A N N UA L R E P O RT 2 02 3
THIS COMPANY IS LIKE ITS PRODUCT; IT REFLECTS THE PASSION AND RESILIENCE OF OUR PEOPLE .
We are made for demanding conditions.
WE ARE NOKIAN TYRES AND HERE TO MAKE
THE WORLD SAFER BY REINVENTING TIRES, AND HOW THEY ARE MADE, OVER AND OVER AGAIN .
Strategy Review | 4 | |||||||||||||||||
Report by the Board of Directors | 16 | |||||||||||||||||
Financial Statements | 36 | |||||||||||||||||
Consolidated financial statements | 37 | |||||||||||||||||
Parent company financial statements | 87 | |||||||||||||||||
Signatures of the Board of Directors and the auditor's note | 98 | |||||||||||||||||
Auditor's report | 99 | |||||||||||||||||
ESEF assurance report | 103 | |||||||||||||||||
Information on Nokian Tyres' share | 104 | |||||||||||||||||
Nokian Tyres group structure | 105 | |||||||||||||||||
Corporate Governance Statement | 106 | |||||||||||||||||
Non-Financial Information Statement | 122 | |||||||||||||||||
Remuneration Report | 140 | |||||||||||||||||
Investor Information and Investor Relations | 149 | |||||||||||||||||
In addition to this Annual Report, Nokian Tyres will publish its 2023 Sustainability Report at the end of March 2024.
WHEN CHANGE IS
THE CONTEXT, AGILITY
BECOMES A SUPERPOWER .
Johanna Horsma,
Chief Transformation Officer
STRATEGY
REVIEW
MADE FOR DEMANDING CONDITIONS
Strategy Review Report by the Board of Directors Financial Statements Governance Non-Financial Information Remuneration | 5 |
This is
Nokian Tyres
Nokian Tyres develops and manufactures premium tires
for people who value safety, sustainability, and predictability. Driven by our Nordic heritage, the company manufactures innovative products for passenger cars, trucks, and heavy machinery, providing peace of mind for all conditions.
Our Vianor chain specializes in tire and car services.
- Nokian Tyres serves its customers in its core markets: the Nordic countries, North America, and Central Europe.
- In 2023, Nokian Tyres products were sold in 55 countries.
- Nokian Tyres manufactures its tires in two factories, located in Finland and the US. A new factory is under construction in Romania. Contract manufacturing complements own production.
- Nokian Tyres' test centers are in Nokia and Ivalo, Finland, and in Santa Cruz de la Zarza, Spain.
- The company's headquarters is in Nokia, Finland, and its shares are listed on Nasdaq Helsinki.
Net sales from external customers by business unit, %
Passenger Car Tyres 52% (67)
Heavy Tyres 19% (13)
Vianor 29% (20)
NOKIAN TYRES
NET1SALES.2IN 023
EUR BILLION
Employees by geographical area, %
Nordics 78% (80)
Other Europe 6% (6)
North America 16% (14)
Net sales by geographical area, %
Nordic countries 57% (54)
Other Europe 19% (22)
Americas 23% (23)
Other countries 1% (1)
Net sales and Segments operating profit | |
EUR million | % |
2,000 | 1,714.1 | 40 | ||||
1,585.4 | ||||||
1,500 | 1,313.8 | 1,350.5 | 30 | |||
1,173.6 | ||||||
1,000 | 20 | |||||
500 | 337.2 | 190.2 | 324.8 | 10 | ||
17.8 | 65.1 | |||||
0 | 2019 | 2020 | 2021 | 2022 | 0 | |
2023 |
Net sales
Segments operating profit
Segments operating profit, %
Figures for 2021 and earlier years have not been restated and include Russia.
Highlights in 2023
Strategy Review Report by the Board of Directors Financial Statements Governance Non-Financial Information Remuneration | 6 |
Emission reduction target reached
In 2023, Nokian Tyres reached a key science-based emissions reduction target seven years ahead of schedule.
The world's first zero CO2 tire factory
Nokian Tyres broke ground for its new passenger car tire factory in Oradea, Romania. The factory is the world's first zero CO2 emission tire factory.
