and adding a strong pipeline to our innovation.

A lot of focus on consumer. We cannot expect the customer to be aware how strong Nokian Tyre is if we are not communicating to them, if we are not able to educate them about the advantages of fitting Nokian Tyre on their vehicles. And then, of course, we have now one status-of-the-art platform. We are really proud of this platform. We need to be extremely good in using this platform from the manufacturing point of view and making sure that we are able to deliver extremely efficient, cost-efficient solutions. Local-to-local business model, very important in the today world. We will reinforce the local-to-local business model in anything we will do tomorrow. And then, of course, we are speaking on behalf of a great team that is at the moment in the office or in the field, supporting us all over the world. This is very important. I mean we can really leverage people who understand the segments where we are, who understand what it means innovation and we understand what it means create value for our own customer. The targets are clear, a little bit flexible, actually flexible when we talk about the sales by 2029, but extremely precise when we talk about profitability because we strongly believe in our profitability journey.

And then, of course, debt has been at the peak in 2025. We expect the debt to gradually go down as soon we are able to generate more cash. And I believe that the latest quarterly release are demonstrating that we are moving in the right direction in generating positive cash flow also through lower investments, obviously, because now the investment level is getting back to normal. Having said that, I really thank you for being here with us today. We will have probably some time together outside of this room. And also for the people connected online, thank you very much for your attendance. And hopefully, we will see very soon again. Thank you very much.

Good afternoon, and welcome to Nokian Tyres Q4 and Full Year 2025 Results Webcast. I am Annukka Angeria from Nokian Tyres Investor Relations. Joining me today are Nokian Tyres President and CEO, Paolo Pompei; and Interim CFO, Jari Huuhtanen. As usual, we will begin with the results presentation. And after that, we will open the line for questions. You may have noticed that interconnection with the results, we published also Nokian Tyres' updated strategy and financial targets. These topics will be discussed in detail tomorrow at our Capital Markets Day. And in today's call, we will focus on Q4 and 2025 financial performance and the key drivers behind the results.

And with that, Paolo, please go ahead.

Thank you, Annukka, and good afternoon also from my side. Thank you for participating in our quarter 4 release as well as year-end release. And what we will do now in the next few minutes, moving to the agenda. We are moving to the highlights, then we will discuss about our financial performance. Jari will present the business unit performance, and we will close the presentation together with the assumptions as well as the guidance highlights, moving directly to Page #4.

It was quite a good year in terms of improvement. We have been improving a lot our performance, and this was possible due to strong price and mix improvement, in particular in the passenger car tires. We've been also very active in releasing new products, mainly related to Central Europe and North American market as new growing areas for our business area. And we've been strengthening a lot our premium positioning through pricing, but also through very effective communication and through dedicated marketing and communication activities. We've also completed a major investment in Oradea. We will discuss about that later on. And we had also a strong improvement of the cash flow, supported mainly by improved working capital, but also by the reduced CapEx that are now gradually getting back to normal level. EBITDA was performing -- remained pretty soft, actually, due to the market decline, in particular in the agricultural and forest tires industry.

Moving to Slide #5. We completed the first important step of our expansion in Romania with reaching 1 million pieces produced in our facility in December 2025. So this was actually an important milestone for us because now we clearly move from the investment phase to stabilizing our manufacturing platform. At the moment, our team is extremely busy implementing new sizes and developing new products for the Central European market. We also obtained, at the end of December, the first installment of EUR 32.6 million from the Romanian government as a state aid. As you may remember, we are entitled up to EUR 100 million to be supported by the Romanian government at the end of the full process.

Moving to Slide #6. This is also an important highlight when we think about the 2025 development. We've been investing heavily in our brand. We've been investing heavily on our product development. We signed a different partnership. I would like to highlight the one we signed with our brand ambassador, Kimi Räikkönen, that is well reflecting our brand values. And he will be with us also in 2026, supporting our development, being with us during the launch of new products, and supporting us in the development of the new products. We also signed an important agreement with the IIHF organization to -- since we will support the World Cup of ice hockey that will take place in May in Switzerland.

As I mentioned before, we were very active in delivering new products. We have developed more than 150 new products in 2025 that will support our future growth in 2026, 2028. And of course, we've been focusing a lot in releasing new products in our growing markets like Central Europe as well as North America to support the demand coming from those markets.

Moving to Slide #7. We did also important progresses when we talk about our sustainability journey. We are pretty proud about that because we have clearly set a direction that is getting closer to our long-term financial target -- sorry, the long-term target. We achieved 28% renewable and recyclable material within our products, moving up from 25% that we had in 2024. So a significant improvement that is supporting us towards our target of 50% by 2030. Then we reduced by 38% our CO2 emissions. I remind you the baseline is 2022. This was possible for Scope 1 and 2 also due to the start-up of our operation on that are -- as you remember very well, reflecting CO2 emissions in the current setup. We also reduced significantly our accident frequency from 4.6 last year to 3.7% this year. There is still a lot to do. Obviously, having new operation, we are improving day by day also on the new site. But I think also when we look at this kind of KPIs, we are improving significantly compared to previous year.

