Nokian Tyres plc Financial Statement Bulletin 2015: Success

Nokian Tyres plc Financial Statement Bulletin 2015, 5 February 2016, 8 a.m.

October-December 2015

· Net sales increased 11.1% to EUR 422.3 million (380.0 in 10-12/2014).
Currency rate changes cut net sales by EUR 21.0 million compared with the rates
in 10-12/2014.
· Operating profit increased 22.4% to EUR 94.8 million (77.5). Operating
profit percentage was 22.5% (20.4%).
· Profit for the period decreased 133.5% to EUR -16.8 million (50.1). This
includes additional taxes and punitive interest of EUR 94.1 million.
· Earnings per share were down 134.4% to EUR -0.13 (0.37).

January-December 2015

· Net sales decreased 2.1% to EUR 1,360.1 million (1,389.1 in 2014). Currency
rate changes cut net sales by EUR 69.3 million compared with the rates in 2014.
· Operating profit was down 4.1% to EUR 296.0 million (308.7). Operating
profit percentage was 21.8% (22.2%).
· Profit for the period increased 15.5% to EUR 240.7 million (208.4). In Q1
the company returned to the financial result the 2007-2010 total additional
taxes and punitive interest of EUR 100.3 million, based on the annulment
decision made by the Board of Adjustment of the Finnish Tax Administration. In
December 2015 and in January 2016 the company received renewed reassessment
decisions of EUR 94.1 million related to the ongoing tax dispute of years 2007
-2010. The company recorded the amount as expenses in full in the financial
statement and result for 2015. The net effect of the above described tax
decisions related to the tax dispute 2007-2010 was EUR 6.2 million positive for
the financial year 2015.
· Earnings per share were up 15.1% to EUR 1.80 (1.56).
· Cash flow from operations was EUR 311.1 (458.3).

Dividend

The Board of Directors proposes a dividend of EUR 1.50 (1.45) per share.

Financial guidance

In 2016, with current exchange rates, net sales and operating profit are to
remain at the same level compared to 2015.

Key figures, EUR million

+---------------------+-----+-----+------+-------+-------+------+
| |10-12|10-12|Change|2015 |2014 |Change|
| |/15 |/14 |% | | |% |
+---------------------+-----+-----+------+-------+-------+------+
|Net sales |422.3|380.0|11.1 |1,360.1|1,389.1|-2.1 |
+---------------------+-----+-----+------+-------+-------+------+
|Operating profit |94.8 |77.5 |22.4 |296.0 |308.7 |-4.1 |
+---------------------+-----+-----+------+-------+-------+------+
|Operating profit % |22.5 |20.4 | |21.8 |22.2 | |
+---------------------+-----+-----+------+-------+-------+------+
|Profit before tax |72.9 |65.0 |12.1 |274.2 |261.2 |5.0 |
+---------------------+-----+-----+------+-------+-------+------+
|Profit for the period|-16.8|50.1 |-133.5|240.7 |208.4 |15.5 |
+---------------------+-----+-----+------+-------+-------+------+
|Earnings per |-0.13|0.37 |-134.4|1.80 |1.56 |15.1 |
|share, EUR | | | | | | |
+---------------------+-----+-----+------+-------+-------+------+
|Equity ratio, % | | | |70.8 |67.5 | |
+---------------------+-----+-----+------+-------+-------+------+
|Cash flow |417.0|579.1|-28.0 |311.1 |458.3 |-32.1 |
|from operations | | | | | | |
+---------------------+-----+-----+------+-------+-------+------+
|RONA, % | | | |18.5 |18.3 | |
|(roll. 12 months) | | | | | | |
+---------------------+-----+-----+------+-------+-------+------+
|Gearing, % | | | |-16.9 |-13.6 | |
+---------------------+-----+-----+------+-------+-------+------+

Ari Lehtoranta, President and CEO:

“Despite the delayed winter season and Russia’s further deteriorating economic
challenges, we were able to deliver strong results. Like we reported earlier,
winter season deliveries moved later; in Central Europe in great extent even to
the fourth quarter. Our teams were able to achieve market share gains based on
the world’s safest product portfolio. North American and Russian winter seasons
were almost non-existing and this resulted in lower sales in 2015 and higher
inventory levels going to 2016 in these market areas.

Raw material cost decline supported our profitability in 2015. Good product mix,
sales growth in 2H and improved productivity contributed also in profitability
increase. Productivity improvement in passenger car tyre manufacturing was 5% in
2015 despite clearly lower volumes.

Heavy Tyres improved profitability and increased its net sales. Vianor was hit
by the lack of winter and ended up in negative profitability.

One of our key strengths, our distribution network, continued to grow as
planned. In 2015, we added over 500 new Vianor, NAD and N-Tyre outlets to our
branded distribution network, and the current number of Vianor stores is 1,475
and the NAD/N-Tyre network has already grown to over 1,300 stores.

Russia is still our biggest single country in terms of sales. Russia’s economic
outlook for 2016 is negative. This together with the North American inventory
situation will limit our capability to grow this year. However, we are aiming at
improving our profitability in 2016.

Our personnel has been doing great job everywhere. During 2015 we went through a
difficult capacity reduction program in Nokia. At the same time, however, we
have increased our investments in R&D, marketing and sales much more than the
savings achieved in that program. These investments together with a strong
balance sheet, positive cash flow and the whole organization delivering
excellent results give us confidence about the positive future.”

Market situation

The global economy is estimated to pick up in 2016. The key issues influencing
the global outlook: the gradual slowdown and rebalancing of economic activity in
China, lower prices for energy and other commodities and a gradual tightening in
monetary policy in the USA. Despite the anticipated improvement, the pace of the
recovery is forecast to remain below pre-crisis levels. The USA continues still
to be the growth engine. Also Europe is recovering. The global GDP is estimated
to grow by 3.5% in 2016. The GDP growth estimates for Nordic countries are +0.5%
– 3.8% and for Europe (including Nordics) +1.7%. The GDP in USA is estimated to
grow by 2.7%. In Russia the GDP is expected to further decline between 0.3% and
3% depending on the scenario.

