NOKIAN TYRES IN RUSSIA
Safest tyres for Nordic conditions 29.9.2006 1
DRIVERS BEHIND NOKIAN TYRES SUCCESS
! ! ! ! !
FOCUS BRAND NEW PRODUCTS & INNOVATIONS HIGH INVESTMENTS COMPANY CULTURE
”The original winter tyre” 2
NORDIC CONDITIONS –> STRATEGY > FOCUS
Winter & Forest High growth potential – product segments and market areas Russia, North America, Eastern Europe
3
NEW PRODUCTS & INNOVATIONS
! ! !
Minimum 25 % of sales new products Technological leadership High investment on winter tyre development and testing
4
SELECTED EXAMPLES OF PRODUCT RANGE 2006
Nokian HKPL5 2006
Nokian Hakka 2006
Nokian Forest Rider
2006
Nokian HKPL SUV 5
Nokian HKPL 4
Nokian NRHi
Nokian RSi
2006
2006
Nokian Hakka C
Nokian i3
Nokian Z
Nokian NTR 861
van & cargo
Nokian Country King
Nokian TRI2
Nokian Noktop
5
NEW INNOVATIVE PRODUCT FAMILIES FOR 2006 SALES
Nokian Hakkapeliitta 5 ! 38 sizes = Largest size range on the market
Nokian Hakkapeliitta Sport Utility 5 ! 27 sizes = Largest size range on the market
“The original winter tyre”
6
MAIN INNOVATIONS !
Bear claw stud area improves ice grip and reduces noise and road wear
!
New evolution version of Nokian’s unique square stud
!
Quattrotread construction with four different rubber compounds
7
NET SALES BY PRODUCT AREA 2005
Net sales 686.5 m€ +13.8%, 14. consecutive year of growth
Vianor 31% (33%) Net sales 235.1 m€ (223.9 m€) Change +5.0%
Retreading operations and truck tyres 4% (5%) Net sales 30.1 m€ (31.0 m€ )
Car tyres 55% (53%) Net sales 416.2 m€ (364.6 m€) Change +14.2%
Heavy tyres 10% (9%) Net sales 76.2 m€ (59.6 m€) Change +28.0% (year 2004)
8
OPERATING PROFIT BY PRODUCT AREA 2005 (MEUR)
Heavy Tyres 14.7 m€ (9.3 m€ ) Vianor 5.3 m€ (11.4 m€ )
Car Tyres 101.9 m€ (100.6 m€ )
(year 2004)
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GROSS SALES BY MARKET AREA JAN-DEC 2005
Sales of Nokian Tyres group (year 2004) North America 11 % (8%) Other Europe
Others 0 % (0%)
Finland 27% (30%)
Sales of Manufacturing units
North America 14% (10%)
(year 2004)
Others 0% (0%) Finland 24% (27%)
13 % (14%) Other Europe 16% (18%) Eastern Europe 4 % (4%)
Russia & CIS 17 % (13%)
Norway 12% (13%)
Sales increased
Sweden 16 % (17%)
Eastern Europe 5% (5%)
Sweden 12% (13%) Russia & CIS 21% (17%)
Norway 8% (9%)
Sales increased
-Nordic countries
+5.5%
-Nordic countries
+2.7%
-Russia and CIS
+44.3%
-Russia and CIS
+44.7%
-Eastern Europe
+21.4%
-Eastern Europe
+17.9%
-North America
+55.9%
-North America
+55.9% 10
RUSSIA UPDATE
SALES DEVELOPMENT IN RUSSIA Growth H1 2006 + 50.2%
Nokian Tyres clear # 1 in premium tyres 4 mpcs
250 200 150 100 50 0 1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
H1 2006
LE 2009
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RUSSIAN PREMIUM TYRE MARKET IN 2005: market shares
Estimated total A-segment market shares 2005 by sell-in volume
Winter tyres market share > 30%
Pirelli Nokian Tyres
Michelin
8 25
16
Summer tyres market share > 10% 17 Bridgestone
18 17
Continental
GoodYear
12
MARKET PROJECTIONS – CAR AND VAN TYRE MARKET RUSSIA
Market size (mill. pcs), expected scenario
Market value (meur), expected scenario 2500
70
731,4
816,5
943,24
1090,19
1261
1469
1692
2121 60
2000
tot. 30,44
32,93
36,35
40,09
44
49
54
63 23
50
17
1265
1500
14 40
935 770 1000 411,4
509,85
632,5
30 5,04 2,8
277,2 500 70
328,9
176,25
237,5
325
550
127,75
400
20
91,5
384,2
396,1
404,09
404,09
391
374
357
306
10
2006
2007
2008
2009
2010
0 2004
2005
segment C
22,6
segment B
2011
segment A
0 2004
5,98 3,66
23,3
2005
7,48
9,27
11,5
5,11
7,05
9,5
13
16
22
23,77
23,77
23
22
21
18
2008
2009
2010
2011
2006
2007
segment C
segment B
segment A
A = Top ranked branded western tyres B = Secondline western & new Russian brands C = Traditional Russian tyres
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SALES OF NEW CARS AND CAR PARK FORECAST IN RUSSIA
Sales of new cars
Russian car park forecast 35 30
m units
25 20 15 10 5 0
2000
2001
2002
2003
2004
2005
2006
Sales of new cars to grow to 2 million pcs by 2007 >50% of car sales western brands
14
2007
WHY PRODUCTION IN RUSSIA?
