Annual Report 2014 Content Highlights of the year Letter from the President and CEO Nokian Tyres in 2014 and Key Figures Strategy Corporate Responsibility Personnel Business Environment Market areas Nokian Passenger Car Tyres R&D and testing New products and innovations Forerunner already for 80 years Production Marketing Customers Sales and distribution Vianor Nokian Heavy Tyres Management Board of Directors Key figures Consolidated Income Statement 3 4 6 7 11 13 14 16 18 20 23 30 32 33 34 35 36 38 40 41 42 43 Consolidated Statement of Financial Position 44 Consolidated Cash Flow Statement Investor information 45 46 Drive safely! Our unique expertise creates the safest and best products and services for the everyday life. As a pioneer in the tyre industry, we want to be the best in everything we do! Highlights of the year Market leader in the Nordic countries and Russia Nokian Tyres is the only tyre manufacturer in riences and independent test results, strong the world focusing on products and services that distribution network, and good logistics facilitate safe transport in Nordic conditions. Its competence. innovative tyres for passenger cars, trucks, and We mainly sell our products in the after- heavy machinery are mainly marketed in areas market. Our group includes the Vianor tyre that are home to snow, forest, and demanding retail chain, which offers wholesale and retail driving conditions due to changing seasons. services in Nokian Tyres’ primary markets. The company develops its products with an Nokian Tyres has factories in Finland and emphasis on sustainable safety and eco-friend- Russia. In 2005–2014, we invested more than liness throughout the products’ life cycle. €1 billion in our factories, whose producti- Nokian Hakkapeliitta is the leading winter vity and product quality are by far the best tyre brand in the Nordic countries and Russia. in the industry. Nokian Tyres’ position as the market and In 2014, the company’s revenue was appro- price leader stems from the company’s key ximately EUR 1,4 billion, and it employed competitive advantages: a solid reputation 4,200 people at the end of the year. Nokian for quality formed by decades of user expe- Tyres’ stock is listed on the NASDAQ Helsinki. Highlights of the year 30% The new Nokian Hakkapeliitta R2 model for electric cars has the world’s lowest rolling resis- tance for a winter tyre – up to 30% lower than its competitors. 93% 50+ 490 new test wins stores 93% of users who posted a product review would recommend Nokian tyres to others. Nokian car tyres scored more than 50 test wins in the Nordic countries, Russia, and Central Europe Our NAD network and the new N-Tyre chain grew by a total of 490 stores. 3 NOKIAN TYRES PLC 2014 Letter from CEO The difficult financial situation in Russia impacted us We will return to growth through our strengthened product portfolio and extended distribution network Dear reader, Our activities last year were considerably affected by the financial situation in Russia. The weakened economy, a strong decline in oil prices, and the swift devaluation of the ruble led to a change in buyer behavior and a substantial decline in sales in Russia and the rest of the CIS. The financial uncertainty in the world is resuming; in addition to Russia, especially in Europe. The US is one of the few drivers of global growth, while China is seeking new ways to grow. Overall, Asia continues to retain substantial growth potential. Despite the weak market, we strengthened our market leader- ship in Russia. The delivery volumes remained nearly at the previous year’s level. However, the decline in the euro value of sales was substantial. We were able to compensate this by improving our market position in Central Europe and especially in North America. The Central European market was negatively affected by the record- breaking winter temperatures. In the Nordic countries, our year was once again successful. 4 NOKIAN TYRES PLC 2014 Letter from CEO The average price of our products fell due to changes in the Our products dominated the winter tyre tests in the automotive The Vianor stores owned by our group achieved nearly EUR value of a number of currencies and the development of the media, securing nearly all of the most important test wins in the 315 million in revenue and turned a profit. Gradually, we will be sales mix in Russia and the CIS. On the other hand, the devalu- Nordic countries and Russia. Additionally, I want to emphasize the increasing the share of car service in our activities, which will allow ation of the ruble helped us in terms of costs, as did the signifi- Central European winter tyre tests; success in these tests paves the us to even out the workload over the year. Excellent customer service cant decrease in the prices of raw materials. However, the latter way for increasing our awareness and sales in these markets. Our combined with professional skill will support our growth and profit- made pricing globally more challenging, and was one factor that new summer tyre range also increasingly scored test wins in our ability improvement into the future. pulled our Average Selling Price downwards. In total, our produc- core markets and in Central Europe in the spring of 2014. The heavy tyres market, which is very important to us, had a tion remained at the previous year’s level and the productivity of In September 2014, Nokian Tyres introduced five new SUV summer positive year. Especially the forest segment grew, and we were able our factories continued to increase. tyres and renewed its van tyre range. In December, we launched a to strengthen our position. The winter tyre legislation is improving Our profits fell, but we still remained profitable and produced winter tyre for electric cars, the world’s first with an A class rolling and it now covers heavy traffic in many of our target countries. In strong cash flow. The company has no net liabilities and it has a resistance rating. The private and professional users of our products Finland and Russia, however, the legislators still have some work to strong balance. The quality of our activities is at a good level, and are enjoying safer driving than ever before. At the same time, their do. The revenue and profitability of our heavy tyres business unit I know we can continue to improve our market positions in 2015. driving comfort is at a high level and less energy is being consumed. improved commendably during the second half of the year, since Looking forward, stronger than ever Our product range is now better than ever. This year, this will be seen we were able to start utilizing our new machine investments and in our customer satisfaction, sales, and market shares. increase our production volumes. We continued expanding our distribution network in 2014 by Capacity increases were not required for passenger car tyres, which opening 149 new Vianor outlets; the total number grew to 1,355 allowed us to keep investments at a low level. This improved our cash establishments in 27 countries. In Russia, the Nokian Tyres’ distri- flow. We are also prepared to respond to market growth by quickly The challenges we have faced have only strengthened our deter- bution partner network consists of 3,600 tyre and vehicle dealer- increasing production without making large investments. mination to move forward. Our product range continues to receive ships. Our new and lighter partnership model, the Nokian Tyres In times of financial uncertainty, it is especially important to focus praise from the press and our customers, our distribution network Authorized Dealer (NAD) also grew; a total of 869 cooperation on the key issues: our customers and the further development of our continues to grow and our own organization further develops contracts have been signed in Europe and China. The number of personnel. I wish to thank all of our customers for their faith in us, every day. We believe in strong growth in North America and Vianor and NAD outlets will continue to grow in 2015. In Russia and and for the excitement that they have expressed toward our extended Central Europe, while strengthening our positions in the difficult Kazakhstan, we have launched the N-Tyre chain totaling 53 sales product range. I also want to thank our personnel for their excellent Russian and CIS markets and holding our strong position in the outlets. Strong distribution is one of our most important compet- efforts in this challenging environment. We will continue our work Nordic countries. itive advantages. in the Hakkapeliitta spirit and in very close cooperation with our customers. This, and the continuous improvement of our competence and activities, will ensure that our success story continues. Ari Lehtoranta 5 NOKIAN TYRES PLC 2014 Nokian Tyres in 2014 and Key figures The plunge of the ruble weakened revenue Positive development on the Western markets Nokian Tyres improved its market share in all the main markets. The company has the strongest brand, price position, and distribution in its core markets, the Nordic countries and Russia. The year 2014 The company’s car tyre sales volumes followed the 2013 level, Profitability decreased but remained on a fairly good level, with and the market share improved in all the main markets. In the operating profit percentage at 22.2%. A 16.5% decrease in raw Key figures, IFRS EUR million Net sales Operating