Review by the President and CEO
Hille Korhonen, President and CEO (Half Year Financial Report January–June 2017):
“In H1/2017 Nokian Tyres demonstrated strong performance in all of its main markets. Our net sales and operating profit improved.
The Passenger Car Tyres business unit showed strong growth during H1/2017. Net sales and operating profit increased clearly year-over-year, and we were able to increase our market shares in our main markets. The growth was driven by Russia due to its stronger currency, price increases and low carry-over stocks from 2016. The growth in Russia will be moderate in H2/2017, as H2/2016 was already strong. We have been responding to the growing demand by increasing the production volumes at both factories and by building a new production line at the Russian factory. The new production line will be taken into use by the end of the year. Raw material costs continued to go up during H1. We estimate, that raw material costs will increase by approximately 20% for the full year 2017 compared with 2016. We have already implemented the necessary price increases in all markets, and the full effect of these increases will be seen from H2 onwards due to the seasonality of Nokian Tyres’ business model. We have been building the foundation for future growth by renewing our product range with new winter tyre range: the Nokian Hakkapeliitta 9 and Nokian Hakkapeliitta 9 SUV, along with Nokian Nordman 7 and Nokian Nordman 7 SUV.
Heavy Tyres increased its sales and production volume especially in the forestry business. We have been investing in production technology, people and marketing activities in order to support further growth. Heavy Tyres has announced several new products, including the Nokian E-Truck series of all-season truck and bus tyres and Nokian HTS G2 – the second generation of terminal tyres.
Vianor’s (own equity) sales were impacted by the atypical spring season, and its profitability was affected by non-recurring expenses. However, a profitability improvement program is proceeding according to plan. Our branded distribution network, including Vianor, NAD, and N-Tyre stores, grew by 145 stores during H1/2017.
In May, we announced an investment in a new greenfield factory in Dayton, Tennessee, USA. This factory will enable us to further enhance our position in the North American market with a wider product range and better customer service.
Our personnel have been doing a great job everywhere. As the company’s new President and CEO, I am very proud of all of them. A strong position in our core markets, investments in growth markets, a strong distribution network, competitive products, and the whole organization delivering excellent results provide us a solid foundation for future growth. We have returned to a growth track and intend to stay on this track also in the future.”