Nokian profit up 82% in 2011
Despite the biting chill of the Finnish winter, the team at Nokian Tyres has surely been warmed by the company’s performance results for the 2011 financial year, which were released on 8 February. During the twelve month period group net sales rose 37.7 per cent to 1.46 billion euros and operating profit increased 71.1 per cent to 380.1 million euros. Better still, the all-important bottom line shot up 82.0 per cent, with profit for the year to 31 December 2011 amounting to 308.9 million euros.
“The year 2011 was a success story for Nokian Tyres as sales, margin and production output all improved. Our growth strategy paid off generously in conditions of strong demand,” stated Nokian Tyres president and chief executive officer Kim Gran. “The fourth quarter sales and results came in as planned with some modification in sales mix due to a black start for the winter season. Sales in 2011 were up significantly in all our key markets and we continue to win market share, especially in Russia and Central Europe.” Gran added that growth and average selling price was fuelled by the launch of Nokian’s WR D3 winter range, which is aimed at the Central European market, plus strong sales growth for its Nordic and Russian Hakkapeliitta winter tyre range.
“Production output (in tonnes) grew by 47 per cent year-over-year, [with] both factories (in Nokia, Finland and Vsevolozhsk, Russia) improving output and productivity,” Gran continued. “Weekly output was increased from 250 to 360 thousand tyres per week during the year by the start of new production lines in Russia. The ramp-up continues by building a new state-of-the-art factory in Russia with start of production during summer 2012.” The company’s Vianor retail chain also continued to grow last year; Gran reported the addition of 139 new stores to the network last year: “The chain now totals 910 stores in 23 countries with 491 stores in 287 Russian/CIS cities.”
Passenger car tyres
Net sales of Nokian’s passenger car tyres amounted to 1.07 billion euros in 2011, a year-on-year growth of 49.1 per cent, while operating profit increased 77.6 per cent to 365.1 million euros. Growth of note took place in Russia, where sales rose 43 per cent, and amongst product groups the sale of 4×4 winter tyres showed the largest growth. As a proportion of sales mix, winter tyres increased to 77 per cent of total volumes. Nokian says the passenger car tyre order book for 2012 is strong and inventories are low. Construction of a new passenger car tyre plant and warehouse next to the current ones in Russia is proceeding to schedule and the plant’s first two production lines will enter service this year. Capacity will be further increased with two additional new lines in 2013-2014.
Heavy tyre sales rose 39.2 per cent to 112.8 million euros and operating profit increased 25.7 per cent to 17.2 million euros. Nokian reports that demand for heavy tyres was strong in 2011, although forestry tyre demand showed signs of decreasing in the final quarter. In total the Nokian Heavy Tyres order book improved during the first to the third quarters, trailing increased activity in machine building and a stronger replacement market. Nokian experienced a notable improvement in sales in all product groups, especially in forestry, mining and radial tyres. A marked improvement in sales was also witnessed in Russia.
Despite network growth, the equity-owned operations of Vianor retail chain delivered lower sales and operating profit in 2011. Net sales in the 179 equity-owned stores (a further 731 Vianor outlets are franchise operations) decreased 3.1 per cent to 298.4 million euros, while operating profit dropped 42.5 per cent to 2.3 million euros. Nokian says the strongest sales growth was achieved in service and truck tyre sales, and Finland was the most profitable among Vianor’s national organisations. Nokian intends to further expand the franchise network during 2012 and aims to have more than 1,000 Vianor stores in operation by the end of the year.
Nokian anticipates an even better year in 2012 and forecasts improved net sales and operating profit. The Finnish tyre maker says the demand and order book for Nokian car tyres has remained strong in all its core markets, although demand for heavy tyres has leveled off and is expected to be softer in 2012. “Our sails continue to bulge with tailwind and we enter 2012 stronger than ever,” Gran shared. “Despite uncertainties in Europe our core markets in Northern Europe and Russia & CIS offer continued growth potential and we see no other target than to improve sales and results also in 2012.”