profit % net sales Profit before tax % of net sale Return on capital employed (ROI), % Return on equity (ROE), % 2014 2013 change% 1,389.1 1,521.0 -8.7 308.7 385.5* -19.9 22.2 25.3 261.2 312.8 -16.5 18.8 19.2 16.0 20.6 21.8 13.0 Interest bearing net debt -164.6 -56.4 -191.9 % of net sales general, the Western markets are developing positively, and material costs provided a benefit of EUR 64 million compared to the Gross investments Nokian Tyres grew clearly in North America. In the East, the previous year. Margins were further supported by decreased fixed Russian and Ukrainian crisis, the strong decline in oil prices, costs and improved productivity. and the depreciation of local currencies in relation to the Nokian Tyres had a strong cash flow of EUR 458.3 million. The global currencies caused financial difficulties in Russia and company has a strong balance and it had no net liabilities at the end the CIS countries. The business environment was challenging, of the year. The dividend remained at €1.45 per share. % of net sales Net cash flow from operating activities Earnings/share, EUR and the revenue of Nokian Tyres decreased 8.7% as a result of Nokian Tyres made significant improvements to its product Cash flow per share (CFPS), EUR the devaluation of sales currencies, consumers’ shift towards offering by introducing five new SUV summer tyres and renewing its Shareholders equity per share, EUR cheaper segment B tyres in Russia, and price reductions due van tyre range. The company’s products had a record year in maga- to lower raw material costs. The currencies’ negative impact zine tests with more than 50 wins in summer and winter tyre tests on our revenue was nearly EUR 100 million. in the Nordic countries, Russia, and Central Europe. The high quality The business of Vianor and Heavy Tyres developed positively. of the company’s products is generally recognized, which supports Equity ratio, % Personnel, average during the year The company’s distribution network expanded as planned. the positive development of its price position. *) Incl. bad debt provision of 14.3 M€ -11.8 80.6 5.8 -0.9 125.6 -35.8 8.3 323.4 317.6 1.8 12.9 1.4 1.39 2.39 10.45 -13.1 67.6 1.56 2.43 9.07 67.5 4,272 4,194 6 NOKIAN TYRES PLC 2014 Strategy Hakkapeliitta Way – Road to success We exist, so that our customers could have the world’s safest and best-quality tyres. Our values are the basic foundations for all activities, and the focusing strategy provides a direction for the choices that we make. The values and strategy become the goals that we aim at, and that will continue to bring us international growth and success. We build success together by working hard and developing all our operations and products. 7 NOKIAN TYRES PLC 2014 Strategy Our strategic focus 1. Northern conditions 2. Narrow product segments We are the only tyre manufacturer in the world focusing on customer needs and products specific to northern conditions. We market our products in regions where there are snow, forests and demanding driving conditions caused by changing seasons. Our special expertise in northern conditions creates added value for our customers. We utilise our special competence in narrow product segments like passenger car winter tyres and forestry tyres. Our other main products include light truck and SUV tyres, winter tyres for trucks as well as harbour and mining machinery tyres. 3. Replacement markets 4. Efficient distribution All our Nokian-branded passenger car tyres and approximately 60% of our heavy tyres are sold in replace- ment markets through special tyre outlets, car dealers and other compa- nies engaged in the tyre trade. The Vianor chain is spearheading the growth of our company. Direct contact with the consumer gives us valuable information about the wishes and needs of end-users. Efficient distribution ensures successful season management as well as management of possible risks. We want the users of our products and services to be the most satisfied customers in the world. 8 NOKIAN TYRES PLC 2014 Strategy Key strategic objectives Our focusing strategy creates goals that enable our company to be the best in the industry. Number one in premium tyres in core markets The best processes • Our key processes and our business network are efficient and represent the cutting edge in the industry • We are the market leader in premium tyres in the • Our organization is lean and fixed costs grow slower than sales Nordic countries, Russia and other CIS countries • We uphold the principles of the responsible citizen • We are the forerunner in our core products and we in all of our activities have a globally strong position in niche segments Personnel satisfaction Customer satisfaction Shareholder satisfaction • Nokian Tyres is a respected and attractive employer • We know the end users of our tyres, their needs • We are the most profitable tyre manufacturer and • Our personnel are highly skilled and motivated and wishes. We offer our customers only the best tyre distributor in the industry with good share • Our personnel have the desire to continuously develop • We have the industry’s best services, the highest price development and dividend policy their personal skills and our company customer satisfaction and loyalty • We grow our company and profits through increasing sales, expanding distribution, strong pricing position and high productivity 9 NOKIAN TYRES PLC 2014 Strategy Values guide and support our strategy Our company culture is called ”Hakkapeliitta Spirit” which includes the following values: Entrepreneurship = Will to win We thirst for profit, we are quick and brave. We set ambitious objectives and perform our work with persistence and perseverance. We are dynamic and punctual, and we always make customer satisfaction our first priority. Team spirit = Will to fight We work in an atmosphere of genuine joy and action. We work as a team, relying on each other and supporting each other, offe- ring constructive feedback when needed. We embrace differences, and we also encourage our team members to individually pursue winning performances. Inventiveness = Will to survive We have the skill to survive and excel, even in the most challenging circumstances. Our competence is based on creativity and inquisi- tiveness, and the nerve to question the status quo. We are driven by a will to learn, develop and create something new. 10 NOKIAN TYRES PLC 2014 Sustainability Sustainability Present in our everyday work The cornerstones for our actions are the high quality, safety, and eco-friendliness of our products as well as the responsible development of our company in all areas of business. For us, responsibility means creating safe and eco-friendly products, using state-of-the-art processes, profitable growth of our company, and the well-being and safety of our personnel. In 2014, we further developed our Corporate Sustainability Report in accordance with the GRI (Global Reporting Initiative) guide- lines and published the renewed report on our website. Regular reporting further increases the transparency and openness of our operation, and offers a good channel to track our activities and the effects of our actions on the outside world. 11 NOKIAN TYRES PLC 2014 Sustainability Responsibility through value-based management Top quality is everyone’s business Safer work and a healthier environment EHSQ issues – such as quality management, environmental protec- We aim at managing the environmental impact of our products Throughout our company history, environmental and safety aspects tion, well-being at work, safety management, and protecting prop- throughout their life cycle and addressing the safety and quality have been at the core of our product development, manufacture, and erty – are managed at the group level in our company. We use aspects of our operations in a comprehensive and systematic marketing. We take care of our personnel, customers, the economy, managed, effective, and carefully monitored development, procure- manner. We strongly focus on the eco-friendliness of our products and environment while focusing on the safety and quality of our ment, and production processes for ensuring the high quality of our and processes. In line with the product life cycle approach, we pay products. In addition to adhering to the laws and regulations, we products. We all want to perform our duties as well as possible and attention to the environmental aspects all the way from raw mate- have tried to exceed the requirements set for our activities by contribute to the premium quality of our products and services. rial purchases to the utilization of used tyres. A good example of doing things better than required, and by simultaneously setting an example for the other companies in the tyre industry. We have grouped the areas of our responsibility under five cate- gories, which describe the main themes of managing and develo- ping responsibility in our company • Hakkapeliitta Way is the theme for the principles of responsi- bility that are seen throughout our operations. It is connected to our company’s strategic goals and vision. • World on Wheels comprises our work on product safety and quality as well as our impact on traffic safety and the future of the rubber industry via expert organizations. • Economy focuses on the economic impacts of our operations. • People form the community around