And now let's move to the financial performance. So moving to Slide #9. Well, we have been navigating in a pretty stable market in 2025. The passenger car tire market was pretty stable both in Europe as well as in North America. We are less exposed to the truck tire market remain stable as well. We are more exposed to the agriculture and forestry tire market that was down 5% in the replacement channel and 10% in the original equipment segment. So the market was not really supporting our journey, but we have been obviously navigating well in these market conditions. I think we will see that the quarter 4 2025 was our best quarter of the last 3 years. While sales remained pretty flat, and this is also driven by the fact that in quarter 4 2024, we were heavily pushing for higher sales. This year, we fully dedicated our attention to improve in terms of profitability. And this is quite visible when we look at our EBITDA improvement in quarter 4. We were up by 30% up to EUR 87.1 million or 20.9% in the relation to sales.

Our segment operating profit also increased significantly by 43%, up to EUR 51.5 million or 12.3% of net sales. This was mainly driven by strong price repositioning in the passenger car tire. And of course, in quarter 4, we had also some support from lower raw material costs. We had also, I would say, a strong improvement in terms of operating profit, up to EUR 35.1 million. This is 128% more than previous year or 8.4% of net sales.

Looking at the same numbers for the full year, moving to Slide #11. We were able to increase sales by 7.2% with comparable currency, and we were able to grow actually in all the regions. Our segment EBITDA was EUR 222.2 million, or plus 20% compared to previous year. It was 16.2% of net sales. Segment operating profit increased by 28%, up to EUR 91.3 million or 6.6% of net sales. And again, same as in quarter 4, strong price increases or price repositioning, and of course, in the full year, positive effect, obviously, coming from the sales volume. The operating profit was EUR 35.8 million at the end, a significant improvement compared to previous year or 2.6% of net sales. The Board of Directors has just proposed a dividend of EUR 25 per share -- EUR 0.25 per share to be paid in April 2026.

Moving to Slide #12. As I mentioned before, we were able to grow actually in all the geographical areas where we operate. We were able to grow in the Nordics, in Central and Southern Europe, as well as in North America. I would say the growth in North America of 16.6% was really a good performance in terms of growth, in particular, when we talk about price and repositioning in the North American market.

Moving to Slide #13. I would like to highlight when we talk about this slide about 2 things, very, very important development. The first one is the net debt -- the interest-bearing net debt that was EUR 664 million at the end of 2025. This was actually much better than what we were also estimating at the end of -- previously at the end of quarter 4 ourselves, but that was turning really in the right direction. As well as the capital expenditure was EUR 126.9 million, almost EUR 127 million. We need to remind you, obviously, this include EUR 32.6 million state aid from the Romanian government. So we were approximately at EUR 160 million in total. So moving significantly down from previous year.

Cash flow also was improving, both in the quarter as well as year-to-date. So let's look at the cash flow in more details in the following slide in Slide #14. As you can see, we were able to improve the change in cash flow by over EUR 200 million. This was obviously driven by an improvement of the EBITDA, but also an important improvement of the working capital despite the growing sales. And of course, we were investing significantly less than previous year. Financial cost has gone up clearly by EUR 16 million. And then, of course, we paid a dividend of EUR 0.25 during 2025. And our debt has gone up compared to previous year. So I would say also in terms of cash development, we are improving significantly our position, and we see actually a better outlook for 2026.

Moving to Slide #15, you can clearly see that we have now completed a strong investment phase that was approximately EUR 800 million between 2023 to 2025, and CapEx now is returning to a normal level in line with the depreciation. We are estimating and anticipating approximately EUR 130 million to be invested in 2026.

And now stop here, and I would like to ask Jari to comment the business unit performance.

Thank you, Paolo, and good afternoon also from my side. I'm starting from Page 17. Passenger Car Tyres in the fourth quarter, we continued sales and profit growth. Our net sales was EUR 244.1 million and net sales increased by 3.9%. Average sales price with comparable currencies improved, and the share of higher than 18 inches tires increased significantly. Segment operating profit was EUR 32.3 million or 13.2% of the net sales comparing to last year, EUR 13.6 million or 5.7%. Segment operating profit improved due to price increases, favorable product mix, and lower material costs.