In the Nordic countries new car sales increased in 2015 by 9% year-over-year.
The market volume of car tyres showed an increase of 5% compared to 2014, but
for full year 2016 the increase is expected to be lower.

In Europe sales of new cars increased in 2015 by 9% year-over-year. Car tyre
sell-in to distributors was up 3% compared with 2014, with winter tyre demand
decreasing by 2%. Overall tyre demand is estimated to grow slightly in Central
Europe in 2016. Pricing pressure is, however, tight.

In the USA estimated new car sales were up 6% 2015 vs. 2014. The market volume
of car tyres was flat compared with 2014, due to specific reasons related to the
punitive import duties imposed on Chinese tyre suppliers. Car tyre demand in
North America is expected to grow by 2% in 2016 year-over-year.

Russia’s economic situation has remained challenging: according to the
preliminary estimates, GDP contracted by 3.7% in 2015 vs. 2014. Year-on-year
decline slowed down in Q4 compared to Q3; quarterly GDP is estimated to have
grown in Q4 vs. Q3. Inflation continued to be high: consumer price index is
estimated to have increased by 12.9% by year-end and by over 15% on average
during the year, resulting in the cut of real wages of about 10%. Russian
consumers’ purchasing power clearly weakened and consumer confidence remained at
a very low level; in Q4 it continued to decline and approached historical
minimum. As a result, consumers are holding back their spending: retail turnover
remains quite sluggish, with only minor improvement on the way.

Sales of new cars in Russia in 2015 reached 1.601 million units, down by 35.7%
vs. 2014. The decline in December (-45.7%) was higher than in the previous
months, as expected, due to the peak in sales in December 2014 driven by the
sharp devaluation of the ruble and consumers’ flight from the ruble. Car
manufacturers have muted expectations for 2016. Their joint forecast for the
year is 1.53 million units, further 4.4% decline from 2015, although many
experts expect a bigger slump in sales, up to -25%. Nokian Tyres estimates new
car sales in Russia to decline approximately 10 – 25%. Tyre market (sell-in in
A+B segments) is estimated to have declined by approximately 20%, with continued
shift towards cheaper segments and decrease of imports by 32%.

The global demand for special heavy tyres varied still strongly between product
and market areas. OE forestry tyre demand continued to be strong. The increased
use of wood and good profitability of pulp manufacturers will also support
forestry machine and tyre demand during the following quarters.

In 2015 in Europe the sell-in of premium truck tyres was up 4%, and in the
Nordic countries demand was flat year-over-year. Demand in North America showed
growth. In Russia, however, demand for premium truck tyres decreased by 11%
compared to 2014. Truck tyre demand in 2016 is estimated to show some increase
or to be at the same level as in the previous year in all Nokian Tyres’ western
markets; in Russia demand is expected to remain weak.

Raw materials

The tailwind from tyre industry raw material prices continued through 2015. Raw
material costs (€/kg) for Nokian Tyres were down 13.1% in 2015 year-over-year,
savings of approximately EUR 40 million. Raw material costs are estimated to
decrease around 5% in full year 2016, providing a tailwind of approximately EUR
15 million versus 2015.

OCTOBER-DECEMBER 2015

Nokian Tyres Group recorded net sales of EUR 422.3 million (380.0), an increase
of 11.1% compared with Q4/2014. Currency rate changes cut net sales by EUR 21.0
million. In the Nordic countries sales increased 6.4% year-over-year. Sales in
Russia decreased 8.4%. Russia and CIS consolidated sales dropped 13.8%. In Other
Europe sales were up 38.3% and in North America sales increased 10.7%.

The raw material cost (EUR/kg) in manufacturing increased 2.9% year-over-year
and increased 4.1% versus the third quarter of 2015. Fixed costs amounted to EUR
114.2 million (109.6), accounting for 27.0% (28.9%) of net sales.

Nokian Tyres Group's operating profit amounted to EUR 94.8 million (77.5), an
increase of 22.4% compared with Q4/2014. The operating profit was negatively
affected by the recognition of credit losses and provisions of EUR 11.3 million
(4.0).

Net financial expenses were EUR 21.9 million (12.5). Net interest expenses were
EUR 21.0 million (4.6). Net interest expenses include EUR 19.2 million penalty
interest related to the tax dispute of 2007-2010. Net financial expenses include
EUR 0.9 million (7.9) of exchange rate differences.

Profit before tax was EUR 72.9 million (65.0). Profit for the period amounted to
EUR -16.8 million (50.1), and EPS were EUR -0.13 (0.37), penalized by the
additional taxes of EUR 94.1 million in Finland, including punitive tax
increases and interests based on the renewed reassessment decisions from the Tax
administration related to the tax dispute 2007-2010 received in December 2015
and January 2016.

Income financing after the change in working capital, investments and the
disposal of fixed assets (cash flow from operations) was EUR 417.0 million
(579.1).

JANUARY-DECEMBER 2015

Nokian Tyres Group recorded net sales of EUR 1,360.1 million (1,389.1), a
decrease of 2.1% compared with 2014. Currency rate changes cut net sales by EUR
69.3 million.

Gross sales development by market areas

+----------------+-------+----------------+----------------+
| |Growth%|% of total sales|% of total sales|
| | |in 2015 | in 2014 |
+----------------+-------+----------------+----------------+
|Nordic countries|4.7 |43.6 |40.3 |
+----------------+-------+----------------+----------------+
|Russia and CIS |-34.0 |17.4 |25.5 |
+----------------+-------+----------------+----------------+
|Other Europe |4.7 |26.4 |24.4 |
+----------------+-------+----------------+----------------+
|North America |25.1 |11.8 |9.1 |
+----------------+-------+----------------+----------------+

Net sales development by business units

+-------------------+-------+----------------+----------------+
| |Growth%|% of total sales|% of total sales|
| | |in 2015 |in 2014 |
+-------------------+-------+----------------+----------------+
|Passenger Car Tyres|-5.2 |66.3 |68.4 |
+-------------------+-------+----------------+----------------+
|Heavy Tyres |4.2 |10.8 |10.2 |
+-------------------+-------+----------------+----------------+
|Vianor |4.1 |22.8 |21.5 |
+-------------------+-------+----------------+----------------+

The raw material cost (EUR/kg) in manufacturing decreased by 13.1 year-over
-year. Fixed costs amounted to EUR 403.8 million (400.0), accounting for 29.7%
(28.8%) of net sales. Total salaries and wages were EUR 197.1 million (195.4).