us: our employees and subcontractors around the world. • Planet describes our environmental footprint. improving our operations is the incineration plant that we installed in our Nokia factory at the end of the year for processing VOC emissions. The incineration plant processes VOC emissions from the manufacture of heavy tyres and retreading materials, which significantly reduces emissions into the atmosphere. We promote both product and occupational safety through risk management, continuous improvement of our processes, and new investments. In 2014, we continued to successfully reduce the amount of occupational accidents: accident frequency decreased by 15% throughout the group compared to the previous year. We clearly communicate and discuss safety visibly, which has made our personnel more active, for example in reporting deviations at earlier stages. In the fall, the management carried out its first safety walk in our Nokia factory, making safety observations and talking to employees about attitudes toward safety. In the future, the management will carry out regular safety walks in our factories in Nokia and Vsevolozhsk. We will continue to develop our safety culture throughout the group in 2015. We build our company’s success in a responsible way together with our Read more about value- based management and what is important to us! http://bit.ly/17MjaRA In 2014, we continued our efforts to improve the quality of our more than 4,000 employees internationally. products and operations even further. For example, we improved the traceability of individual tyres from the raw materials used until when the tyres are shipped out. Our objective is to record all the information that there is about a tyre and its production stages Read more about our thereby improving quality assurance. We use different surveys to environmental and responsibility track and anticipate the needs of our customers, and we want to matters in our Corporate provide each one an excellent customer and user experience from Sustainability Report online! every aspect. http://bit.ly/1EmdBq3 12 NOKIAN TYRES PLC 2014 Personnel Good leadership improves well- being and gives a competitive edge Employee well-being, excellent performance and successful business require good leadership that is aimed at creating a result-oriented and posi- Working to improve activities and well-being tive working community. We at Nokian Tyres use The renewed personnel survey achieved a response systematic leadership to promote the competence rate of 80%, which also tells us that our staff wants development, well-being, and equal treatment of to actively participate in the development of our our committed, motivated, and professional staff. working community. The results indicate that During 2014, we clarified human resource commitment, leadership, and performance in our management and put more emphasis on supervisor company are at a higher level than in the other work and communication. The results from our Drive reference organizations. Our staff thought that the personnel survey acted as the basis for our devel- values and goals of our company are worth aiming opment work, and our goal is to achieve a working for, and that our corporate social responsibility issues community that is even more functional and safer are well managed. It is also important for business than before and that has a higher will to win. that our staff strongly believes in our products and For more information about our leadership, well-being, innova- tion activities, and other personnel issues, please see our online corpo- rate sustainability report. http://bit.ly/1EmdBq3 Read more about our unique Hakkapeliitta culture. http://bit.ly/1a3w4wm services and considers them to be of high quality. The results also show that they were willing to recommend our company as an employer. The internal inspection of communications processes and clarifying leadership were selected as areas for improvement. We want to take these actions in order to ensure that leadership and supervisor work are of high quality and suited to our needs. At the end of the year, we started a development project for leadership and supervisor work; it will define good leadership in our company at the level of principles and practical activities. Well-being in our company consists of four areas: the physical, mental, cognitive, and social. We firmly believe that by developing our leader- ship and activities, and by advancing the different issues, we can increase security, commitment, productivity, and well-being. The internal entre- preneurship, collaborative understanding, and activity among our personnel all serve to support competence development, profitable growth, and strategic implementation. In our company, everyone has an opportunity for further growth and personal development. 13 NOKIAN TYRES PLC 2014 Business Environment Business in the tyre industry The value of global tyre sales is nearly USD 190 billion. We have seen the strongest growth in the markets for winter tyres, summer tyres with a high speed rating, and SUV tyres. There is a statutory obligation to use winter tyres in the Nordic countries and, in recent years, similar regulations have spread to new geographical areas. 14 NOKIAN TYRES PLC 2014 Business Environment The key factors that affect the consumer sales of passenger car tyres are the sales volumes of new cars, development of purchasing power, and consumer confidence. Winter tyre sales are also affected by the weather conditions: the more wintery and slippery the conditions, the greater the need for new winter tyres. Tyre manufacturers’ sales to distributors are also affected by the distributors’ remaining tyre stock and the price of financing. The demand for heavy and truck tyres varies in cycles that follow the trends of machinery manufac- ture and businesses’ general investments. Tyre seasons are critical for succeeding in Nordic conditions One special characteristic of Nokian Tyres’ core market is that the sales of passenger car tyres are strongly built around two seasons. We sell most of our summer tyres to consumers a few weeks before and after Easter. Consumer sales of winter tyres peak between September and November depending on the weather conditions: we sell some 30% of our winter tyres in the first 10 days after the first snow- fall. Predicting sales and production several months in advance is a demanding task, as tyre manufac- turers typically offer more than a thousand different combinations of tyre models and sizes. Our exten- sive distribution network and effective logistics and information systems play a key role during the busy peak seasons. High utilization and productivity support profitability Due to logistics and other business reasons, tyre manufac- turers usually establish local factories in their most significant markets. Payroll and energy costs vary by country but raw material costs are generally on the same level globally. The most important raw materials include natural rubber, synthetic rubber, filler substances (such as soot), plies and cables, and various chemicals. As tyre manufacturers have high fixed costs, profitability requires optimal utilization of the full production capacity while minimizing interruptions. For tyre manufacturers, contin- uous improvement of profitability through investments and process developments is a prerequisite for success. A strong brand guarantees a high price position The tyres on the market are divided into two or three segments by their price depending on the market. The manufacturers of premium or segment A tyres empha- size the improved road safety, comfort, and environmental aspects of higher quality in their marketing and communi- cation, whereas segment B tyres are only manufactured for consumers looking for the lowest purchase price. Distrib- utors typically offer their customers alternatives from all the price ranges. In the tyre industry, the regional market leader is usually also the price leader. Pricing power is increased by a strong brand, product reputation, reliability of distribution, and success in objective tyre tests by the automotive media. 15 30% of our winter tyres are sold in the first 10 days after the first snowfall NOKIAN TYRES PLC 2014 Market areas Select markets for special products Russia Potential as well as risks Russia is a large market with an estimated 2.5 million new cars and 39 million car and van tyres sold in 2014. The factors that affect tyre demand espe- cially in Russia are GDP development, which follows the price of oil, and the interest rates for car financing. The Russian economy was in turmoil in 2014 due to the crisis in Ukraine and Crimea and the strong decline in oil prices, which resulted in zero GDP growth. The weakened household purchasing power caused a shift of sales from premium products to segment B tyres. Winter tyres make up two thirds of aftermarket tyre sales. There is no winter tyre legislation in Russia, but the climate conditions in Nokian Tyres’ operating region warrant the use of winter tyres during the winter months. Nokian Tyres is the market leader and largest manufacturer of segment A and B tyres in Russia. Our total sales in Russia and the CIS countries in 2014 amounted to EUR 386.7 million, or 26% of the total sales of the Nokian Tyres Group. Fluctuation of the ruble exchange rates made it challenging for Nokian Tyres and other international companies to secure and optimize their financial result. 