In the next page, we can see Passenger Car Tyres net sales and segment operating profit bridges. Net sales in the last quarter increased by EUR 6 million. And again, we can see very positive improvement coming from price/mix, plus EUR 20 million. On the other hand, sales volume was down by EUR 11 million, and then some headwind, mainly from the U.S. dollar, minus EUR 3 million. In the segment operating profit bridge, the same positive price/mix, plus EUR 20 million. And now first time in 2025, we had positive contribution coming from the material costs, plus EUR 6 million. Sales volume in the operating profit was slightly down, as well as SG&A, otherwise quite neutral changes comparing to the last year.

In Page 19, we have Passenger Car Tyres net sales components and quarterly changes. In price/mix, we can see that this was now third quarter in a row that we reported quite significant positive change comparing to the last year numbers. In the fourth quarter, price/mix positive impact was 8.5%. Volume change was minus 4.6% and currency minus 1.4%.

Moving to Page 20, Heavy Tyres. In the last quarter, lower volume affected net sales. Net sales was EUR 60 million and the change in comparable currencies, minus 2.8%. And net sales decreased caused by lower volume of forestry tires. Segment operating profit was EUR 6 million or 10% of the sales, and profitability declined mainly due to lower volume, weaker product mix, and inventory valuation, which had a positive impact on last year numbers. And Vianor in the last quarter, operating profit was stable. Net sales was EUR 132.4 million and net sales with comparable currencies decreased by 2.7%. And sales was impacted by the mild winter in the last quarter.

Segment operating profit was EUR 11.2 million or 8.5% of the net sales and segment operating profit was exactly at last year level, EUR 11.2 million.

Then handing over back to you, Paolo, with assumptions and the guidance.

And before we move to the guidance, I would like to say, first of all, thank you to the whole team. This was for us an important year of transformation, moving really from managing a strong transformation to create -- start to create value -- future value for our own shareholders. This has been well managed by the team who has been working hard in multiple dimensions, and we'll be happy also tomorrow to talk about our journey and how we will be able actually to improve further our performance for the years to come. But let's move to the assumption and guidance that is also very, very important.

We are expecting for 2026 net sales to grow compared to previous year and our segment operating profit as a percentage of net sales to be between 8% to 10%. So we are becoming more specific about our guidance because we want to make sure that you will be able to follow our own journey with more information and more precise information now that our journey is becoming more and more reliable and more and more easy to manage when we look at our future development. The tire demand from the Nokian tire market is expected to remain pretty flat in 2026. So we are not expecting the market to grow significantly. Of course, the development of the global economy, as well as the geopolitical situation or trade tariff is creating some uncertainty and some volatility. But obviously, the improvement is supported by new high-performing product, price mix, and, of course, efficiency improvements that will be still having a strong effect in the years to come.

Before to move to the question and answer, I would like to remind you that we have appointed a new CFO. He will start latest 15th of April 2026. So we will have the opportunity with Jari to keep working together on the quarter release. Timo Koponen is the appointed new CFO. He will be -- he has an extensive experience in the financial operation. He has been in important companies such as Normet, where he is currently the CFO, Lamor Corporation, but also he had an extensive career in Wärtsilä, Hackman as well as Konecranes at the beginning of his career. So we'll be happy to present Timo as soon he will be able to join us latest, as I said, by the 15th of April.

And we remind you that tomorrow, we will held our Capital Market Day. This will be done in -- actually in here in Helsinki in the Sanding Up Hotel. So you are really welcome to join, and we hope to see you tomorrow at 2:00 p.m. to discuss together our new financial targets as well as our new journey up to 2029.

We can now move to the question and answer, and we look forward to your questions.

[Operator Instructions] The next question comes from Akshat Kacker from JPM.

I have 3 questions, please, and I will take them one by one, if possible. The first one on end markets, and what your peers have been saying recently. So Goodyear last evening talked about global tire shipments being down 10% in the first quarter. And I understand they do have exposure to the truck business, and there are some weather-related impacts in the U.S. But could you just give us a download on how you're seeing the inventory situation in both Europe and North America? And how do you expect the start of the year in terms of sell-in volumes, please?

Thank you very much for your question. Obviously, comparing Nokian Tyres with Goodyear and other companies, I need to remind you that, obviously, we are mainly focusing on specific segment, while Goodyear obviously is exposed to a larger scope. In general, we see, I would say, a healthy development of the inventory. So we believe that from the pure dealer wholesaler point of view, the inventory were pretty stable during 2025. And we see a pretty stable also consumer demand. So this is not really affecting our own business.

Of course, when we look at the quarter 4 performance of Nokian Tyres, in particular, we should not forget winter came pretty late. So in some way, we were affected by a lower, let's say, a mild winter season in quarter 4. Fortunately, since, I would say, before Christmas, then winter started to come and started to come heavily in Europe, both in the Nordics as well as in North America. So this is also making us confident about the inventory development of 2026 because obviously, a stronger winter for a company like us that is strongly exposed to the winter tire business or all-season business. It's obviously something that is helping the inventory to be released to the end user. And consequently, we can anticipate that from the inventory point of view, we don't see major issues in 2026.