Nokian Tyres Group's operating profit amounted to EUR 296.0 million (308.7). The
operating profit was negatively affected by the IFRS 2 -compliant option scheme
accrual of EUR 9.1 million (9.6) and the recognition of credit losses and
provisions of EUR 17.7 million (8.8).

Net financial expenses were EUR 21.8 million (47.5). Net interest expenses were
EUR 10.7 million (16.7). Financial expenses have been adjusted with a EUR 20.2
million reversal of interest on back tax as the reassessment decisions on the
years 2007-2010 were annulled and returned to the Tax Administration for
reprocessing in April 2015. Net interest expenses include EUR 19.2 million
penalty interest related to the ongoing tax dispute of 2007-2010 and based on
the renewed reassessment decisions from the Tax Administration received in
December 2015 and January 2016. Financial expenses include EUR 2.7 million
premium related to Nokian Tyres voluntary buy-back of company’s bond maturing
2017 amounting to EUR 62.3 million. Net financial expenses include EUR 11.1
million (30.8) in exchange rate differences.

Profit before tax was EUR 274.2 million (261.2). Profit for the period amounted
to EUR 240.7 million (208.4), and EPS were EUR 1.80 (1.56). The tax expense has
been adjusted by EUR 80.1 million as the tax reassessment decisions on the years
2007-2010 were annulled in April 2015 and returned to the Tax Administration for
reprocessing. The tax expense was again adjusted by EUR 74.9 million based on
the renewed reassessment decisions from the Tax Administration received in
December 2015 and January 2016.

Return on net assets (RONA, rolling 12 months) was 18.5% (18.3%). Income
financing after the change in working capital, investments and the disposal of
fixed assets (cash flow from operations) was EUR 311.1 million (458.3).

Investments

Investments in the review period amounted to EUR 101.7 million (80.6). This
comprises of production investments in the Russian and Finnish factories, moulds
for new products, ICT and process development projects, and the Vianor expansion
projects.

Financial position on 31 December 2015

The gearing ratio was -16.9% (-13.6%). Interest-bearing net debt amounted to EUR
-209.7 million (-164.6). Equity ratio was 70.8% (67.5%).

The Group’s interest-bearing liabilities totalled EUR 219.6 million (275.2), of
which current interest-bearing liabilities amounted to EUR 19.9 million (0.6).
The average interest rate for interest-bearing liabilities was 3.2% (3.6%). Cash
and cash equivalents amounted to EUR 429.3 million (439.9).

At the end of the review period the company had unused credit limits amounting
to EUR 508.7 million (606.5), of which EUR 155.7 million (255.7) were committed.
The current credit limits and the commercial paper program are used to finance
inventories, trade receivables and subsidiaries in distribution chains and thus
control the typical seasonality in the Group’s cash flow.

Group’s Total comprehensive income was negatively affected by translation
differences on foreign operations by EUR 55.2 million (202.1). Total
comprehensive income for the period amounted to EUR 185.2 million (4.4).

Tax rate

Dispute concerning 2007-2010

In April 2015 the Board of Adjustment of the Finnish Tax Administration annulled
the reassessment decision from the Tax Administration, according to which the
Company was obliged to pay EUR 100.3 million additional taxes with punitive tax
increases and interest concerning the tax years 2007-2010, and returned the
matter to the Tax Administration for reprocessing. According to the Board of
Adjustment, the Tax Administration neglected the obligation to hear the
taxpayer. Because of the procedural fault by the Tax Administration, the Board
of Adjustment annulled the decision without considering the actual substance of
the matter.

The Company returned the 2007-2010 total additional taxes of EUR 100.3 million
in full to the financial statement and result for the first quarter of 2015. The
Company had recorded the same amounts as expenses in full in the financial
statement and result for 2013.

In December 2015 and in January 2016 the Company received renewed reassessment
decisions from the Tax Administration, according to which the Company is obliged
to pay EUR 94.1 million additional taxes with punitive tax increases and
interests concerning tax years 2007-2010. Payment was due in January 2016. The
total sum demanded by the tax authorities is EUR 94.1 million, of which EUR 62.8
million are additional taxes and EUR 31.3 million punitive tax increases and
interests. The Company considers the decision unfounded and appeals against it
by leaving the claim to the Board of Adjustment.

Based on the renewed reassessment decisions the Company has recorded the total
additional taxes of EUR 94.1 million as expenses in full in the financial
statement and result for 2015.
Dispute concerning U.S subsidiary 2008-2012

Nokian Tyres U.S. Finance Oy, a subsidiary of Nokian Tyres plc (ownership 100%
of shares), received a reassessment decision from the Finnish Tax
Administration, according to which the company is obliged to pay EUR 11.0
million in additional taxes with punitive tax increases and interest concerning
the tax years 2008 to 2012. EUR 7.9 million of this is additional taxes and EUR
3.1 million is punitive tax increases and interest. The company recorded them in
full in the financial statement and result for Q1/2014.

The Large Taxpayers’ Office carried out a tax audit concerning the Finnish
Business Tax Act, where the Tax Administration raised an issue about the
restructuring of the sales company and acquisitions by Nokian Tyres Group in
North America, totally ignoring the business rationale and corresponding
precedent rulings presented by the company.

Nokian Tyres U.S. Finance Oy considered the reassessment decision of the Tax
Administration as unfounded and submitted a claim for rectification to the Board
of Adjustment. If necessary, the company will continue the appeal process in the
Administrative Court.

Tax rate outcome and estimate

The Group’s tax rate was 12.2% (20.2%) in the review period. The tax rate
excluding the additional taxes was 14.2%. The tax rate was positively affected
by tax incentives in Russia for current investments and further investments in
the future. The new agreed tax benefits and incentives came into force in the
beginning of 2013. The agreement will extend the benefits and incentives until
approximately 2020.

