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Profitable growth benefits everyone

We seek growth and strong profitability for our business. Our strategic goal is to grow faster than the market. Through financial success and profitability, we are able to offer security, work and well-being for our personnel, while also considering the investors, customers and other stakeholders.

We reached our goals for 2017: we are back on track to growth and increased our turnover in terms of Passenger Car Tyres, Heavy Tyres and the Vianor chain. Furthermore, we saw a positive trend for the third consecutive year in our Drive! personnel survey. We experienced no permanent or temporary layoffs in our production during 2017. However, due to the challenging year, temporary layoffs were required at Vianor.

Our goals for 2018 include maintaining the industry’s best operating profit level (22% at a minimum), aiming for organisational efficiency and growing sales faster than our overhead costs. The goals are set until the end of 2018, and we will review their progress during the year 2018.

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

Continuous improvement in all areas

For us, it is important to improve our products and maintain our position as a leading manufacturer of premium tyres. 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 our company’s reputation and drive 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 while following the market developments.

 

The new factory supports our goal of doubling our North American sales within five years

The new factory supports our goal of doubling our North American sales within five yearsIn May 2017, we announced that we are building a factory in Dayton, Tennessee, which will be our third factory. This important investment decision follows our growth strategy. North America is one of our key growth areas in addition to Central Europe. Our investment will support our sales in North America and Canada, enable us to serve our customers better and yield savings, among others, with customs duties and logistics costs. We are currently making between 600 and 700 different products for the North American market. Moving the production of these tyres to the upcoming Dayton, TN factory will boost our factories’ productivity and efficiency and simplify our production, thereby enabling us to grow our production capacity.

This will be our first North American production facility, with a production capacity of 4 million tyres per year. It will be possible to expand the factory at a later time. We will also build a logistics centre in the area with a storage capacity of 600,000 tyres. The construction is scheduled to start in early 2018, and we expect tyre production to start in 2020.

The new factory in a nutshell

Key figures, IFRS

Key figures, IFRS
EUR million 2017 2016 change %
Net sales 1,572.5 1,391.2 13.0
Operating profit 365.4 310.5 17.7
% net sales 23.2 22.3
Profit before tax 332.4 298.7 11.3
% of net sales 21.1 21.5
Return on capital employed (ROI), % 22.4 19.9
Return on equity (ROE), % 15.1 18.7
Interest bearing net debt -208.3 -287.4 27.5
% of net sales -13.2 -20.7
Net cash flow from operating activities 234.1 364.4 -35.6
Gross investments 134.9 105.6 27.8
% of net sales 8.6 7.6 1.0
Earnings/share, EUR 1.63 1.87 -13.0
Shareholders equity per share, EUR 10.74 10.75 -0.1
Equity ratio, % 78.2 73.8
Taxes, EUR 111.0 46.9
Wages, fees, social security contributions 215.2 197.6
Personnel, average during the year 4,630 4,433

Impact on society and communities

Nokian Tyres contributes to society and communities through the payment of salaries and taxes. We directly employ more than 4,600 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 Nokian Tyres’ economic footprint in terms of its stakeholders.

Partnerships and sponsoring

We locally assist and support organisations and events that suit our company culture and brand. We continuously work with various organisations in places where we employ people.

We are one of the major employers in Nokia and have built housing for our personnel in Russia. The taxes that we pay support the well-being of people in several countries, and we are actively involved in making road traffic safer. Many small actions – from our dialogue with our neighbourhood and work with educational institutions to minor contributions for local sports clubs – have an effect on individuals and communities.

In 2017, we continued our long-term partnership with the International Orienteering Federation. Our agreement with the International Orienteering Federation provides us with high visibility during the annual World Orienteering Championships and World Cup events.

In 2017, we became the main partner and title sponsor for the first IRONMAN triathlon race to take place in Finland. The first Nokian Tyres IRONMAN 70.3 Finland event will be organised in Lahti, Finland on 30 June 2018. The high-energy sport matches our values that promote mobility and an active lifestyle while supporting the company’s brand visibility in Finland as well as internationally.  

Succeeding under exceptionally demanding conditions through cleverness and relentlessness is also something found in the Swamp Soccer World Championships, which take place in Hyrynsalmi, Finland annually. We have been the main sponsor of the championships for more than 10 years. Furthermore, we have been one of the main sponsors of the youth road safety campaign “Turvassa tiellä”.

As a registered participant in the UN Global Compact Initiative, we annually support the initiative and its efforts to promote corporate sustainability. Learn more about the topic.

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