39 mill. sold passenger and van tyres per year Nokian Tyres has an extensive distribution network in Russia. By the end of 2014, the Hakka Guarantee network and other retail partners who work closely with Nokian Tyres in Russia comprised of 3,600 tyre retailers, Vianor outlets, car dealerships, and online stores. The company’s strong brands, expanding distribution network, and the location of its factories behind Russian tariff walls give Nokian Tyres a signif- icant competitive edge on the market. 16 NOKIAN TYRES PLC 2014 Market areas The Nordic countries Stable development continued 6 mill. sold winter tyres per year Central Europe The largest winter tyre market North America Focusing on the winter tyre niche 69 mill. sold winter tyres per year Approximately 230 million car and van tyres were sold in 2014 in the European market, excluding the Nordic countries. Central Europe is globally the largest winter tyre market – 12 times larger In North America, Nokian Tyres focuses on Canada and the US compared to the Nordic countries. Approximately 69 million winter snowbelt region. There, the market potential for winter tyres is tyres were sold in this region, and the winter tyre segment is twofold compared to the Nordic countries. Canadian winter tyre growing faster than the total market. legislation supports the growth of demand. The expanding tyre markets and the adoption of winter tyre legis- lation in more countries have made Central Europe one of the most important growth areas for Nokian Tyres. Nokian Tyres tailors its products to suit the needs of consumers in different markets. Our summer tyres and non-studded winter tyres that are designed for Approximately 10 million car and van tyres are sold each year in the Central and Eastern European winter conditions are considerably Finland, Sweden, and Norway. Some 6 million of these are winter different from the products that we sell in our core markets. We sell tyres. Generally, the market grows 1–3% per year, and there are tyres to 32 European countries in addition to the Nordic countries, approximately 80 competing brands. The legislation in these coun- Russia, and the CIS countries. Central Europe accounted for some tries requires the use of winter tyres during the winter months. 24% of Nokian Tyres’ sales in 2014. The Nordic countries accounted for approximately 40% of Nokian The Ejpovice logistics and service center serves the main markets The Vianor chain has 69 outlets in New England. Tyres’ sales in 2014. Nokian Tyres is the market and price leader and around the clock. The expansion of the retail channel was spearheaded Nokian Tyres has a strong brand and a solid reputation for the only local manufacturer in the region. The company has an exten- by Vianor, with a total of 288 partner outlets in the area by the end of quality in the North American regions where winter tyres are used. sive distribution network, including its own Vianor tyre chain that 2014. The Nokian Tyres Authorized Dealer (NAD) network comprises In select areas, we make exclusive agreements with distributors. comprises 294 outlets. 811 outlets in 14 European countries. The Vianor chain has 69 outlets in New England. 17 NOKIAN TYRES PLC 2014 Nokian Passenger Car Tyres Nokian Passenger Car Tyres NOKIAN TYRES PLC 2014 18 Nokian Passenger Car Tyres Premium tyres carefully tailored for customers’ needs The Nokian Passenger Car Tyres unit develops, manufactures, and markets summer and winter tyres for passenger cars and delivery trucks as well as SUVs. The key products are studded and non-studded winter tyres and SUV tyres. These are the fastest growing product segments in the tyre industry, and also with the highest prices. Nokian Tyres’ most important brands are Nokian Hakkape- liitta, Nokian Hakka, and Nokian Nordman. Product development takes place mainly in Finland. Tyres are produced in the company’s own factories in Nokia, Finland and Vsevolozhsk, Russia and sold in the aftermarket. Our main markets are the Nordic countries, Russia and the other CIS coun- tries, the rest of Europe, and North America. NOKIAN PASSENGER CAR TYRES Net sales, Operating profit and Operating profit% Operating profit% 60 EUR mill. 1,500 1 250 1,000 750 500 250 0 10 11 12 13 14 50 40 30 20 10 0 Net sales Operating profit Operating profit% 2010 2011 2012 2013 2014 Net sales Operating profit Operating profit% 714.7 1,071.1 1,220.1 1,137.0 1,003.2 292.2 410.8 205.5 29.1 33.7 28.8 378.5 33.3 365.1 34.1 The problems between Russia and Ukraine affected our 2014 revenue, but we strengthened our market position even further With more than 50 test wins, our product range is more competitive than ever The revenue of Nokian Passenger Car Tyres grew in grew our market share in all our main markets. In the fall of 2014, our products dominated Nokian Tyres’ products gained more than 50 test the Nordic countries and Central Europe, amounting Winter tyres amounted to 79% of the unit’s 2014 the winter tyre tests in the automotive media, wins in 2014. In our consumer ratings, our prod- to more than €1 billion. Tyre sales volumes followed sales volume. scoring numerous test wins in the Nordic coun- ucts received an average score of 4.6 (out of 5.0), the previous year’s level, but our revenue suffered The combined annual output of our Finnish and tries and Russia. Our Nordic winter tyre, the and 93% of consumers who wrote reviews recom- from the strong devaluation of the currencies in Russian factories exceeded 20 million tyres, with shift Nokian Hakkapeliitta 8, took first place in practi- mended Nokian-branded tyres. Russia and the CIS countries, and from the Ukrainian arrangements. In 2014, we did not utilize our full cally every test that it participated in. The success In September 2014, Nokian Tyres introduced crisis. production capacity but, compared to the previous that Nokian Tyres achieved in Central European five new SUV summer tyres and renewed its van Nokian Tyres is the market and price leader in year, we improved our production volume (pc) and winter tyre tests is especially noteworthy. Our tyre range. With our special products tailored for the Nordic countries, Russia and the CIS countries. productivity (kg/mh) by 4.3% and 5.1%, respectively. new summer tyre range scored several test wins SUVs, we are targeting the fast-growing segment Its business is growing in the Central European In 2014, 80% (82%) of Nokian car tyres (pcs) were in motoring magazines both in our core markets in our main markets in the Nordic countries, and North American premium market. In 2014, we manufactured in our Russian factories. and Central Europe in the spring of 2014. All in all, Central Europe, and Russia. 19 NOKIAN TYRES PLC 2014 R&D and testing Safety pioneer Unique product development and testing competence create patented solutions for the demanding Nordic conditions thereby improving safety, driving comfort, and performance. 20 NOKIAN TYRES PLC 2014 R&D and testing Sustainable safety Tailored with high precision In the company that invented the winter tyre, product development Nokian Tyres is known for the high quality, safety, and eco-friendliness of is guided by the principle of sustainable safety: the safety character- its products, which are carefully tailored to different markets and diverse, istics of a tyre must remain nearly unchanged throughout its service demanding conditions. Product development carefully follows the movements life. Sustainable safety also includes developing eco-friendly products and changes of consumer needs and tries to anticipate the users’ wishes. We and production technologies. spend more than half of our R&D resources on testing our products. The quality, durability, and eco-friendliness of our products are based We also renew our comprehensive product range quickly: new products on careful structural development and testing. Our state-of-the-art make up at least 25% of our annual revenue. New products help the company testing machines allow for an even more effective comparison of the to strengthen its position and maintain the desired pricing and profit margins characteristics of rubber compounds, tread patterns, and tyre structures. in a highly competitive market. Adding canola oil to rubber compounds improves the tear strength We work closely with the leading car manufacturers. More than 20 of winter tyres and provides more grip on snow and ice. In summer quality brands have selected Nokian Tyres’ products in tyres, we use pine tree oil to improve wear resistance. Using natural their winter tyre program. Testing collaboration materials and developing eco-friendly products that reduce fuel with contractors plays a key role in consumption, noise, and harmful emissions are important aspects of the development of Nokian our R&D operations also in the future. Combining safety with driving special tyres. We spend more than 50% of our R&D resources on testing our products comfort while also cutting fuel costs is a challenging task. In 2014, “Nordic” winter tyres with excellent grip on ice made up more than half (56%) of our winter tyre range. The proportion of tyres that reduce fuel consumption through ultra-low rolling resistance was 76%. A total of 89% of our summer tyre products were in the very high wet grip category. Our top tyres in terms of low rolling resistance and high wet grip correspond to categories A, B, and C in the EU tyre label system. 