The tax rate in the coming years will depend on the timetable and final result
of the ongoing back tax disputes with the Finnish Tax Administration. The
Group's corporate annual tax rate may rise from its medium-term average of 17%
as a result of these cases.
Personnel

In 2015 the Company was forced to reduce capacity at the Nokian plant. This
resulted in reduction of 122 employees. In 2015 the Group employed an average of
4,421 (4,272) people, and 4,389 (4,204) at the end of the review period. Despite
of the above-mentioned reductions, the headcount in Finland increased and the
Group employed in Finland 1,732 (1,657) people at the end of the review period,
and in Russia 1,327 (1,326) people. The main increase took place in the equity
-owned Vianor tyre chain, which employed 1,681 (1,508) people at the end of the
review period.

BUSINESS UNIT REVIEWS

Passenger Car Tyres

+-----------------+-----+-----+------+-----+-------+------+
| |10-12|10-12|Change|2015 |2014 |Change|
| |/15 |/14 |% | | |% |
+-----------------+-----+-----+------+-----+-------+------+
|Net sales, M€ |276.5|237.9|16.2 |951.5|1,003.2|-5.2 |
+-----------------+-----+-----+------+-----+-------+------+
|Operating profit,|80.3 |55.4 |44.8 |285.5|292.2 |-2.3 |
|M€ | | | | | | |
+-----------------+-----+-----+------+-----+-------+------+
|Operating profit,|29.0 |23.3 | |30.0 |29.1 | |
|% | | | | | | |
+-----------------+-----+-----+------+-----+-------+------+
|RONA, % | | | |27.8 |23.5 | |
|(roll. 12 m.) | | | | | | |
+-----------------+-----+-----+------+-----+-------+------+

Net sales dropped in 2015 mainly due to clearly lower sales volumes in Russia
and the devaluation of the ruble. Sales increased and market share improved in
North America. Sales were stable in the Nordic countries. In Other Europe sales
increased slightly. Nokian Tyres summer tyre sales increased in all key markets.

In 2015 the Average Selling Price in euros decreased due to currency rate
devaluations. The share of winter tyres in the sales mix was 73% (79%). Overall
sales mix development was positive, as the share of premium tyres in the winter
segment increased and successful SUV tyre sales improved the summer tyre mix.
Local price increases in Russia supported the ASP development. Minor price
reductions have taken place in some countries, which reflect the tight
competitive situation and reductions in material costs partly passing through to
tyre prices.

Raw material costs (€/kg) were down by 13.2% year-over-year, which together with
improved productivity supported margins.

Like in 2014, Nokian Tyres has again succeeded in the winter tyre tests with
several car magazine victories globally. The new Nokian Tyres summer tyre range
also won several car magazine tests in Central Europe in spring 2015. A constant
flow of product launches with new innovations - improving safety, comfort and
ecological driving - have supported the brand image and price position of Nokian
Tyres.

In 2015 capacity was not fully utilized, and production output (pcs) decreased
by 7%. Productivity (kg/mh) improved by 5% year-over-year. In 2015, 81% (80%) of
Nokian car tyres (pcs) were manufactured in the Russian factory.

Heavy Tyres

+-----------------+-----+-----+------+-----+-----+------+
| |10-12|10-12|Change|2015 |2014 |Change|
| |/15 |/14 |% | | |% |
+-----------------+-----+-----+------+-----+-----+------+
|Net sales, M€ |41.8 |41.0 |1.9 |155.3|149.1|4.2 |
+-----------------+-----+-----+------+-----+-----+------+
|Operating profit,|6.7 |7.8 |-14.1 |28.7 |24.6 |16.9 |
|M€ | | | | | | |
+-----------------+-----+-----+------+-----+-----+------+
|Operating profit,|15.9 |18.9 | |18.5 |16.5 | |
|% | | | | | | |
+-----------------+-----+-----+------+-----+-----+------+
|RONA, % | | | |28.9 |22.9 | |
|(roll. 12 m.) | | | | | | |
+-----------------+-----+-----+------+-----+-----+------+

Demand remained at a good level in the western markets in most of Nokian Heavy
Tyres’ core product groups. The delivery capacity improved year-over-year,
resulting in higher net sales. Forestry tyre sales remained on a good level and
other product groups developed moderately. North America showed the strongest
sales growth and the outlook for the start of the year is good. Also the Nordic
countries and Other Europe showed growth. Weak economies and currency
devaluations against the euro weakened Russia and CIS sales.

The Average Selling Price decreased slightly year-over-year due to a challenging
pricing environment and a bigger share of OE sales. Operating profit, however,
improved clearly on the back of increased sales volumes and reduced fixed costs.
Margins were supported by lower raw material costs and productivity improvement.

Continuous investments to production and new products increased production
output (tonnes) in 2015 9% year-over-year.

Vianor

Equity-owned operations

+-----------------+-----+-----+------+-----+-----+------+
| |10-12|10-12|Change|2015 |2014 |Change|
| |/15 |/14 |% | | |% |
+-----------------+-----+-----+------+-----+-----+------+
|Net sales, M€ |119.4|117.5|1.6 |327.6|314.8|4.1 |
+-----------------+-----+-----+------+-----+-----+------+
|Operating result,|11.1 |13.1 |-15.7 |-1.9 |2.1 |-189.2|
|M€ | | | | | | |
+-----------------+-----+-----+------+-----+-----+------+
|Operating result,|9.3 |11.2 | |-0.6 |0.7 | |
|% | | | | | | |
+-----------------+-----+-----+------+-----+-----+------+
|RONA, % | | | |-1.0 |1.2 | |
|(roll. 12 m.) | | | | | | |
+-----------------+-----+-----+------+-----+-----+------+

At the end of the review period Vianor had 198 (189) equity-owned stores in
Finland, Sweden, Norway, USA, Switzerland and Russia.

Net sales grew in the Nordic countries, Norway showing the strongest
development. Car tyre sales increased, whereas truck tyre sales decreased
slightly. Heavy tyre sales was flat. Service sales increased by 6%, including
growth of 8.5% in car service sales. Retail sales formed 51% of Vianor’s total
sales. As the season did not start properly during Q4, operating result
decreased compared to 2014.

The gradual change in the operating model from tyre sales to full car service in
the stores continues with investments and local acquisitions of car service
shops. At the end of the year 2015 a total of 64 car service operations have
been acquired and integrated with existing Vianor stores in the Nordic
countries.

