Profitable growth benefits everyone

Financial success and our ability to create value for our stakeholders lay the foundation for our financial responsibility. Our business must be profitable so that we are able to offer security, work and well-being for our personnel as well as consider our investors, customers and other stakeholders.

We seek growth and strong profitability for our business. Our strategic goal is to grow faster than the market and be the world’s most profitable tyre company. We intend to maintain the best operating profit level in the industry, at 22 per cent at a minimum. Furthermore, our strategy sets a target of an efficient organisation whose sales grow faster than the fixed costs. In 2016, we performed well in the rather challenging market environment.

Profitable business not only benefits our stakeholders in various ways, it also enables us to further improve our business. Financial success also makes our own business even more interesting and varied overall.

Continuous improvement in all areas

Improving our products and maintaining our position as a leading manufacturer of premium tyres are important for us. We focus our production on core products with good margins and make consistent investments in improving quality, productivity and logistics. Our strong expertise in the northern conditions has enabled us to grow our product range and extend our sales to new areas. Consumer recommendations strengthen the reputation of our company, thereby driving our sales.

In addition to product development, we prioritise the continuous improvement of our business models and processes. The management and functionality of the distribution chain are basic requirements for growing our sales and for receiving a good return on investment. Profitable growth requires that we continuously increase our capacity. We, therefore, invest in new production capacity according to our growth targets and the development of the market. Better productivity supports profitability, which enables higher salaries or dividends for our stakeholders, for example. As a responsible company, we are also an attractive option for investors who take into account sustainability when making investments.

Key figures, IFRS

Key figures, IFRS
EUR million 2016 2015 change %
Net sales 1,391.2 1,360.1 2.3
Operating profit 310.5 296.0 4.9
% net sales 22.3 21.8
Profit before tax 298.7 274.2 8.9
% of net sales 21.5 20.2
Return on capital employed (ROI), % 19.9 20.3
Return on equity (ROE), % 18.7 19.6
Interest bearing net debt -287.4 -209.7 -37.1
% of net sales -20.7 -15.4
Net cash flow from operating activities 364.4 283.4 28.6
Gross investments 105.6 101.7 3.8
% of net sales 7.6 7.5
Earnings/share, EUR 1.87 1.80 3.6
Shareholders equity per share, EUR 10.75 9.24 16.4
Equity ratio, % 73.8 70.8
Taxes, EUR 46.9 33.5
Wages, fees, social security contributions 197.6 195.5
Personnel, average during the year 4,433 4,421

Impact on society and communities

Nokian Tyres contributes to society and communities through the payment of salaries and taxes. We directly employ more than 4,400 people around the world. When we also consider all of our subcontractors, our role as a job creator becomes even more significant. Our tyre factories are significant employers. The salaries and taxes that we pay support the structures of society and improve the quality of life for thousands of people.

Nokian Tyres and the cash flow between stakeholders

A good financial result has extensive effects on our stakeholders. The following graph shows the Nokian Tyres’ economic footprint in terms of its stakeholders.

Partnerships and sponsoring

We continuously work with various organisations in the localities where we employ people. We affect our local communities in many ways: In Nokia, we are one of the major employers. In Russia, we have built housing for our personnel. We annually sponsor the Finnish war veterans’ celebrations. The taxes that we pay support the well-being of people in many countries. We are also actively involved in making road traffic safer. Many small actions – such as our dialogue with our neighbourhood, work with educational institutions and minor contributions for local sports clubs – have an effect on individuals and communities.

Similarly to previous years, our work with schools in 2016 included thesis collaboration and company visits, for example. We offer a range of thesis assignments and trainee positions in fields from product development to production. We also participate in various student projects and events.

In 2016, we engaged in international marketing collaboration with the International Orienteering Federation and the organisation behind the Tough Mudder events. Our agreement with the International Orienteering Federation provides us with high visibility during the annual World Orienteering Championships and World Cup events. Focused on Central Europe, our partnership with Tough Mudder supported the image that our specially reinforced SUV tyres deserve and provided us with visibility throughout Europe.

Tough Mudder organises obstacle races that put strength, endurance, teamwork and mental grit to the test. The Nokian Tyres’ brand and Tough Mudder both demonstrate the same mentality: succeeding under exceptionally demanding conditions through intelligence and relentlessness. These elements can also be found in the annual Swamp Soccer World Championships in Hyrynsalmi, Finland. We have been the main sponsor for the championships for nearly 10 years.

We signed a partnership agreement with two-time F1 champion Mika Häkkinen in 2016, which will promote the Nokian Tyres brand as well as our collaboration projects for better road safety. Mika Häkkinen and Nokian Tyres share the values of mental grit, relentlessness and professional expertise, which we will also emphasise from a safety perspective.

Furthermore, we have been one of the main sponsors of the youth road safety campaign “Turvassa tiellä” and the “Rosvopaisti” meal events for Finnish war veterans. We have also offered minor contributions to local activity clubs and organisations that focus on substance abuse prevention.

New tyres help Russian families with children get around more safelyUudet renkaat lisäävät lapsiperheiden turvallista liikkumista Venäjällä

In 2016, the Leningrad Oblast decided to support families with more than seven children by donating 40 multi-purpose vehicles to them. The Russian organisation of Nokian Tyres decided to participate in the initiative by donating safe and eco-friendly tyres for the MPVs. In celebration of the 80th anniversary of the Nokian Hakkapeliitta, each family got to choose between the Nokian Hakkapeliitta C3 winter tyres or Nokian Hakka C2 summer tyres. With this gesture, we want to help the families stay safe on the road.

 

This page is included in KPMG’s assurance scope. Assurance report can be found here.