21 NOKIAN TYRES PLC 2014 R&D and testing Testing under extreme conditions We test our products under authentic conditions around the world. In our own test laboratory in Ivalo, Finnish Lapland we develop test winner tyres that consumers around the world can rely on. Creating a test-winning tyre requires immense exper- tise and millions of test kilometers. We annually expand our Ivalo Testing Center “White Hell”, which simulates the extreme winter driving conditions from November to May, day and night. Our versa- tile testing center in Nokia provides flexible and unique conditions for utilizing high- speed photography and testing the slush-planing properties of tyres, for example. To achieve comprehensive results, we also test our tyres on several international tracks. In addition to our own tests, taxi businesses from the Nordic countries also take part in durability testing and the development of new tyre models. The development of an entirely new passenger car tyre takes 2 to 4 years. Read more: bit.ly/1EV9SRy We test more than 20,000 winter tyres in Ivalo throughout the winter season. Continuous renewal Continual investments in new products, versatile testing, and advanced instruments enable the company to develop test-winning products with unique innovations year after year. One of our newest inventions is the Nokian Aramid Sidewall technology, which provides SUV tyres with added protection against impacts and cuts. Intensive laboratory and field testing, a thorough understanding of the seasons together with the elements and characteristics of our products all work to serve the ultimate goal of product development – road safety in demanding and varying conditions. Read more: bit.ly/1KIqLxq 22 NOKIAN TYRES PLC 2014 New products and innovations Tailored safety for varying conditions Different markets require their own tailored products and precision innovations. 23 NOKIAN TYRES PLC 2014 New products and innovations As a winter tyre pioneer, we expanded our compre- hensive winter product range with new special prod- ucts. The new studded Nokian Hakkapeliitta 8 SUV repre- sents the new Hakkapeliitta winter tyre generation that tackles the extremes of Nordic winter with completely new innovations. The state-of-the-art stud technology provides never before seen grip on ice and snow. Our new van tyres, the studded Nokian Hakkapeliitta C3 and non-studded Nokian CR3 provide winter grip and driving comfort for demanding professional use. Another interesting addition is the robust Nokian Hakkapeliitta LT2 AT35 special tyre. The experts of extreme conditions, Nokian Tyres and Arctic Trucks teamed up enabling special 4x4 vehicle owners to handle the most demanding winter conditions in the world. The new Nokian Hakkapeliitta LT2 AT35 is the largest Hakkapeliitta winter tyre designed for heavy-duty 4x4 vehicles. In the future, you might encounter this giant Hakkapeliitta in the regions near the North or South Pole. 24 NOKIAN TYRES PLC 2014 New products and innovations The new summer tyre range is built to last In the spring of 2015, Nokian Tyres offers a wider summer tyre range than ever before. The company launched 8 new premium summer tyres for its core markets in the fall of 2014. We introduced three new products to the Nokian Hakka summer tyre family, which is tailored for rough roads and the varying Northern summer. Nokian Hakka Black SUV and Nokian Hakka Blue SUV are designed for varied use on sports utility vehicles. With the precise handling and unique durability of the sporty Nokian Hakka Black SUV, drivers of powerful SUVs can enjoy the full perfor- mance of their vehicle with exceptional driving comfort. The new Nokian Hakka Blue SUV is a comfortable charmer and a high performer that cuts fuel costs. It is the right choice for the driver who values safe and powerful performance but wants to enjoy the features of his or her SUV on dirt roads and urban environments alike. The sturdy Nokian Hakka C2 van tyre brings controlled stability and durability for heavier loads. Nokian zLine SUV and Nokian Line SUV targeted especially for Central European markets are convincing performers with a comfortable driving feel. The new Nokian cLine van tyre provides durability and safety for demanding professional use. View the video of Nokian Hakka Black SUV: http://youtu.be/u00rU28qq98 View the video of Nokian Hakka Blue SUV: http://youtu.be/JS8tJoBGlvo View the video of Nokian zLine SUV: http://youtu.be/sYHyUmczeS4 View the video of Nokian Line SUV : http://youtu.be/kOD9prmIPEQ 25 NOKIAN TYRES PLC 2014 New products and innovations Special products for demanding heavy use The versatile Nokian Rotiiva AT Plus is espe- The new Nokian NTR 52 front tyre is a reli- cially designed for heavy-duty use on light able performer even as the kilometers add up. trucks and pick-ups. For light trucks, large The new structure and tread compound give the SUVs, and pick-ups, we developed the Nokian new tyre excellent durability and high grip under Rotiiva HT, which performs reliably on asphalt main road conditions. The tyre is designed for as well as gravel. trucks and buses for medium and long distance The world’s first winter tyre for tractor use, and it meets the EURO 6 load carrying contracting, Nokian Hakkapeliitta TRI is a capacity requirements. Nokian NTR 52 also has unique winter specialist. This special product the M+S label, and it is well suited for all-season by Nokian Heavy Tyres provides superior trac- use. tion and winter grip for snow clearing and heavy-duty contracting. Nokian Hakka Truck 844 is designed for all-season long and medium distance trans- Nokian truck tyres View the video: http://youtu.be/iX54JZNF3Rc port, and it provides excellent grip even under Hakkapeliitta Test Experience winter conditions. It is the first trailer tyre of this size (385/55R22.5) on the market that has both the M+S label and the snowflake symbol, which indicates official winter tyre approval. View the video: http://youtu.be/SSGI1MIr5F4 Nokian Hakkapeliitta TRI – Innovations to beat winter View the video: http://youtu.be/vr3nFdmUJSM 26 NOKIAN TYRES PLC 2014 New products and innovations Green winter tyre technology for electric cars The most energy efficient winter tyre model in the automotive industry Nokian Tyres developed the world’s first winter tyre with an A class rolling resistance rating. The new Nokian Hakkapeliitta R2 is a non-studded winter tyre designed for BMW’s unique i3 electric car. The genuine Hakkapeliitta winter tyre is tailored for the Nordic winter, and it combines ultra-low rolling resistance with excellent grip and driving comfort. With the Nokian Hakkapeliitta R2, electric car drivers can enjoy up to 30% lower rolling resistance compared to other winter tyres on the market. The new model is the world’s first winter tyre to achieve an A class rolling resistance rating in the EU tyre label system. Low rolling resistance saves energy, thereby extending the range of the car. Read more: http://bit.ly/12QOkog 27 NOKIAN TYRES PLC 2014 New products and innovations Top innovations Peace of mind, precision, and safety Improved durability Nokian Aramid Sidewall technology The test-winning Nokian Hakkapeliitta 8 SUV winter tyre features the unique Nokian Aramid Sidewall techno- logy, which is now also used in the sidewall compound of new SUV tyres. The sidewall compound contains the extremely strong aramid staple fiber and provides exceptional protection against wear and cuts. The same material is utilized by the aerospace and defense industries. The aramid fiber stiffens and reinforces the sidewall to withstand external impacts and pressing against the wheel flange. Nokian Hakkapeliitta 8 SUV | Nokian Hakka Black SUV | Nokian Hakka Blue SUV Nokian zLine SUV | Nokian Line SUV Learn more about the Nokian Aramid Sidewall concept: http://youtu.be/N5LvBke-UqY View the video: http://youtu.be/AtA3xCcYc4A Better winter grip and driving comfort Nokian Eco Stud 8 concept A new-generation, multi-faceted anchor stud, flange design that reduces stud impact, and the patented Eco Stud cushion that improves the operation of the stud and softens the road contact. • 190 studs (size 205/55 R16) with computer-optimized stud distribution. • A single stud weighs under 1 g. • On average, 12% lower road wear effect than required by the Nordic stud legislation. Nokian Hakkapeliitta 8 | Nokian Hakkapeliitta 8 SUV Nokian Eco Stud 8 concept: http://bit.ly/1uzDpg2 28 NOKIAN TYRES PLC 2014 New products and innovations First-class winter grip, more precise handling Improved range, excellent winter grip Safety on wet roads Effective anti-aquaplaning Nokian Cryo Crystal concept Nokian Intelligent eSilica rubber compound Blade groove Trumpet grooves Grip on ice is improved with diamond- The rubber compound we use in electric car tyres Aggressive blade grooves cut through the ribs The shoulder areas have trumpet grooves, bullet- tough crystal-like grip particles in the rubber performs well over an extended temperature in the center area, effectively storing water and type indentations that store water from between compound that grab onto the driving surface. range, maximizing low rolling resistance and winter guiding it towards the longitudinal grooves. the tyre and the road, accelerating its flow from Nokian Hakkapeliitta 8 SUV Nokian Hakkapeliitta R2 Nokian Hakkapeliitta R2 SUV Nokian Hakkapeliitta CR3 grip. Together with the silica particles, the mole- the main grooves towards the transverse grooves cular chains of the tread compound form a strong, Nokian Hakka Black SUV and maximizing grip even on wet roads. yet flexible combination. The sipes, or grooves, on Nokian zLine SUV the symmetrical tread model work actively regard- less of variations in grip level and temperature. Nokian Hakkapeliitta R2 – BMW i3 ja BMW i8 Nokian Hakka Blue SUV Nokian Line SUV 29 NOKIAN TYRES PLC 2014 Forerunner already 80 years A tyre technology pioneer 1898 Suomen Gummitehdas Osakeyhtiö is established. 