Franchising and partner operations

Vianor expanded the retail network in Nokian Tyres’ key markets by 120 stores
during 2015. At the end of the year the Vianor network comprised in total 1,475
stores, of which 1,277 were partners. Vianor operates in 26 countries; most
extensively in the Nordic countries, Russia and Ukraine. Expanding the partner
franchise network will continue.

A softer partner model, Nokian Tyres Authorized Dealers (NAD), expanded in the
review period by 370 stores and totals 1,239 stores under contract in 19
European countries and China. N-Tyre, a new Nokian Tyres partner network, is
operating with 102 stores in Russia and CIS.

SPECIAL REVIEWS

Russia and the CIS countries 2015

Nokian Tyres’ sales in Russia decreased year-over-year by 34.8% to EUR 237.0
million (363.4). Sales in the CIS countries (excluding Russia) were EUR 18.1
million (23.2). Consolidated sales in Russia and CIS decreased by 34.0% to EUR
255.1 million (386.7).

Sales volume in Russia decreased clearly compared to the previous year. Nokian
Tyres’ market share in winter tyres on the sell-in level (distributor sales)
somewhat decreased in Russia measured in sales volume due to consumers’ shift
towards cheaper segments and brands driven by the weak purchasing power as well
as aggressive pricing of some competitors. Nokian Tyres’ market share on the
sell-out level (consumer sales) is estimated to remain intact. The sales value
decreased clearly also due to the ruble devaluation against the euro. Double
-digit price increases in rubles were made in early 2015, but this does not
fully compensate for the impact of the currency devaluation. However, Nokian
Tyres’ product mix and ASP in the local currency clearly improved due to the
restructuring of the winter tyre range and the launch of new SUV models in the B
segment.

The sell-out of winter tyres in the 2015 season (in the overall market,
including Nokian Tyres products) was very weak due to the lack of proper winter
season in most regions of Russia. This resulted some carry-over stocks of winter
tyres in distribution, which will negatively affect further sell-in for 2016
season.

At the same time, Nokian Tyres maintained its market leader position in the
premium segment. The company also became the market leader in summer tyres in
both A and B segments. The biggest growth categories for Nokian Tyres in summer
tyres were SUV, UHP (ultra-high performance) and other high value-added product
lines.

Nokian Tyres factory in Vsevolozhsk playes a very important role in the Group’s
supply chain. In the review period 67% of the Russian factory’s production
output was exported, mostly to Central Europe and North America. This supports
the company’s margins, as production costs are mainly in rubles and sales mainly
in euros and dollars.

OTHER MATTERS

1. Stock options on the Nasdaq Helsinki Stock Exchange

The total number of stock options 2010B was 1,340,000. Each stock option 2010B
entitled its holder to subscribe for one Nokian Tyres plc share. The shares were
subscribed with the stock options 2010B during the period 1 May 2013 - 31 May
2015.

The total number of stock options 2010C is 1,340,000. Each stock option 2010C
entitles its holder to subscribe for one Nokian Tyres plc share. The shares can
be subscribed with the stock options 2010C during the period 1 May 2014 - 31 May
2016. The present share subscription price with stock options 2010C is EUR
30.95/share. The dividends payable annually are deducted from the share
subscription price.

The total number of stock options 2013A is 1,150,000. Each stock option 2013A
entitles its holder to subscribe for one Nokian Tyres plc share. The shares can
be subscribed with the stock options 2013A during the period 1 May 2015 - 31 May
2017. The present share subscription price with stock options 2013A is EUR
29.36/share. The dividends payable annually are deducted from the share
subscription price.

2. Authorizations

In 2012 the Annual General Meeting authorized the Board of Directors to make a
decision to offer no more than 25,000,000 shares through a share issue. The
authorization is effective for five years from that decision.

3. Own shares

No share repurchases were made in the review period, and the company did not
possess any own shares on 31 December 2015.

Nokian Tyres has entered into an agreement with a third-party service provider
concerning the share-based incentive program for key personnel. The third party
owns the shares until the shares are given to the participants within the
program. In accordance with IFRS these repurchased 300,000 shares have been
reported as treasury shares in the Consolidated Statement of Financial Position.
This number of shares corresponds to 0.2% of the total shares and voting rights
of the company.

4. Trading in shares

The Nokian Tyres’ share price was EUR 33.10 (20.29) at the end of the review
period. The volume weighted average share price during the period was EUR 28.06
(26.74), the highest EUR 37.57 (36.19) and the lowest EUR 19.23 (18.82). A total
of 195,229,321 shares were traded in Nasdaq Helsinki during the period
(216,446,904), representing 145% (162%) of the company's overall share capital.
A total of 83,198,786 shares were traded in Chi-X during the period. The
company’s market capitalization at the end of the period was EUR 4.458 billion
(2.708 billion).The company had 38,304 (50,142) shareholders. The percentage of
Finnish shareholders was 27.5% (39.1%) and 72.5% (60.9%) were foreign
shareholders registered in the nominee register. This figure includes
Bridgestone's holding of approximately 14.9%.

5. Changes in ownership

Nokian Tyres has received an announcement from The Capital Group Companies Inc.
on 23 February 2015, according to which the total holding of The Capital Group
Companies Inc. in Nokian Tyres plc fell below 5 percent as a result of a share
transaction concluded on 20 February 2015.

Nokian Tyres has received an announcement from The Capital Group Companies Inc.
on 15 September 2015, according to which the holdings of the mutual funds
managed by The Capital Group Companies Inc exceeded level of 5% of the share
capital in Nokian Tyres plc, as a result of a share transaction concluded on 14
September 2015.

Nokian Tyres has received an announcement from Varma Mutual Pension Insurance
Company on 27 May 2015, according to which the total holding of Varma in Nokian
Tyres plc fell below 5 percent as a result of a share transaction concluded on
26 May 2015.

Nokian Tyres has received announcements from BlackRock, Inc. on 23 March 2015,
on 15 September 2015, on 8 December 2015, on 23 December 2015 and on 30 December
2015, according to which the holdings of the mutual funds managed by BlackRock
exceeded 5% of the share capital in Nokian Tyres plc, as a result of share
transactions concluded on 20 March 2015, on 14 September 2015, on 7 December
2015, on 22 December 2015 and on 29 December 2015.

