Time to deliver – Nokian Tyres aiming for 7% annual growth
Finland’s Nokian Tyres says that its large investment phase is now over and, following revisions to the company’s mid-term strategy, the goal is now to “fully benefit” from these investments. The company aims for organic growth ahead of the market and increasing market share in all key regions, with a target to achieve net sales of 2 billion euros in the mid-term.
At the same time, Nokian Tyres aims to achieve 20 per cent segments operating profit and segments return on capital employed. The dividends target is to pay above 50 per cent of net earnings.
Explaining how Nokian Tyres expects to achieve this level of organic growth, president and chief executive officer Jukka Moisio notes that a number of factors will come into play: “One is that we have completed our large investment phase. Many of the programmes and investments that we’ve undertaken in the past years are ready, and now we need to make sure we fully benefit from these investments. It’s time to deliver.”
Moisio reports that Nokian Tyres’ sales in the 12 months to the end of June 2021 were approximately 1.52 billion euros. The company’s goal, he adds, is to grow at an annual rate of around seven per cent, higher than the global replacement tyre market’s projected annual growth rate of five per cent during 2020 to 2024. This above average growth should be helped by the record number of new products that Nokian Tyres launched in 2020-21 as well as those still to come; the tyre maker states it will “continue to accelerate innovation” and anticipates that this expanding product offering, together with improving commercial capabilities, will drive top-line growth.
Higher volumes and greater operational efficiency should result in improved profitability, and the tyre maker intends to collaborate more closely with customers to reinforce the Nokian brand.
Safer, smarter, sustainable driving
Nokian Tyres has also defined its purpose: “We empower the world to drive smarter. The company has for decades safeguarded people’s lives and is committed to continuing this effort through even safer, smarter and more sustainable driving.”
Moisio adds that Nokian Tyres has “the spirit to achieve beyond expectations” and is “very strong” in delivering those results: “Our team is ready to make us grow faster than the market.”
Growth by business unit
Nordics and Vianor: strengthen leadership position
Russia: strengthen leadership position
Central Europe: Approximately 50 per cent growth in sales, from circa 6 million to 9 million tyres
North America: Approximately 100 per cent growth in sales, from circa 2 million to 4 million tyres
Heavy Tyres: Approximately 50 per cent growth in sales, from 200 million to 300 million euros.
We are now able to deliver
“All the investment programmes mean that we are now able to deliver the volumes this growth requires,” comments Moisio. “Heavy Tyres’ expansion will be completed by the end of 2023. We have added shifts in Dayton, US, and in Nokia, Finland, so that we are boosting production as we speak.”
Nokian Tyres has capacity to produce 17 million tyres a year in Russia; it describes its plant in Vsevolozhsk as “one of the most efficient tyre manufacturing units in the world.” The company’s combined capacity for car tyres will reach 26 million units per annum by 2024, and heavy tyre capacity around 32,000 tonnes by the end of 2023. Nokian expresses confidence that these capacities will allow it to achieve a revenue plan of two billion euros.
Nokian Tyres shared details of its growth plans at the company’s recent Capital Markets Day.