Improving market position
– aiming for growth

Dear Reader,

Nokian Tyres’ strong market leader position in Russia and Nordic countries improved further in 2013 and we managed again to increase both market share and our distribution footprint. Despite the headwind from the markets in 2013 we maintained a reasonably good level of profitability and provided strong cash flow. The company is debt free with a strong balance sheet, which gives us a good platform to create further growth and improve owner value.

Even though the global economy has showed signs of improvement since late 2013, consumer confidence and spending were still modest in full year, reflecting the uncertainty and slow growth. The economies in the Nordic countries were relatively stable, whereas in Russia the usually higher growth rate dropped to 1.3%. During the summer 2013 the European economy turned to growth after 18 months of recession.

Nokian Tyres’ sales in the Nordic countries were again solid, and our already strong market position was further improved by clear growth especially in Sweden. Our market winter tyre share in the Nordic region improved to an all-time high. Our sales growth in Russia took a breath, even though we managed again to grow winter tyre sales clearly in a weaker market. One of our highlights was a clear improvement in our CE sales. The expansion of our distribution network in CE is starting to pay dividends with sales volumes increasing faster than the average market demand. We showed clear growth in Germany, Poland and France.

We achieved reasonably good financial results in 2013. Our sales mix was strong securing an almost flat ASP in a challenging market. Our margins were good while the result was being pulled in two directions: a strong tailwind from material cost was challenged by the unfavourable exchange rate of the Russian Rouble and a tough pricing environment. 

A reasonable utilization rate and an increased share of Russian production compensated for the increased depreciation and marketing costs. However, our net profit was hit hard by additional taxes of EUR 100.3 million in Finland. We strongly disagree with the tax decision, which we consider to be in conflict with legislation and tax agreements. We will appeal against this decision in all instances necessary, and trust that the decision will be revised.

Equipped for success

We are looking into the future with confidence, as our market geography is showing signs of improving demand. Growth is still slow in Russia and the Nordic countries, but both Central Europe and North America are expected to improve clearly. 

We continue to thrive as the leading winter tyre manufacturer. A major overhaul of key winter product offering, altogether five new product ranges, was done in 2013. The biggest launch ever included the new generation of studded Nokian Hakkapeliitta 8 and non-studded Hakkapeliitta R2 targeting further growth in core markets. Nokian Tyres also introduced two new winter tyres for the Central European and North American markets. The new Nokian Hakkapeliitta 8 has dominated the winter tyre tests with victories in practically all car magazines. Also the Central European winter tyre test results have been a success for Nokian Tyres with test wins in key markets. The new summer tyre range also won several car magazines’ tests in the core markets and in Central Europe. All in all, our product offering at the moment is the best we have ever had. I expect this to materialize in our sales and market shares already in 2014.

Strong distribution is one of our key competences. Expanding our distribution network continued in 2013 as we opened 169 new Vianor stores, now totalling 1,206 stores in 27 countries. In Russia Nokian dealership programs now include nearly 3,300 tyre stores and car dealers. A new softer partner franchise model called Nokian Tyres Authorized Dealer (NAD) has also been rolled out with 432 shops contracted in Europe and China. Our objective is to continue to expand our distribution, and to open 140 new Vianors and double the amount of NADs in 2014.

We continued to develop and improve productivity and our industrial structure in 2013. We commissioned two new lines (12 and 13) in the new Russian factory, which took the annualized capacity in Russia to more than 15 million tyres. We have an inbuilt capability to increase our output rapidly without big investments to meet market growth.

In conclusion, I would like to thank our customers, personnel and other stakeholders for the past year. Our achievements did not come easy, but co-operation in true Hakkapeliitta spirit was our key driving force. We are committed to make the future years an addition to our success story.

Kim gran allekirjoitus 
Kim Gran