Nokian Tyres has received announcements from BlackRock, Inc. on 20 August 2015,
on 19 November 2015, on 9 December 2015, on 28 December 2015 and on 31 December
2015, according to which the holdings of the mutual funds managed by BlackRock
fell below level of 5% of the share capital in Nokian Tyres plc, as a result of
a share transactions concluded on 19 August 2015, on 18 November 2015, on 8
December 2015, on 24 December 2015 and on 30 December 2015.

More detailed information on flaggings can be found at
http://www.nokiantyres.com/company/investors/share/flagging
-notifications/ (http://www.nokiantyres.com/company/investors/share/flagging
-notifications/).

6. Decisions made at the Annual General Meeting

On 8 April 2015, the Annual General Meeting of Nokian Tyres approved the
financial statements for 2014 and discharged the Board of Directors and the
President and CEO from liability.

6.1 Dividend

The meeting decided that a dividend of EUR 1.45 per share be paid for the period
ending on 31 December 2014. It was decided to pay the dividend to shareholders
included in the shareholder list maintained by Euroclear Finland Ltd on the
record date of 10 April 2015. The dividend payment date was 23 April 2015.

6.2. Members of the Board of Directors and Auditor

The meeting decided that the Board of Directors has six members. Existing
members Hille Korhonen, Raimo Lind, Inka Mero, Hannu Penttilä and Petteri
Walldén were elected to continue on the Board of Directors. Mr Tapio Kuula was
elected as a new member of the Board.

Authorised public accountants KPMG Oy Ab continue as auditors.

6.3. Remuneration of the Members of the Board of Directors unchanged

The meeting decided that the fee paid to the Chairman of the Board is EUR 80,000
per year, while that paid to Board members is set at EUR 40,000 per year.
Members of the Board are also granted a fee of EUR 600 for every Board meeting
and Committee meeting attended.

In accordance with current practice, 50% of the annual fee is paid in cash and
50% in company shares. It was decided, that in the period 9 April to 30 April
2015, EUR 40,000 worth of Nokian Tyres plc shares be purchased on the stock
exchange on behalf of the Chairman of the Board and EUR 20,000 worth of shares
on behalf of each Board member. This means that the final remuneration paid to
Board members is tied to the company’s share performance.

7. Chairman of the Board and Committees of the Board of Directors

In the Board meeting on 8 April 2015 Petteri Walldén was elected chairman of the
Board. The members of the Nomination and Remuneration committee are Petteri
Walldén (chairman), Hille Korhonen and Hannu Penttilä. The members of the Audit
committee are Raimo Lind (chairman), Inka Mero and Tapio Kuula.

8. Corporate social responsibility

Nokian Tyres published its Corporate Sustainability Report in March 2015. The
report, implemented in accordance with the revised GRI G4 guidelines, has been
published as a web version at www.nokiantyres.com/company/sustainability.
Product safety and quality, as well as profitable growth, good HR management,
and environmental issues are important for the development of sustainable
business operations in Nokian Tyres.

Nokian Tyres plc is included in the OMX GES Sustainability Finland GI index. The
index is designed to provide investors with a liquid, objective and reliable
benchmark for responsible investment. The benchmark index comprises of the 40
leading Nasdaq Helsinki listed companies in terms of sustainability. The index
criteria are based on international guidelines for environmental, social and
governance (ESG) issues. The index is calculated by Nasdaq in cooperation with
GES Investment Services.

Nokian Tyres gets good grades for corporate responsibility

Nokian Tyres received consistently good results in the global Dow Jones
Sustainability Index. The Dow Jones Sustainability Index is the world's most
respected comparison of large companies in terms of corporate responsibility.
Every year, the 3,400 largest listed companies in the world, representing dozens
of different sectors, are invited to participate.

The evaluations reviews the corporate responsibility of the companies'
operations from 18 different perspectives including environmental affairs, human
rights, accountability in the procurement chain, and safety in the workplace.

In the 2015 evaluation, Nokian Tyres was graded above average for its sector in
all of the 18 sub-areas. The evaluation is carried out by a Swiss company named
RobecoSam.

9. Board of Adjustment annulled the reassessment decision against Nokian Tyres
plc concerning tax years 2007-2010

On 7 April 2015 Nokian Tyres announced that the Board of Adjustment had annulled
the reassessment decision from the Tax Administration, and that the Company
would return the 2007-2010 total additional taxes of EUR 100.3 million in full
to the financial statement and result for the first quarter of 2015.

10. Nokian Tyres plc’s share bonus scheme 2015 and actual performance in 2013
-2014

On 29 May 2015 Nokian Tyres announced that the targets set for the 2013-2014
earnings periods in the share based incentive plan were not met. As a result, no
share bonus has been paid to the key employees for the years 2013-2014.

Bonuses for the 2015 performance period will be paid partly in Company shares
and partly in cash in 2017. The rewards to be paid on the basis of the 2015
performance period correspond to a maximum of some 160,000 Nokian Tyres plc
shares, including the portion to be paid in cash. The target group for the
scheme comprises approximately 40 people.

11. Nokian Tyres introduced new winter products for Central Europe

On 16 February 2015 Nokian Tyres announced that it is adding five new tyres to
its product selection for varying Central European winter weather. The new
Nokian WR D4 passenger car tyre, the Nokian WR C3 for versatile use on vans, and
the Nokian Weatherproof product family that demonstrates the All-Weather
concept, improve the company’s competitive strength especially in Central
Europe.

Central Europe is the world's largest market area for winter tyres.
Approximately 70 million winter tyres were sold in 2014 and the winter tyre
segment is growing faster than the overall market. As the tyre markets expand
and winter tyre legislation becomes more common, Central Europe has become one
of Nokian Tyres' most important areas for growth.