1932 Passenger car tyre production starts in Nokia. 1934 “Kelirengas”, the first winter tyre in the world. 1936 The legendary Hakkapeliitta winter tyre is born. 2014 2014 2014 The Hakkapeliitta winter tyre range expands. The studded Nokian Hakkapeliitta 8 SUV and the van tyres Nokian Hakkapeliitta C3 and Nokian Hakkapeliitta CR3. The world’s first winter tyre with retractable studs. Nokian Hakkapeliitta concept tyre. New Nokian Hakkapeliitta R2 – the world’s first winter tyre with an A class rolling resis- tance rating designed for electric cars. 30 NOKIAN TYRES PLC 2014 Kelirengas. World’s first winter tyre in 1934. Nokian Hakkapeliitta 8. Multiple test winner in 2014. Forerunner already 80 years First since 1934 Already in 1934, Nokian Tyres developed and manufactured the world’s first winter tyre to match the winter frost. Two years later, the Northern winter witnessed the birth of Nokian Hakkapeliitta, the legendary snow road cham- pion designed for passenger cars. The Kelirengas was designed for trucks; together with buses, they formed most of the road traffic in the 1930s. The strong tread made the Kelirengas a winter tyre, as its transverse grooves gripped the snow like a cog wheel. The tread pattern was loose and it could clean itself well while driving, which in turn improved the grip. The entire concept of the tyre was based on a good grip surface. As the advertisement stated, “braking is more effective, and sliding sideways in corners and turns is entirely eliminated”. 80 years since the invention of the winter tyre: Nokian Kelirengas mastered safe turns in snowy weather This is how the winter tyre has changed – comparing the world’s first winter tyre to the state-of-the-art non-studded winter tyre http://bit.ly/18fIVem http://bit.ly/17MuahV 31 NOKIAN TYRES PLC 2014 Production Keeping busy Aiming for the high utilization of production capacity and improved productivity Nokian Tyres’ production facilities are located in Finland and company is capable of responding to market growth by quickly Russia. Product development and the manufacture of proto- increasing production without making large investments. In types and test batches take place in Nokia, in connection 2014 the capacity was not fully utilized, but production output with the company’s head office. The Nokia factory manu- (pcs) increased by 4.3% and productivity (kg/mh) improved factures passenger car tyres, heavy tyres, and retreading by 5.1% year-over-year. materials for truck tyres. In Russia, the production costs of tyres are clearly lower than The state-of-the-art factory in Vsevolozhsk, near St. Peters- in Finland or other Western countries. The operation in Russia burg, manufactured approximately 80% of company’s passenger has been supported by tax agreements based on the amount of car tyres. From Vsevolozhsk, tyres are supplied to more than 40 investments and the location of the factory behind tariff walls. countries making Nokian Tyres the largest exporter of consumer In addition to its own production facilities, the company goods in Russia. The company’s investments in the Russian uses contract manufacturing in factories whose level of production facilities exceed 800 million. quality meets Nokian Tyres’ high standards. In 2014, contract The annualized capacity of the Finnish and Russian factories manufacturing accounted for approximately 3% of the compa- amounts to over 20 million tyres, with shift arrangements. The ny’s total tyre sales. over 20 mill. Production both in Nokia and Vsevolozhsk in 2014 was over 20 million tyres. 32 NOKIAN TYRES PLC 2014 Marketing We focus on the customer The main markets of Nokian Tyres are served by the group’s own sales companies or a representative with its own sales organization. Our typical customers include regional tyre wholesalers, tyre retail chains, car dealership chains and, as the latest addition, online stores. As the sale of Nokian- branded tyres is important for our customers’ business, they are willing and well prepared to support and build the Nokian brand. Developing the consumer relationship strengthens the brand For the purposes of product development and improving quality, it is important for tyre manufacturers and developers to learn about actual user experiences and receive feedback from the end users. In recent years, the spread of social media has significantly improved the possibilities of directly contacting consumers. As online services become increasingly community oriented, consumers are clearly more committed to brands and more willing to share product recommendations. Valuing retail experts Consumers often find tyre purchase to be complicated and difficult. Studies of buyer behavior show that tyre salespersons have a crucial Everyday interaction and joint development projects as well as role in the buying decision process. It is, therefore, very important surveys and interviews keep us in touch with our customers’ for both tyre manufacturers and consumers that the salespersons needs. Most of their wishes are related to the different stages are professionals who know their products thoroughly and can help of our partnership processes, such as logistics or marketing and consumers choose the right product for their needs. In addition to product support. Nokian Tyres’ strength is in its flat organization training sessions and personal guidance, Nokian Tyres has developed and its ability to quickly respond to customer needs and changes an online learning system that enables tyre retailers around the world in the market. We have personal, long-lasting relationships with to improve their competence any time, anywhere. Furthermore, our many of our customers, reinforced by a sense of belonging to the technical customer service helps and advises distributors, consumers, same Hakkapeliitta family. professional users, and other interest groups in the selection and use of tyres as well as in problematic situations. facebook.com/nokiantyres youtube.com/NokianTyresCom twitter.com/nokiantyrescom linkedin.com/company/nokian-tyres-plc 33 NOKIAN TYRES PLC 2014 Customers We are part of your everyday life Vaihteeks radan ulkopuolella #toyota #hilux #arctictrucks #nokiantyres #offroad #northproof #nokiahakkapeliitta #talvivanne @mikkoau | Helsinki, Finland We are part of your everyday life in all weathers and on all roads. Our job is to help people reach their destination safely. Through social media, our customers’ satisfaction, user experiences, and the feelings associated with driving are communicated around the world. Safe driving lets you feel the joy of skiing trips in the winter, the relief of avoiding dangers in traffic, and the comfort of your morning commute even in difficult weather condi- tions. Time after time, successful journeys on our tyres earn us the trust of our customers. That trust is put to the test when it is time to replace your worn tyres with a new set. That is when you want to take a look at Instagram, Twitter, Facebook, or YouTube to see how the other moms and dads feel about driving on Nokian tyres. @krikidikrisse | Jyväskylä, Finland @bmw1200gs | Thessaloniki, Greece picture taken at Bansko ski resort, Bulgar @emilwerner1 | Östersund, Sweden 34 NOKIAN TYRES PLC 2014 Sales and distribution Sales and distribution approx. 3,600 In Russia a network of approx. 3,600 tyreshops Nokian tyres were sold in 61 countries Russia, Finland, Germany, Sweden and Norway made up 70% of sales Vianor 1,355 stores in 27 countries Target markets Vianor Nokian Tyres Authorized Dealers Russia In 2014, Nokian tyres were sold A total of 1,355 outlets in 27 countries (189 In the review period, our Nokian Tyres The Hakka Guarantee retailers and other retail partners in 61 countries. Russia, Finland, own outlets and 1,166 franchising and Authorized Dealer (NAD) partner who work closely with Nokian Tyres in Russia form a Germany, Sweden, and Norway partner outlets). 329 outlets in the Nordic network grew by 437 contracts and network of some 3,600 locations, including tyre retai- made up 70% of our product sales. and Baltic countries, 633 in Russia and the now totals 869 locations in 14 Central lers, Vianor outlets, car dealerships, and online stores. CIS countries, 294 in Central and Eastern European countries and China. Furthermore, our new N-Tyre partner network comp- Europe, and 69 in the United States. rises 53 outlets in Russia and Kazakhstan. 