And the second question I have is on your top-line assumptions. When I think about 2026, you are talking about top-line growth. Could you just help us understand that better? What kind of growth assumptions are you working with, either in the passenger car business or for the group overall? And what does that mean in terms of volume growth for the business in 2026? That's the second question, please.

Thank you also. This is a very important question. When we say growth, we are expecting 1-digit growth. This is the best visibility we have at the moment, and it's also reflecting our strong focus on profitability improvement. So what I mean is that we are not going to look for market share growth. We are not going to fight for a higher volume as far, we don't see those volume will deliver value. This was the journey, as you know very well, that we started in 2025, and we will keep carrying this journey in 2026. So when we say growth, we are, at the moment, indicating single-digit growth.

And the last question is on the definition of the segment operating profit and operating profit. The question is on the IFRS exclusions. I thought the idea was to move away from any excluded costs in the medium term. Could you just tell me your recent view on how you want to tackle these exclusions going forward? And what do you want to book in those one-off costs, please?

Yes. We have anticipated several times that we will gradually go away from the exclusions concept. Obviously, we'll do it gradually because last year, we had EUR 70 million exclusions in 2024. In 2025, we had EUR 55 million exclusion. So we will go gradually down when we are -- we will discuss tomorrow our financial targets. Obviously, our financial targets will be very close to segment operating profit equal to operating profit. This is obviously a gradual process. So you can expect a gradual reduction, obviously, will carry a gradual reduction will carry on, obviously, up to 2027, 2027-2028.

The next question comes from Thomas Besson from Kepler Cheuvreux.

I have a few questions. I'd like to start with just a follow-up on the previous question. It's very difficult for analysts to make a forecast if we don't know what your exclusions are going to be. Can we assume, as you said, that in '29, it should be almost 0 that you're going to see 2026 exclusion go down by EUR 15 million or EUR 20 million, the same way the decline between '24 or '25? Or is it not going to be a linear decline?

I think your assumptions are correct. Obviously, you will -- I mean, at the moment, we are not planning any exclusion. There are no specific projects that will come up later on. But at the moment, we are not planning any specific exclusion, for obviously, we will go down EUR 15 million, EUR 20 million year-on-year to get obviously to 0. So your calculation and your assumptions are pretty correct.

Second question, I'd like you to discuss about the [indiscernible] market and how you see that developing for -- no in 2026. Of course, you have a specific exposure to forestry and ag in specific markets. Do you see these end markets showing signs of a turning point or not yet? Are you assuming in your 2026 guidance that the end markets in the [indiscernible] segment grow or not?

This is a very good question. Obviously, you know very well that the agriculture and forestry market has been cyclical since I was born, meaning that it is up and down. It's been always quite difficult to see when the market was going up and down. Clearly, this cycle is longer than usual. So I'm expecting the market to recover within 6 to 12 months. Obviously, this is my estimation based on my experience in that industry. And as I said, the last cycle has been pretty long. 2025 was a difficult year for the -- particularly for the forestry machinery producers. And as you know very well, we are strongly exposed to those guys. at this moment, I don't say in the immediate, let's say, in quarter 1, any strong improvement, but we should expect that something will improve starting already from the second half of 2026. Again, this is the best estimate we can do based mainly on the analysis of the historical cycles.

I think you have a very good experience of these end markets. So that's very helpful. Could you also please discuss the timing of the Romanian state aid? I think you had about 1/3 of what was expected in 2025. Should we assume that to be 1/3, 1/3, 1/3 over '26, '27 as well? Or are you going to get the remainder of the aid so EUR 67 million, EUR 68 million in 2026?

Well, obviously, please remind that these incentives are not fixed. What I mean is up to EUR 100 million, and this will be dependent on the final total investment level. This is very important, we remember. So it can be any value close to EUR 100 million, but obviously, or lower than EUR 100 million, depending on the final calculation of the investment level. Clearly, we will apply for -- we have a routine of applying for those incentives year-on-year. So we could expect a second payment within 2026. But I will be very careful in giving you a strong estimation about this because, as you know, we are talking about, obviously, I told you up to the end of last year, we didn't know exactly when those incentives were coming. Finally, they came in December. The Romanian government was extremely reliable in respecting the deadline of 2025. But again, there is a strong bureaucratic process that we need to run to get those incentive on time. But the best estimation we can do will be that, obviously, the second part will come based on our investment level in 2026, and eventually the last part in 2027.

I have last question. Could you comment on the evolution of pricing in Q4 and year-to-date, given that raw materials have become finally, as you are saying after 2 or 3 years, a support toharmakers' earnings. Do you see any signs of price erosion? Because oil prices have picked up again and some of the materials are going up again, pricing have held up very well.