12. The launch of world's first AA class winter tyre in terms of wet grip and
fuel efficiency

On 12 May 2015 Nokian Tyres announced that it will in the autumn of 2015 offer
European SUV drivers the world’s first winter tyre that achieves the best
possible class A in wet grip and fuel efficiency for the EU tyre label. The
revolutionary Nokian WR SUV 3 winter tyre, in size 265/50 R19 V, can reduce
braking distances by up to 18 meters on wet roads and save fuel by up to 0.6
l/100 km.
13. Voluntary tender offer of Nokian Tyres EUR 150,000,000 3.25 percent notes
due 2017

On 28 August 2015 Nokian Tyres announced a voluntary cash tender offer for
noteholders holding its EUR 150,000,000 3.25 percent senior unsecured notes
issued on 19 July 2012 (FI4000046370). The approximate nominal amount of notes
tendered under the tender offer was EUR 75,000,000.
The Offer Period expired at 4.00 p.m. EET on 8 September 2015. The aggregate
principal amount of Notes validly offered for purchase by Noteholders was EUR
62,300,000 representing 41.53 percent of the aggregate amount of all the Notes.
The Purchase Price was EUR 104,400 per each EUR 100,000 nominal amount of the
Notes which, together with Accrued Interest of EUR 772.54 (0.7725 percent) per
each EUR 100,000 nominal amount of the Notes, was payable by Nokian Tyres plc to
the relevant Noteholders. The settlement occured on 14 September 2015.

14. Statutory negotiations at Nokian Tyres’ Finnish factory ended

The statutory negotiations concerning workers and staff in car tyre production
and administration at Nokian Tyres’ Finnish factory ended on 28 September 2015.
Adjustments to production capacity utilization as well as cost savings will be
achieved by reducing 122 people. Statutory negotiations concerned a total of 900
people.

15. Changes in operational structure and management team

On 20 October 2015 Nokia Tyres announced that it will change its operational
structure and responsibilities in the management team to strengthen the
company's product and innovation leadership, end-to-end supply operations and
sales and distribution management which have been the core of Nokian Tyres'
success.

In the new management structure the former operations of Passenger car tyres
will be disintegrated and reorganized in a following way: product management,
R&D and sales functions will report directly to CEO. Procurement, demand and
supply management together with logistics and customer service functions will be
part of new Supply Operations unit. In the financial reporting Passenger car
tyres will continue to be separately reported like Vianor and Nokian Heavy
Tyres. Other operations will continue as earlier without any changes in
operative mode reporting to CEO.

16. Capital Markets Day 2015: Back to profitable growth, Financial targets and
dividend policy set for 2016-2018

On 17 November Nokian Tyres hosted Capital Markets Day for investors and
analysts in Helsinki, Finland. The event focused on Nokian Tyres’ strategy and
financial targets for 2016-2018. All CMD materials can be found at
http://www.nokiantyres.com/cmd/.

Nokian Tyres’ financial targets for 2016-2018: grow faster than the market with
healthy profitability. With the November 2015 market outlook this would result
to minimum 4-5% average annual sales growth for the period 2016-2018. Company
targets to maintain its industry leading operating profit level of minimum 22%.

Nokian Tyres’ dividend policy for 2016-2018: company’s target is to provide
steady or higher absolute dividend per share throughout 2016-2018 (despite the
investments in the third factory). Company targets to distribute at least 50% of
net profits in dividends.

17. Nokian Tyres received EUR 87 million additional payable tax in Finland
regarding years 2007-2010; the company will make a complaint against the
decision

On 15 December 2015 Nokian Tyres announced that it has received a renewed
reassessment decision from the Tax Administration, according to which the
Company is obliged to pay EUR 87 million additional taxes with punitive tax
increases and interests concerning tax years 2007-2010. Payment must be made in
January 2016. The total sum demanded by the tax authorities was EUR 87 million,
of which EUR 55 million additional taxes and EUR 32 million punitive tax
increases and interests. Company considers the decision unfounded and appeals
against it by leaving the claim to the Board of Adjustment.

MATTERS AFTER THE REVIEW PERIOD

18. Nokian Tyres participating in UN Global Compact initiative

On 11 January 2016 Nokian Tyres announced that it has signed the United Nations'
Global Compact initiative and is registered as a supporting member of the
initiative as of December 23, 2015. Signing the initiative further strengthens
the Group's commitment to profitable business and responsible methods.
19. Nokian Tyres: Disclosure under chapter 9, section 10 of the securities
market act
Nokian Tyres has received announcements from BlackRock, Inc. on 11 January 2016,
on 15 January 2016 and 22 January 2016, according to which the holdings of the
mutual funds managed by BlackRock exceeded level of 5% of the share capital in
Nokian Tyres plc, as a result of a share transactions concluded on 8 January
2016, on 14 January 2016 and on 21 January 2016.
Nokian Tyres has received announcements from BlackRock, Inc. on 14 January 2016,
on 21 January 2016 and on 25 January 2016, according to which the holdings of
the mutual funds managed by BlackRock fell below level of 5% of the share
capital in Nokian Tyres plc, as a result of share transactions concluded on 13
January 2016, on 20 January 2016 and on 22 January 2016.
More detailed information on flaggings can be found at
http://www.nokiantyres.com/company/investors/share/flagging
-notifications/ (http://www.nokiantyres.com/company/investors/share/flagging
-notifications/).

20. Changes in operational structure and management team

On 20 January 2016 Nokian Tyres announced that it is going to change its
operational structure and responsibilities in the management team to strengthen
the Company's further expansion, and to improve the distribution and the
development and harmonization of processes.

Nokian Tyres’ Management team as of 1 April 2016
Ari Lehtoranta, President and CEO
Alexej von Bagh, Process Development
Esa Eronen, Supply Operations
Teppo Huovila, Quality, Sustainability and ICT
Anna Hyvönen, Vianor and Partner Distribution
Anne Leskelä, Finance & IR
Ville Nurmi, Human Resources
Andrei Pantioukhov, Executive Vice President, General Manager of Russian
Operations
Juha Pirhonen, Research and Development
Manu Salmi, Heavy Tyres
Pontus Stenberg, Sales
Antti-Jussi Tähtinen, Marketing and Communications

RISKS, UNCERTAINTY AND DISPUTES IN THE NEAR FUTURE

Growth in Russia is expected to be negative with full year 2016 GDP decline in
the range 0.3…3% due to the low oil price, high interest rates, slow
investments, and sanctions followed the Ukraine crisis. An escalation of the
Ukraine crisis could cause serious disruption, additional trade barriers and a
further slowdown of economic development in Russia, CIS and Finland. All in all
the uncertainties may weaken future demand for tyres and increase credit risk.