35 NOKIAN TYRES PLC 2014 Vianor Vianor 36 NOKIAN TYRES PLC 2014 Vianor The most comfortable way to buy Nokian Hakkapeliittas? Vianor offers tyres for all common vehicles: passenger cars, vans, trucks, and heavy machinery. In addition to Nokian-branded tyres, the chain sells other leading tyre brands and a variety of motoring products, such as rims, batteries, and shock absorbers. Apart from retail sales, Vianor conducts whole- sale and fleet customer sales. The heavy seasonal fluctuations in tyre retail sales poses challenges for the year-round profitability of traditional tyre outlets. Therefore, Vianor’s services include tyre changes and mounting as well as oil changes, car VIANOR Net sales, Operating result and Operating result% servicing, and tyre storage, depending on the loca- tion. The goal is to make servicing a more signifi- EUR mill. 400 Operating result% 4 cant part of Vianor’s growth and profitability. The Vianor tyre chain operates in markets that are strategically important to Nokian Tyres, where it builds a foundation for permanent market shares for the group’s products. In 2014, Vianor offered the best network for the wholesale and retail of Nokian Tyres’ products in the group’s core markets. Vianor also improved its winter tyre market share and continued to grow its service sales. Developing the outlets’ operating model from tyre sales toward full car servicing was continued with investments and local acquisitions of car service shops. By the end of 2014, the chain had purchased a total of 56 businesses and integrated their car servicing oper- ations into existing Vianor outlets. 300 200 100 0 -100 10 Net sales 11 12 13 Operating result 3 2 1 0 -1 14 Operating result% 2010 2011 2012 2013 2014 Net sales Operating result Operating result% 307.9 4.0 1.3 298.4 2.3 0.8 315.3 0.0 0.0 312.5 -1.8 -0.6 314.8 2.1 0.7 37 NOKIAN TYRES PLC 2014 Nokian Heavy Tyres Nokian Heavy Tyres 38 NOKIAN TYRES PLC 2014 Nokian Heavy Tyres The leader in forestry tyres Nokian Heavy Tyres focuses on high-quality use the Nordic CTL (Cut-to-length) method. Today, tured at our factory in Nokia. A restructuring of euros. Due to the challenging pricing environ- special tyres. The key product groups are forestry it is the global market leader in this field with over the Heavy Tyres operation to include also the ment, the average price fell when compared to tyres, harbor and mining tyres, special agricul- 50% market share. On average, sales to OEMs have Truck Tyre business unit was done in the end of the previous year. Lower raw material costs and tural tyres, a variety of industrial tyres as well as accounted for approximately 40% of the unit’s 2013 and the new organization became effective improved productivity supported our margins, truck tyres and retreading materials for deman- revenue. The customers of Nokian Heavy Tyres from the beginning of 2014, creating synergies and lower fixed costs improved profitability. ding conditions. The unique qualities of the prod- value the functionality and overall cost efficiency in all operations. The production output (tonnes) in 2014 was up ucts grow out of the knowledge of extreme oper- of tyres. For them, low operating costs per hour are In 2014, the revenue of Nokian Heavy Tyres by 19.8% year-over-year. The production utiliza- ating conditions and respect for nature. The core more important than a low purchase price of tyres. was nearly EUR 150 million and operating profit tion rate was increased to over 90% during 2014. products are manufactured in Nokia, Finland. In The high-quality truck tyres are developed in was about EUR 25 million. In some product The factory modernization and automation have addition to the Nordic countries, the main markets Finland and manufactured as outsourced cont- groups, demand exceeded Nokian Heavy Tyres’ already opened bottlenecks, as well as improved include Central and Southern Europe, the USA and ract manufacturing in factories whose level of supply capacity. Total sales volume remained product quality, flexibility, and productivity. Canada, and Russia and the CIS countries. quality meets Nokian Tyres’ high standards. at the previous year’s level, but the sales of Since the 1960s, Nokian Heavy Tyres has Retreading materials, which are mainly used in forestry tyres grew by 15%. The changes in the designed special tyres for forestry machines that truck tyres and machinery tyres, are manufac- currency exchange rates decreased our sales in NOKIAN HEAVY TYRES Net sales, Operating profit and Operating profit% EUR mill. 200 Operating profit% 40 150 100 50 30 20 10 0 10 Net sales 0 11 12 13 14 Operating profit Operating profit% 2010 2011 2012 2013 2014 Net sales Operating profit Operating profit% 122.2 22.0 18.1 172.1 28.2 16.4 157.3 19.9 12.7 149.7 20.4 13.6 149.1 24.6 16.5 39 NOKIAN TYRES PLC 2014 Management Management Read QR Code with your smart phone or look at details of Management at http://bit.ly/1AZddb1 Esa Eronen Born 1957 Antti-Jussi Tähtinen Born 1965 Vice President, Production Service. Vice President, Marketing Technology Engineer. & Communications. With the company since 1988. Master of Arts. With the company since 2005. W O R K C A B W O R E L D D M I Heikki Mattsson Born 1960 Ville Nurmi Born 1971 Andrei Pantioukhov Alexej von Bagh Pontus Stenberg Born 1972 Born 1968 Born 1966 Teppo Huovila Born 1963 Vice President, ICT. Vice President, Human Resources Russian operations, Vice President, CEO of Vianor. Vice President, Nokian Heavy Tyres. Vice President, Quality. With the company since 2010. Doctor of Education. General Manager, Vice President. Master of Science (Eng.). Master of Economic Sciences. Master of Science, MBA. With the company since 2014. MBA. With the company since 1995. With the company since 2010. With the company since 1989. With the company since 2004. W O R T N O R F Rami Helminen Born 1966 Anne Leskelä Born 1962 Hannu Teininen Ari Lehtoranta Born 1960 Born 1963 Manu Salmi Born 1975 Vice President, Passenger Car Tyres. Vice President, Finance and Control & IR. Vice President, Sales and Logistics. President and CEO from 1 October, 2014 Vice President, Procurement. Master of Economic Sciences. Master of Economic Sciences. Engineer, MBA. M.Sc. Telecommunications. Master of Military Sciences, M.Sc. Economics. With the company since 1990. With the company since 1997. With the company since 1984. With the company since September, 2014 With the company since 2001. 40 NOKIAN TYRES PLC 2014 Board of Directors Board of Directors Year of birth: 1961. Licentiate of Science (Technology). President and CEO, Alko Inc. Member of the Board since 2006. Member of the Nomination and Remuneration Committee. Independent of the company. Shares: 6,568 pcs. Year of birth: 1963. Doctor of Science (Economics), Master of Science (Economics). CEO, Varma Mutual Pension Insurance Company. Member of the Board since 2012. Member of the Audit Committee. Independent of the company. Shares: 1,899 pcs. Hille Korhonen Risto Murto Year of birth: 1948. Master of Science (Engineering). Member of the Board since 2005 and Chairman. Chairman of the Nomination and Remuneration Committee. Independent of the company. Shares: 15,737 pcs. Year of birth: 1953. Master of Science (Economics). Member of the Board since 2014. Chairman of the Audit committee. Independent of the company. Shares: 697 pcs. Year of birth: 1953. Master of Laws. Member of the Board since 1999. Member of the Nomination and Remuneration Committee. Independent of the company. Shares: 8,196 pcs. Petteri Walldén Raimo Lind Hannu Penttilä Year of birth: 1954. Bachelor of Science in Economics. Member of the Board since 2002. Shares: 0 pcs. Bonds with warrants: 2010B 90,000; 2010C 90 000; 2013A 60 000; 2013B 40. Year of birth: 1976. Master of Economics. Co-Founder and Chairwoman, KoppiCatch Ltd. Member of the Board since 2014. Member of the Audit Committee. Independent of the company. Shares: 697 pcs. Kim Gran Inka Mero Read QR Code with your smart phone or look at all details of Board of Directors at http://bit.ly/1LGW24k 41 NOKIAN TYRES PLC 2014 Key figures Net sales, Operating profit and Operating profit% EUR million 2,000 Operating profit% 50 1,600 1,200 800 400 0 10 11 12 13 14 40 30 20 10 0 Profit before tax Earnings per share Equity ratio milj. EUR 400 300 200 100 0 10 11 12 13 14 EUR 3.0 2.5 2.0 1.5 1.0 0.5 0 10 11 12 13 14 % 80 60 40 20 0 10 11 12 13 14 Net sales Operating profit Operating profit% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Net sales Operating profit Operating profit% 1,058.1 1,456.8 1,612.4 1,521.0 1,389.1 308.7 415.0 22.2 25.7 222.2 21.0 385.5 25.3 380.1 26.1 EUR million 208.8 359.2 387.7 312.8 261.2 2010 1.34 2011 2.39 2012 2.52 2013 1.39 2014 1.56 EUR 2010 68.4 2011 63.2 2012 71.2 2013 67.6 2014 67.5 % Net sales by market area Share of group’s sales % Net sales by business unit Share of group’s sales, % Gross investment Cash flow from operations Gearing 6 1 5 4 2 3 EUR mill. 3 2 1 1. Finland 2. Sweden 3. Norway 4. Russia and CIS 5. Other Europe 6. North America 2013 2014 14% 11% 11% 34% 22% 7% 15% 13% 12% 26% 24% 9% 1. Passenger Car Tyres 2. Heavy Tyres 3. Vianor 2013 2014 71% 9% 20% 68% 10% 22% milj. EUR milj. EUR 250 200 150 100 50 0 10 11 12 13 14 350 280 210 140 70 0 10 11 12 13 14 % 20 10 0 10 -20 10 11 12 13 14 2010 2011 2012 2013 EUR million 50.5 161.7 209.2 125.6 2014 80.6 2010 2011 2012 2013 2014 2010 2011 2012 2013 EUR million 318.8 114.1 262.3 325.6 458.3 % 0,1 -0,3 -4,5 -4,1 2014 -13,6 42 NOKIAN TYRES PLC 2014 Consolidated income statement, IFRS EUR million | 1.1. – 31.12. Notes 2014 2013 EUR million | 1.1. – 31.12. Notes 2014 2013 (1) 1,389.1 1,521.0 CONSOLIDATED OTHER