Yes. I mean, obviously, we've been focusing a lot on repositioning our own product in 2025. So we are expecting this effect to roll over in 2026. The raw material, I would say, at the moment, we see the raw material trend favorable, but also because we have been doing a lot, we have been working hard and really improving our raw material cost, both in terms of negotiating new agreements with our suppliers, but also in terms of better utilization of the material in our own products as well as in our own manufacturing facilities. So at the moment, of course, it's very difficult to anticipate in February what will happen for the full year. When we talk about raw material, they can go up and down. And at the moment, we see raw material pretty stable. And we see obviously a positive rollover in 2025 of the good job done by the team in 2026, rewarding the good job done by the team in 2025.

The next question comes from Artem Beletski from SEB.

Still 2 questions from my side. So the first one is relating to passenger car tires and seasonality on that front. How we should think about Q1? Because looking at past years, you have been unprofitable in this business, but I think that those years are not that representative what comes to 2026 and the Q1 development. So maybe some inputs you can provide on that front? And then the second question is relating to price/mix outlook for this year. So it has been really strong also in Q4, up almost 9% year-over-year. Some pricing effects are likely to be fading away gradually, but you're also introducing new products. So what is the picture when it comes to price/mix outlook for 2026? So those are my 2 questions.

Thank you very much for your question. I start with the seasonality. Historically, even when I was not working in Nokian Tyres, I was observing Nokian Tyres from outside. Nokian Tyres has been always having, I would call it, growing seasonality, meaning that quarter 1 is normally very slow, quarter 2 is improving. Quarter 3 and quarter 4 obviously are improving further. This is mainly reason by our strong exposure to the winter tire business because in quarter 1, mainly we produce, and in quarter 2, quarter 3, and quarter 4, we start to release all the stock that we have produced to face the new season. We have obviously -- if you look at the performance of the last 2 years, we were negative both in 2024 as well as in 2025. Clearly, we are here to improve day by day and quarter-by-quarter. So this is really reflecting our long-term plan to improve quarter-by-quarter compared to previous year.

But of course, there will be always some seasonality related to the fact that we want and we are, and we will be strongly exposed to the winter tire seasons. About pricing, obviously, we did -- the team made a very good job in 2025. That was my first priority since the very beginning to make sure that we were getting back to the level where we should be in terms of price positioning, in particular, in the new markets like Central Europe and North America. And I would say that we will see this carryover in 2026 because obviously, we should maintain this value within the company. New products that we are going to release, actually, we are very excited about the new product that we are going to release very soon in -- starting from March, and particularly for the Nordic market, will, of course, present an upgrade -- that is my -- I would say, so we are expecting an improvement in terms of positioning and mix. Obviously, as you can appreciate, we cannot make any comment about price development from now to the remaining part of the year for competitors' rules.

Yes. That's very clear. But I have still one follow-up question relating to the start of this year. So we indeed have seen really no winter weather conditions in Nordics, in Central Europe, and in North America. Should we anticipate any tailwind from this weather picture during the season or basically in Q1? Or should it be the impact for, let's say, Q2, Q3, ahead of the season when dealers are taking in new tires?

I think the development of the winter this year is having a positive effect on the new season when we will start because obviously, this will -- at the moment, what we see is probably the inventory of our own customers are going down because obviously, the winter has been pretty strong, I would say, everywhere in Nordics, in Europe, in North America as well. So their inventory are now going down, and this will be a very -- I think, is a very good news for us for the new season that will start. So we are talking about really quarter 3 and quarter 4 of 2026. This is the way I see it at the moment. So you should not expect any effect today because now today is the time for our customer really to reduce their inventory.

The next question comes from Pasi Väisänen from.

Well, I would like to start with the regulation. And so what is the latest information regarding these possible antidumping duties against the Chinese tires? And if those will be kind of set, could it even affect Nokian Tyres offtake agreements, those tires coming from China to Europe? And secondly, what could be the realistic sales volume forecast for your Romanian factory this year, and also on next year when looking at this ramp-up schedule?

Thank you. Two very important questions. About regulation, obviously, you read the news as we read the news at the moment, the antidumping investigation is moving on. There will not be apparently any preliminary duties that are coming from the preliminary investigation. So I think the investigation will need to be completed. And then obviously, the European authority will decide based on the findings they will see during the investigation. There is no effect really now, and we don't expect any effect for the future in Nokian Tyres because obviously, we are mainly now sourcing from different countries than China. So obviously, the impact on Nokian Tyres, considering the latest news, meaning that there are no duties in the immediate future, will not have an impact on us because in the wild time, we have been obviously moving our sourcing to other countries that are not today under investigation.