The company’s receivables remained at the previous year’s level. Tyre
inventories are on the planned level. The company follows the development of NWC
very closely. At the end of the review period Russian trade receivables
accounted for 31% (33%) of the Group’s total trade receivables.

Around 40% of the Group’s net sales in 2016 are estimated to be generated from
Euro-denominated sales. The most important sales currencies in addition to the
euro are the Russian ruble, the Swedish and Norwegian krona, and the US and
Canadian dollar.

Nokian Tyres’ other risks and uncertainty factors relate to the challenging
pricing environment for tyres. If raw material prices rise, maintaining
profitability depends on the company’s ability to raise tyre prices in line with
increasing raw material costs.

More detailed information relating to risks can be found at
http://www.nokiantyres.com/annual-reports, Financial review 2014, pages 40-45
and 63-64.

Tax disputes

Nokian Tyres Group has pending disputes with the Finnish Tax Administration that
are described in the section “Tax rate” earlier in this report.

OUTLOOK FOR 2016

In 2016 market demand for replacement car tyres is expected to show growth in
Central Europe, North America and the Nordic countries. In Russia and CIS the
overall uncertainty will decrease tyre demand in 2016.

The company’s replacement tyre market position (sell-in) is expected to improve
in 2016 in all key markets. In Russia the company expects to retain its market
leader position in the A + B segments.

Raw material cost is estimated to decrease around 5% in 2016 versus 2015. The
pricing environment for 2016 remains tight for all tyre categories.

Nokian Tyres continues to have competitive advantages from having manufacturing
inside Russia. About 67% of the Russian production was exported in 2015 and the
margin between production costs in rubles and export sales in euros has improved
along with the ruble devaluation. If there is an upturn in demand, Nokian Tyres’
car tyre production capacity in Russia offers an inbuilt capability to increase
output rapidly without capex, to meet market growth.

Demand in Nokian Heavy Tyres’ core products is estimated to remain healthy.
Nokian Heavy Tyres’ delivery capability has improved, therefore the sales and
EBIT are expected to remain on a good level in 2016.

Vianor (equity-owned) is expected to increase sales, to develop the service
business further and to show a positive operating result in full year 2016.
Vianor (partners) and other Nokian Tyres’ partner networks, like Nokian Tyres
Authorized Dealers (NAD) and N-Tyre network, will continue expanding.

Nokian Tyres’ estimate for total investments in 2016 is EUR 130 million (102).

The competitiveness of the Nokian Tyres product offering is very strong. A
strong position in the core markets, investments in growth markets, an expanding
distribution channel, and an improved cost structure combined with competitive
products give Nokian Tyres opportunities to strengthen its position and to
provide healthy margins and a strong cash flow also in 2016.

Financial guidance
In 2016, with current exchange rates, net sales and operating profit are to
remain at the same level compared to 2015.

The proposal for the use of profits by the Board of Directors

The distributable funds in the Parent company total EUR 575.6 million.

The Board of Directors proposes to the Annual General Meeting that the
distributable funds be used as follows:

A dividend of 1.50 EUR/share
be paid out, totaling EUR 202.0 million
retained in equity EUR 373.6 million
Total EUR 575.6 million

No material changes have taken place in the financial position of the company
since the end of the financial year. The liquidity of the company is good, and
the proposed distribution of profits does not compromise the financial standing
of the company, as perceived by the Board of Directors.

Nokia, 5 February 2016

Nokian Tyres plc

Board of Directors

***

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

Please read the whole report from http://www.nokiantyres.com/company/investors/
or from the annex.

Nokian Tyres plc

Antti-Jussi Tähtinen, Vice President, Marketing and Communications

Further information: Mr. Ari Lehtoranta, President and CEO, tel: +358 10 401
7733

Distribution: Nasdaq Helsinki, media, www.nokiantyres.com

*****

Annual General Meeting 2016

The Annual General Meeting of Nokian Tyres plc will be held on 12 April 2016.
The Annual Report, including the company’s annual accounts, the Report of the
Board of Directors and the Auditors Report is available on the company’s website
no later than week 12, 2016. Read more at
www.nokiantyres.com/annualgeneralmeeting2016

*****

Nokian Tyres Financial Statement Bulletin 2015 was published on 5 February, 2016
at 8.00 a.m. Finnish time.

The result presentation for analysts and media will be held in Hotel Kämp in
Helsinki at 10.00 a.m. Finnish time. The presentation can be listened through
audiocast via internet at
(http://www.nokiantyres.com/Resultinfo2007) www.nokiantyres.com/resultinfo-Q4
-2015

To be able to ask questions during the event you can participate in the
conference call. Please dial in 5-10 minutes before the beginning of the event:

FI: +358 9 8171 0495
UK: +44 20 3194 0552
US: +1 8557161597

Stock exchange release and presentation material will be available before the
event from http://www.nokiantyres.com/ir-calendar

After the event the audio recording can be downloaded from the same page.

Nokian Tyres Interim Report 1-3/2016 will be published on 4 May, 2016.

Releases and company information will be found from http://www.nokiantyres.com
Nokian Tyres is the only tyre manufacturer in the world that focuses on customer
needs in northern conditions. The company supplies innovative tyres for cars,
trucks and special heavy machinery mainly in areas with special challenges on
tyre performance: snow, forests and harsh driving conditions in different
seasons. Nokian Tyres’ product development is consistently aiming for
sustainable solutions for safety and the environment, taking into account the
whole life cycle of the tyre. A part of the Nokian Tyres group, the tyre chain
Vianor has over 1,400 outlets in 26 countries. In 2015 Nokian Tyres had over
4,200 employees and net sales of approximately 1,4 billion euros. Nokian Tyres’
share is listed on the Nasdaq Helsinki. Further information: www.nokiantyres.com

Nokian Tyres plc Financial Statement Bulletin 2015: Success in Europe boosted sales. Strong profitability in Q4. Outlook for 2016 cautious.

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