COMPREHENSIVE INCOME (3)(6)(7) -769.6 -819.9 Result for the period 208.4 183.7 619.5 701.0 Other comprehensive income, items that may be reclassi- fied subsequently to profit and loss, net of tax 3.4 3.9 Gains/Losses from hedge of net investment in foreign operations -246.5 -249.1 Cash flow hedges -34.5 -33.2 -36.6 -33.8 Translation differences on foreign operations (4 Total other comprehensive income for the period,net of tax (10) (10) (4) (6)(7) (6)(7) (5)(6)(7) 308.7 385.5 Total comprehensive income for the period Total comprehensive income attributable to: (8) (9) 268.4 -315.9 104.3 -177.0 Equity holders of the parent Non-controlling interest 0.0 1.9 -202.1 -204.0 -1.9 0.8 -65.6 -66.7 4.4 117.0 4.4 0.0 117.1 0.1 Net sales Cost of sales Gross profit Other operating income Selling and marketing expenses Administration expenses Other operating expenses Operating profit Financial income Financial expenses (1 Profit before tax Tax expense (2 (3 261,2 312.8 (10) -52.8 -129.1 Profit for the period 208.4 183.7 Attributable to: Equity holders of the parent Non-controlling interest Earnings per share (EPS) for the profit attributable to the equity holders of the parent: (11) Basic, euros Diluted, euros 208.4 183.7 0.0 0.1 1.56 1.56 1.39 1.39 1) 2) 3) 4) Financial expenses in 2014 contain EUR 1.6 million expensed punitive interest for tax reassessment decisions on years 2008-2012 and in 2013 EUR 20.2 million on years 2007–2010. Tax expense in 2014 contains EUR 9.4 million expensed additional taxes with punitive tax increases for tax reassessment decisions on years 2008–2012 and in 2013 EUR 80.1 million on years 2007–2010. Otherwise tax expense in the consolidated income statement is based on the taxable result for the period. Since the beginning of this year the Group has internal loans that are recognised as net investments in foreign operations in accordance with IAS 21 “The Effects of Changes in Foreign Exchange Rates”. The impact on year 2014 is EUR -10.0 million. 43 NOKIAN TYRES PLC 2014 Consolidated statement of financial position, IFRS EUR million | 31.12. Notes 2014 2013 EUR million | 31.12. Notes 2014 2013 ASSETS Non-current assets EQUITY AND LIABILITIES Equity attributable to equity holders of the parent (22)(23) Property, plant and equipment (12)(13) 502.8 683.8 Share capital Goodwill Other intangible assets Investments in associates Available-for-sale financial assets Other receivables Deferred tax assets Current assets Inventories Trade and other receivables Current tax assets Cash and cash equivalents Total assets (2)(14) (14) (16) (16) (15)(17) (18) (19) (20)(29) 73.3 19.8 0.1 0.3 10.0 9.1 69.9 24.7 0.1 0.3 11.3 8.8 615.4 798.8 Share premium Treasury shares Translation reserve Fair value and hedging reserves Paid-up unrestricted equity reserve Retained earnings 288.3 444.6 8.9 322.1 503.5 13.8 424.6 Non-controlling interest Total equity Liabilities (21) 439.9 25.4 181.4 -8.6 25.4 181.4 - -202.0 -128.5 -2.6 100.3 -0.7 97.1 1,114.5 1,217.9 1,208.5 1,392.5 - 0.2 1,208.5 1,392.8 1,181.6 1,264.1 Non-current liabilities (1) 1,797.0 2,062.9 Deferred tax liabilities Provisions (24) (18) (25) 26.7 0.1 Interest-bearing financial liabilities (26)(27)(29) 274.7 Other liabilities Current liabilities Trade and other payables Current tax liabilities Provisions (28) (25) Interest-bearing financial liabilities (26)(27)(29) 5.1 306.5 259.9 18.7 2.8 0.6 282.0 36.1 0.1 185.8 3.5 225.4 255.2 4.0 3.1 182.4 444.7 Total liabilities (1) 588.5 670.1 Total equity and liabilities 1,797.0 2,062.9 44 NOKIAN TYRES PLC 2014 Consolidated Cash Flow Statement, IFRS EUR million | 1.1.-31.12. Notes 2014 2013 Cash flows from operating activities: Cash receipts from sales Cash paid for operating activities Cash generated from operations Interest paid Interest received Dividends received Income taxes paid Net cash from operating activities (A) Cash flow from investing activities: The company has received a stay of execution from the Finnish Tax Administration for the collection of the tax increases based 1,348.9 1,469.9 on the tax reassessment decisions on years 2007–2010. In spite -870.9 -1,045.5 of this stay of execution the Finnish Tax Administration has 477.9 -69.8 3.3 0.0 -88.2 323.4 424.3 -56.3 3.4 0.0 -53.9 317.6 taken funds in accordance with these aforesaid decisions from company’s tax account setting off company’s other tax refunds. Financial items and taxes in 2014 contain these set-offs by the Tax Administration in total of EUR 34.2 million. Acquisitions of property, plant and equipment and intangible assets -81.7 -151.8 Proceeds from sale of property, plant and equipment and intangible assets Acquisitions of Group companies, net of cash acquired Change in Non-controlling interest Net cash used in investing activities (B) Cash flow from financing activities: Proceeds from issue of share capital Purchase of treasury shares Change in current financial receivables Change in non-current financial receivables Change in financial current borrowings Change in financial non-current borrowings Dividens received Dividends paid Net cash from financing activities (C) Net increase in cash and cash equivalents (A+B+C) Cash and cash equivalents at the beginning of the period Effect of exchange rate fluctuations on cash held Cash and cash equivalents at the end of the period (2) (22) (21) 3.2 -5.8 -0.3 11.2 -2.7 0.0 -84.7 -143.4 2.6 -8.6 -8.0 -3.4 62.2 -79.6 0.4 17.8 - -1.2 3.8 -39.5 32.8 - -193.4 -227.7 -191.9 -178.1 11.0 -4.0 424.6 4.3 439.9 11.0 430.3 -1.8 424.6 -4.0 45 NOKIAN TYRES PLC 2014 Investor information Annual General Meeting 2015 Financial reports Questions from analysts and investors: Investor information: The Annual General Meeting of Nokian Tyres plc Nokian Tyres will publish financial information in Ari Lehtoranta, President and CEO Antti-Jussi Tähtinen, Vice President, will be held at Tampere-talo, in Tampere, Finland; Finnish and in English as follows: address Yliopistonkatu 55 on Wednesday 8 April 2015, starting at 4 p.m. Registration of attendants and the distribution of ballots will begin at 3 p.m. Shareholders registered by no later than 25 March 2015 in the company´s shareholder register, • • • • which is maintained by Euroclear Oy are entitled to 5 February 2016 Interim Report for three months on 8 May 2015 Interim Report for six months on 7 August 2015 Anne Leskelä, CFO, Investor Relations Interim Report for nine months on 30 October 2015 tel. +358 10 401 7481 Anne Aittoniemi, Communications Financial Statements Bulletin 2014 on email: ir@nokiantyres.com Marketing and Communications tel. +358 10 401 7940 email: info@nokiantyres.com & IPR Specialist tel. +358 10 401 7641 tel. +358 10 401 7733 email: ir@nokiantyres.com attend the Annual General Meeting. • Annual Report 2015 on March 2016 Request for meetings and visits: email: info@nokiantyres.com The Annual Report, including the company’s Raija Kivimäki, Assistant to Fax: +358 10 401 7799 annual accounts, the Report of the Board of Direc- Nokian Tyres publishes its Interim Reports, Finan- President and CEO tors and the Auditors Report is available on the cial Statements Bulletin and Annual Report at tel. +358 10 401 7438 company’s website no later than week 12, 2015. www.nokiantyres.com/company/investors/ email: ir@nokiantyres.com Address: Nokian Tyres plc Read more: www.nokiantyres.com/annualgeneralmeeting2015 Principles of investor relations Fax: +358 10 401 7378 P.O. Box 20 (Visiting address: Pirkkalaistie 7) FI-37101 Nokia Dividend payment The goal of Nokian Tyres’ investor relations is to regularly and consistently provide the stock market with essential, correct, sufficient and Nokian Tyres’ share price development 1 January 2010 – 31 December 2014 The Board of Directors proposes to the Annual up-to-date information used to determine the General Meeting that a dividend of EUR 1.45 per share value. The operations are based on equality, share be paid for the financial year 2014. The openness, accuracy and good service. record date for the dividend payment will be 10 The Management of Nokian Tyres is strongly April 2015 and the dividend payment date 23 committed to serving the capital markets. The April 2015, provided that the Board’s proposal is company’s President & CEO and CFO are the main approved. parties dealing with and answering questions Share register from analysts and investors. Nokian Tyres adopts a three-week period of EUR 40 35 30 25 20 15 10 5 0 silence before the publication of financial infor- 2010 2011 2012 2013 2014 Shareholders are requested to notify any changes mation and a six week period of silence before the in their contact information to the bookentry publication of the Financial Statements Bulletin. register in which they have a bookentry securi- Analyst and investor meetings are mainly held Annual Report and Financial Review 2014 ties account. both in Finland and abroad in conjunction with the publication of the company’s financial results. At other times analysts and investors are mainly answered by phone or email. Nokian Tyres Annual Report and Financial Statements Bulletin/Financial Review 2014 are available only in electronic form on the company’s web site. Electronic Annual Report, above mentioned reports as well as contact details including analysts can be read from www.nokiantyres.com/company/investors/ 46 NOKIAN TYRES PLC 2014 www.nokiantyres.com 47 NOKIAN TYRES PLC 2014