I said very clearly as well that with the ramp-up of Oradea, of course, we have been in-sourcing a lot of products that before we had, by definition, had to produce in partnership with other suppliers. Moving to the question about Oradea. Clearly, Oradea is set to now to increase significantly the production. This will be strongly dependent on the development of the sales in Central Europe. We should expect anyway, for Oradea to, in some way, double the production volume compared to this year. And -- but will be very difficult. We should be more precise during the year to give you an exact estimation of where we are going to land. It's all dependent on sales development, and the success of the new products that we are expecting will deliver value to the customers.

And maybe still one detail regarding the ramp-up costs. So if I remember right, they were close to EUR 10 million in the third quarter, now roughly EUR 16 million. So which figure of these should be used as an estimate for the first quarter or the run rate for the full year?

As we mentioned before, we are expecting -- I can guide you for the full year because obviously, the ramp-up cost is directly proportional to the ramp-up of the production as well in Croman in Romania. As you know, in quarter 4, we have been moving from 5 days to 7 days, 24-hour shift. So this is an important step for us in order to get to a normal production level and to increase our production output. So obviously, in quarter 4, they were a little bit heavier than in quarter 3.

We said before that you should expect year-on-year a reduction of our exclusion of the region of EUR 15 million, maximum EUR 20 million year-on-year moving forward up to 2028 up to 0. So this is more or less our best estimate at the moment.

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

It seems that there are no further questions. So it is time to conclude this call. Thank you, Paolo and Jari, and everyone who joined us online. And hopefully, we will meet many of you tomorrow at our Capital Markets Day. For now, goodbye, and enjoy the rest of your day.

Thank you very much. Looking forward to meet you tomorrow.

Thank you.

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 CFO, 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.

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 quarter 3, driven by announced pricing in passenger car tire, 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. But 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.

Now let's go to the quarterly highlights. In Slide #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 tires. 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. This -- in the month of September, we were also expanding our product offering and brand partnership. We will tell something more in a minute. And of course, there is also starting from the 1st of September, a favorable tariff development in North America for Nokian Tyres.

Moving to Slide #5. Let's talk about our new factory in Romania. We are 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 4 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 start-up of the operation in Oradea.

Moving to Slide #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 Powerproof 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 terms of performance and tested by the TUV SUD. And we were able to launch in this new product in the beautiful scenario of our test center in Spain, HAKKA 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 #7. We're also pleased to tell you that we received once again several testimonies 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 #1 tire or on the podium when we talk about studded and not studded winter tires.

So 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. But we have also some good news related to the heavy tire business. We will receive in a few days silver metal for our Intuitu 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 #8. We're also reinforcing our effort in terms of communication. We signed an important agreement for 2 years with the IIHF Association, which is actually 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 are very pleased to be partner of this important sport 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 #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 tires. The market in truck tires or in the agri tire has been stable in truck tires, while in the agricultural segment is still down compared to previous year, both in the replacement market as well as in the original equipment market.

Moving to Slide #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. But we did really an exceptional good performance in the North American market in a declining market environment. So 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 EUR 65.4 million. This is actually now 19% in percentage of sales. And our segment operating profit has been growing by over 6% to EUR 32.4 million. It's very important to remember that the comparability when we talk about segment operating profit is heavily affected by EUR 13.3 million exclusions or write-down related to the write-down of the contract manufacturing product that we did last year in quarter 3 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 #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 #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 to the cash flow. You will see that, obviously, the improvement of cash flow was coming, obviously, from the EBITDA improvement of EUR 33 million, then, 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.

So 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 EUR 180 million investment level at the end of 2025. This will basically close a long cycle of approximately 3 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 then next year to a normal level. And of course, we -- as you know, we are entitled to get state aid from the Romanian government up to EUR 100 million, and we are expecting to receive the first part of this incentive by the end of the year or in quarter 1 next year.

Moving to Slide #16. I would like to pass the stage to Jari for the performance of the business units.

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 EUR 234 million and the increase in comparable currencies plus 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 EUR 38.9 million or 16.6% of the net sales. And 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 bridges in third quarter. Net sales improved from EUR 210 million to EUR 234 million. And clearly, the biggest positive contribution is coming from the price/mix, plus EUR 35 million. Sales volume was slightly down comparing to last year, minus EUR 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 2 components which are clearly coming visible. First of all, this positive price/mix, EUR 35 million. On the other hand, in supply chain, we have a negative impact of EUR 25 million. Here, the reasons are mostly related to non-IFRS exclusions what we had in last year third quarter. Contract manufacturing inventory write-downs and Dayton ramp-up related exclusions.

In material costs, we still had a slightly negative impact, minus EUR 3 million. However, we can say that we are very close to previous year cost level at the moment. Sales volume, minus EUR 3 million, but otherwise, it's very stable performance comparing to prior year. Moving to Page 19, Passenger Car Tyres net sales components, quarterly changes. In price/mix, we can see a significant improvement comparing to last year, plus 16.5%. This is due to implemented price increases and better product mix comparing to last year. In sales volume, minus 3.3% and in currency, minus 1.7% in the third quarter.