The Russian market is strategically very important for Nokian Tyres
Nokian is one of the most well-known tyre brands in Russia ! Tyres have been exported to Russia since 1964 ! Currently Nokian Tyres is one of top 3 players in the premium segment with a 20% market share (2004 data)
The Russian tyre market is expanding rapidly ! Market growth is estimated at 10 – 15% a year ! Premium segment, which Nokian focuses on, demonstrates higher growth
The factory in Nokia, Finland is running at full capacity
15
WHY PRODUCTION IN RUSSIA?
Benefits compared to production in Finland (2005): ! no import duties => 6-15 euros per tyre (min. 6.25 euros/tyre) ! lower personnel costs => Finland EUR 45,000-50,000 per year => Russia EUR 5,000 per year (inflation 8-12 % p.a.) ! 20-25% lower raw material costs (gap to narrow with time) ! 40% lower energy costs (gap to narrow with time) ! tax holiday for 10 years ! 4 million tyres => 80 MEUR/year benefit in favour of Russia if all benefits fully factored in at 2005 level
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RUSSIA • strong sales growth • clear market leader with approx. 30% market share in premium car winter tyres • distribution expanded through partner agreements and Vianor shops • two first production lines operate in 3 shifts • production volumes and quality according to targets • installation of the third production line during H2/2006 • construction work of the mixing house and warehouse proceeded as planned ⇒new warehouse taken Into use in June; 19,000 m2 for approx. 600.000 tyres ⇒first mixing line to be taken into use in the autumn 2006 and the second line by the end of the year
• total number of personnel working in Russia 30.6.2006: 308
17
VIANOR IN RUSSIA
! ! ! ! !
Significant increase of Vianor partner network Wider distribution More visibility and market presence Limited investment on distribution chain Growth via partner & franchising concept
Murmansk
18
VIANOR IN RUSSIA - additional contracts made - planned outlets => approx 100 by the - organization established - network expansion accelerating end of 2007 August 3rd, 2006: 39 outlets
Perm Nishnekamsk Ufa Krasnodar Krasnodar
Tjumen
Magnitogorsk
19 10 10
VIANOR OUTLETS 2006, August 3rd TOTAL: 228 OUTLETS (166 own, 62 franchising/partner)
Vianor Finland - 60 own outlets - 7 franchising outlets - 3 retreading plants - personnel ~440
over 10 outlets
Vianor Norway - 43 own outlets - 2 partner outlets - 2 retreading plants - personnel ~260
Vianor Sweden - 54 own outlets - 16 partner outlets - 1 retreading plant - personnel ~360
Vianor Russia - 2 own outlets - 37 partner outlets Vianor Estonia - 6 outlets - personnel ~35
Vianor Latvia - 1 outlet - personnel 7
20
CAPEX AND GROWTH PLAN FOR 2006 => Investments Q1/2006: 14.7 m€ (23.7 m€ ) Total investments for 2006 92 m€ (119.6 m€) RUSSIA ! capacity ramp-up and investments ! progressing according to plan ! 70 m€ in 2006-2007 ! 53 m€ 2006 ! 4 million tyres in 2008
VIANOR EXPANSION
140000 120000 100000
Vianor
! Nordic countries, Russia, Eastern Europe
80000
! own outlets, franchising and tyre hotels
60000
! approx. 10 m€ in 2006 -2007
Sales Companies
Other
Heavy 40000
Vsevolozshk
20000
Car
0
A 2004
B 2005
A 2005
B 2006
21
VSEVOLOZHSK TYRE FACTORY
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PROJECT HISTORY: WHY VSEVOLOZHSK?