Moving to Heavy Tyres. In third quarter, we had lower volumes, which affected the net sales and profitability. Net sales was EUR 55.4 million and the change in comparable currencies, minus 4.4%. Net sales decreased mainly due to lower volumes in truck and agri tires. Segment operating profit was EUR 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.

And in Vianor, in third quarter, we reported improved sales and operating profit. Net sales was EUR 74.9 million and the increase in comparable currencies, plus 7%. Segment operating profit seasonally negative minus EUR 6.4 million or minus 9% of the net sales. However, we can see an improvement both in operating and business profitability. Then I'm handing over back to you, Paolo.

Moving to Slide 23 to the assumptions and guidance. Well, we have a very good news in quarter 3 coming from the North American market. As you know very well, we are exporting all-season tire from our factory in Dayton in United States to Canada. And this -- there were obviously counter tariff implemented by Canada in quarter -- at the end of quarter 2. Those counter tariffs have now been removed. So obviously, today, we are in the ideal situation to deliver tires from 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 United States, and this is making the company much less vulnerable, being -- having a business model that is local for local. And the winter tire business that is going to Canada is supported by our factory in Nokian based in Finland.

So moving to Slide 24. Our guidance for 2025 remain 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. And 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 question and answer.

[Operator Instructions] The next question comes from Akshat Kacker from JPM.

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? And specifically, how do you think about the sustainability of these price increases going forward? Because a couple of your peers, the bigger Tier 1s 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 are seeing from the consumers in the market. So 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. But just could you talk to us about overall expectations for volume growth going forward given that the business has been in a supply-constrained mode?

And the last one on passenger car 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?

Excellent. Thank you very much for your question. And obviously, I'm happy to reply to at least the first 2 questions. Talking about price increase, this is a journey that we started already at the end of quarter 1, as you may remember. It was necessary, first of all, to compensate the raw material cost increasing in quarter 1 compared to previous year. And that was mainly valid for all the regions, in particular for Nordics.

Then, of course, we combine these price increases also to necessary 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 gradually repositioning our products 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 sellout of a lot of tires that we did in quarter 3 last year. This is what is affecting the comparability of segment operating profit, but at the same time, it's improving significantly our profit.

So 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, then of course, we can still calculate an important growth for the company. And that is really where the volume effect is coming from. So we are not expecting the price increase to affect volume at this stage and minus 3% is well 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 will 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. So obviously -- and now we are moving to the last part of the season, meaning that we will sell in this quarter more winter tire. And so by definition, our margins will keep improving in quarter 4. I hope I replied.

The next question comes from Thomas Besson from Kepler Cheuvreux.

I have 3 as well, please. The first one is on your planned adjustment measures, the personal 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 offtake by your own production?

Second question will be on the EUR 180 million CapEx guide. Could you confirm that it does not include any Romanian state aid that may or not happen in 2025? And finally, you had a tough quarter for your ag and trucks business or what I would call the specialty business or industrial tire business. Could you tell us whether you already see a trough 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 for your question. I start with the negotiation. Obviously, this is part of our journey when we want to improve efficiency and productivity. So -- and this is necessary to support the company in this journey, in particular, when we talk about SG&A development.

So we start the negotiation. And obviously, we will inform you about the progress. But in general, I mean, 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 EUR 180 million, there is nothing about the state aid. So this -- 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, well, this is a million-dollar question. However, I believe the agri business, in particular, is subject to cycles. And cycles can be long or short. But in general, obviously, we are now landing at the end of second, I would say, almost second years of downturn. So obviously, I'm expecting the agri business at the OE level in particular, to recover pretty soon in the next 6 to 12 months.

Obviously, 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, and 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 cycle that were lasting in a positive or negative way 2 or 3 years. I hope I replied to all your questions.

[Operator Instructions] The next question comes from Artem Beletski from SEB.

So I also have 3 to be asked. So the first one is relating to the price/mix development in Passenger Car Tyres. And 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. And maybe just a question on pricing side. So could you maybe comment whether there has been some further price changes, what you have done, for example, during Q3, which are not yet visible in the numbers?

Then the second question is related to net debt. So I understand that Q3 seasonally is the 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. And the last one is just relating to winter tire season. So how you have seen the demand picture so far when it comes to Europe and also North America?

All right. Thank you for the questions. And 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 2 and in quarter 3. There will be a carryover in quarter 4, and that is pretty clear. Then of course, we will not make any comment about future price development for obvious competition rules.

Regarding the second question was -- sorry, the third question was about the net debt. As you know very well, considering our seasonality, quarter 3 is always the period of the year where obviously our debts are getting to a higher level. So we are expecting the level of net debt to go down in the next quarter.

And about the winter tire season, we can say that obviously, the weather was actually a little bit too warm, let's say, in September, but now it's getting colder, both in the Nordics as well as in North America. So we are expecting the winter tire season to basically start as I speak in this moment in November. We had also a good presales activities, obviously, in the previous month. So the market -- we see the market is still growing. So obviously, we are pretty positive about the development of the winter tire sales.

The next question comes from Thomas Besson from Kepler Cheuvreux.

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 inventories declined, but receivables increased. Could you indicate whether you see any risk of write-down? And 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?

And when I look at your payables, they are higher than usual. Could you explain why and whether this will be a headwind on the working capital front in Q4? And my last question will be on your net interest charge. I mean your net debt obviously has gone up the last 3 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 '25, both on the P&L and on the cash flow statement and whether it will already be declining in '26 or be flat in '26 and '25?

Okay. Thank you. I will reply to the first one and maybe Jari can also support the discussion on the last 2 topics. About the working capital, the working capital is improving with growing sales year-to-date. So we are very pleased about this development. And obviously, this is really driven in particular by the reduction of the inventory that we have implemented in -- basically during the whole year, in particular now in quarter 2 and quarter 3.

The receivables are growing because we are growing in terms of sales. And about ATD, obviously, 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 relative low since we are at the beginning of the journey. So 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.

Payable are higher, obviously, because we are growing in Oradea. But please, Jari, would you like to comment the payable and net interest?

Yes. Thank you. So 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 are not -- have not been able to see, but of course, we will continue and we want to improve in that respect. And 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.

And then on top of that, you can notice from the report as well that we have some hedging 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 anything related to '26 at the moment. So let's come back to that later. But that -- those are the main kind of answers or reasons behind.

The next question comes from Rauli Juva from Inderes.

Rauli from Inderes. A question still on the passenger car tire margins. You touched this already, but just want to be clear, you posted in Q3 now around 16% EBIT margin as in last year and then your Q4 last year was really weak. So I guess you should be improving from that year-on-year. But how do you see the dynamics on the passenger car tire margin from between Q4 and Q3?

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, improving our cost when we talk about manufacturing. So they are a natural consequence of what we are doing around the company. And 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 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 3, the part of the cost that we had in North America in Dayton, while this year we don't have those kind of exclusions. So in terms of comparability, I believe that we are really progressing in the right direction, and this is really encouraging. So you should see step-by-step margins improvement.

The next question comes from Akshat Kacker from JPM.

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?

And 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? And how should we expect offtake agreements to progress going into next year? Just a total overview on overall capacity planning, please?

Thank you very much. As I mentioned several times, and this is very important, I will focus -- we will focus as a company on profitable growth. So 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. So the capacity that we have today, it's enough to support our strategic term objective for the next 3 years. So we will not need to implement additional capacity at this stage in -- both in Central Europe as well as in North America.

Clearly, we will do specific adjustments on specific lines since we are going, for instance, in terms of mix. So we are producing bigger and bigger sizes. So we will need to do some adjustments in order to increase eventually the capacity on bigger sizes. But in general, I would say, overall, I think it's now time to harvest what we did in the last 3 years and to make sure that we are able to saturate our existing capacity.

So answering briefly to your question, we don't see the need to add additional capacity in the next 2 years at this stage. When we talk about offtake, of course, we are reducing the level of offtake. We have indicated that from the strategic point of view, in average, 10% of our total volume will remain in offtake 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 start to contribute to the sales in the Central European market. And that is already ongoing since May, June this year. And 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 Southern Europe.

The next question comes from Thomas Besson from Kepler Cheuvreux.

I'm sorry for coming back in slot 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.

So you mean -- 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, 2 million, 3 million, 4 million in the next couple of years, knowing that the investment is behind you, right?

Thank you very much. And you don't need to apologize if there are questions. So this is really what this section is all about, answering to your question. So 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 semifinished product lines more than curing or building machineries. So this is why we say the investment in Romania for the next 3 years will be really limited because we are at the end of the process. So in total, we will have 6 million pieces capacity already by, let's say, the end of next year, eventually, obviously, we -- this is really how the factory works.

So 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 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.

The next question comes from Artem Betsky from SEB.

Yes. Also one follow-up from my end. And it is relating to PCT profitability. So what we have seen during years '23 and '24 and also 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? And 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?

For sure. Thank you for your question. Clearly, again, we need to look at the history of this company in the last 3 years. So we came out from the 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.

So it was really difficult for the team to manage all this transition. And in some way, we are still managing this transition. But of course, we see finally good progresses, and we see finally a gradual stabilization of our performance and continuous improvement. So 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 efficient and efficient manufacturing footprint. And 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.

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

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

Thank you very much, and looking forward to the next call.

Thank you.