! Proximity to important regional markets in Russia and Nordic countries ! Availability of highly qualified work force ! Attractiveness of the investment climate ! Competence and professionalism of regional and local authorities ! Industrial zone with prepared engineering infrastructure ! Proximity to Finland (transportation of raw materials and equipment, possibility to utilize a large number of technical specialists from the parent company)
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PROJECT HISTORY: IMPORTANT MILESTONES 2003
2004
2005
11 Feb 5 May 23 June Sep Investigation on possible investment Decision of NT’s Board in Russia on Vsevolozhsk investment
Groundbreaking ceremony
Start of earth works On site
Jan Feb 6 June
Roofing celebration
Start of construction works
2006
22 Sep Oct
Jan 15 Mar
Official Start-up of Commissioning inauguration second of ceremony warehouse production line
Production of first Hakkapeliitta 4 tyres
Start of equipment installation
July
Production start-up
Start of 2 nd stage Construction works
Production of first Hakkapeliitta 5 tyres
24
GROUND-BREAKING CEREMONY ON JUNE 2004
25
OFFICIAL LAUNCH CEREMONY 22 SEPTEMBER 2005
26
VSEVOLOZHSK FACTORY TODAY
! Installed two production lines
! Approx 300,000 tyres were produced in 2005 ! Production is running at full capacity in a 24/7 mode ! Daily output in the range 5,500 – 6,100 tyres/ day ! Vsevolozhsk-produced tyres delivered to customers in key markets since September 2005 ! Number of personnel in Russia in June 2006 – 270 • 210 employed in production, both blue- and white-collar ! Products currently produced: winter tyres ! Nokian Hakkapeliitta 5, Nokian Hakkapeliitta 4, ! Nordman + and summer tyres Nokian i3 ! Production range continuously expanded
27
EXPANSION PLANS
! Warehouse commissioning: July 2006 ! Mixing start-up: autumn 2006 ! Planned production capacity by 2008: 4 million tyres a year • third and fourth production lines to be installed in 2006 – 2007 ! Ultimate planned production capacity 8 million tyres a year • further expansion possible
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NOKIAN TYRES RUSSIA: ORGANIZATIONAL STRUCTURE 2006 • Nokian Tyres LLC Senior Vice President, Strategy
• Nokian Shina LLC
Antero Juopperi
• Vianor LLC/Vianor SPb LLC Vice President, Sales & Logistics
Kari-Pekka Laaksonen Vice President, Communicat. & IR
General Manager Andrei Pantioukhov
General Sales Manager Dmitry Shmarov
Vice President Production Services
Esa Eronen
Manufacturing Manager Oleg Orlov
Raila HietalaHellman Marketing Communications Supervisor
Vice President, Sales & Logistics
Kari-Pekka Laaksonen
Anna Gorokhova
Finance Manager Irina Ushakova
Vice President, Finance & Control
Anne Leskelä
Vice President, Personnel & Safety
Sirkka Hagman Logistics Manager Dmitry Makarov
HR Manager Lilia Yasakova
Assistant to GM Natalia Belichenko
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SALES ORGANIZATION 06/2006 Vice-President Sales & Logistics Kari-Pekka Laaksonen
General Sales Manager Dmitry Shmarov Sales Assistant XXX
Regional Sales Manager Irina Surkova M
Sales Analyst Ekaterina Arkhipova
RRep Moscow Vitaliy Maslov
M
RRep Golden Ring Danil Abramov Regional Sales Manager Max Chizhov Regional Sales Manager Kirill Sevrukov
Customer Service Supervisor Svetlana Ivanova
RRep Ural Dmitry Musalnikov RRep Far East Andrei Isachenko RRep Siberia Eugeny Khanko DSD SRep SPb Frol Skipin
Heavy Tyres Sales Mgr Jukka Hautala
Sales Mgr PC2 Artyom Prigoda M
RRep North-West Alexey Krivosheev Car Dealer SRep SPb M. Shalanzev
RSM (2) XXX
Sales CDB Mgr K. Kivelä
BDM Vianor M. Kudrov TBR Manager XXX
Logistics Manager Minna Metsälä
Automotive KAM Oleg Poluyansky M RSM Rodion Savelyk
CS Coordinator Natalia Titova CS Coordinator Alla Demchenko CS Coordinator Olga Tikhomirova
CarDealerSRepMoscow V. Vyrypaev M CS Coordinator Olga Zarechneva RRep Central Russia Kirill Shabinsky RRep Southern Russia V. Kajukov
Sales Coordinator Darja Kuznetsova M
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