Key Flag symbol for Nokian Heavy Tyres
Nokian Heavy Tyres was awarded the Key Flag symbol for its heavy-duty tires, wheels, and retreading materials as a recognition of products manufactured in Finland, and the Design from Finland mark for products designed in Finland.
Dow Jones Sustainability Europe Index
Nokian Tyres was again included in the Dow Jones Sustainability Europe Index. The selection was based on S&P Global's Corporate Sustainability Assessment 2023, in which Nokian Tyres scored 70 points out of 100.
The target was
to decrease
the tire
factories' CO2
emissions
intensity by
52%
Direct CO2 emissions from the tire factories (Scope 1 and 2), per production ton
800 710
600 | ||||||||||
341 | ||||||||||
400 | ||||||||||
158 | ||||||||||
200 | ||||||||||
0 | ||||||||||
2015 | 2023 | Target | ||||||||
2030 |
New long-term financial targets
Nokian Tyres published its updated long-term financial targets and confirmed its non-financial targets. The target is to reach EUR 2 billion in net sales with strong profits.
Sale of the Russian operations
Nokian Tyres completed the sale of its Russian operations, after which all Nokian Tyres operations in Russia ended.
Co-operation with
the Finnish Ski Association
Nokian Tyres started a partnership with the Finnish Ski Association, becoming the main partner of Cross-Country Ski Team Finland and junior Cross-Country Ski Team Finland for the seasons 2023-24 and 2024-25.
A year of transformation
2023 marked a new beginning for Nokian Tyres. We completed our exit from Russia, announced new long-term financial targets, and celebrated the start of construction work on the world's first zero CO2 emission tire factory in Romania. I am extremely proud of what we have achieved and excited about the future.
Nokian Tyres' operating environment has changed significantly over the last two years. This has required agility to adapt and challenged us to find new ways to develop our business. In 2023, we continued to recover from the disruption that we faced in 2022. We steadily improved our performance and volume delivery towards the end of the year, which provides us with a solid foundation for 2024. I want to thank our employees for their excellent work as we are together building the new Nokian Tyres, as well as our customers for their trust.
In addition to changes in the operating environment, climate change, evolving technologies, and the transformation of the automotive industry keep us moving forward. Innovating for safer driving has been a key contributor to Nokian Tyres' success ever since we invented the world's first winter tire 90 years ago. And the same principle still guides our work: We make the world safer by reinventing tires, and how they are made, over and over again. With this relentless attitude and commitment to continuous improvement we aim - in line with our new vision - to lead the world to drive smarter. We firmly believe that our expertise in designing and manufacturing premium products will be increasingly valued, and as a sustainable tire company, our role will become even more significant.
Strategy Review Report by the Board of Directors Financial Statements Governance Non-Financial Information Remuneration | 7 |
OUR PURPOSE
WE MAKE
THE WORLD SAFER
BY REINVENTING
TIRES, AND HOW
THEY ARE MADE,
OVER AND OVER
AGAIN .
Strategy Review Report by the Board of Directors Financial Statements Governance Non-Financial Information Remuneration | 8 |
Accelerating growth
Nokian Tyres' future direction is clear: We are returning to growth. In line with our new long-term financial targets, we aim for EUR 2 billion net sales with strong profits. Building the new Nokian Tyres is based on organic growth in the Nordic countries, North America, and Central Europe. Expanding capacity, together with market relevant high-quality products and enhancing commercial capabilities, boost topline growth. Margin improvement is driven by increasing sales volume and average sales price.
Creating a balanced manufacturing footprint
One of our key priorities is building the world's first zero CO2 emission tire factory in Romania. Construction is progressing as planned and the first tires will be manufactured in the second half of 2024. We have also increased capacity at our factories in Finland and the US, and are supplementing our own production with carefully selected contract manufacturing partners. Nokian Tyres' manufacturing footprint will become even more diversified and balanced in the future.
Leading the industry towards net-zero
Sustainability continues to remain at the core of our operations. In reducing greenhouse gas emissions from tire production, we are a frontrunner in our industry. As an example, in 2023, we reached one of our key science-based emissions reduction targets seven years ahead of schedule. Other key sustainability initiatives include advancing safety and well-being of our employees, protecting human rights in the supply chain, and increasing the share of renewable and recycled materials in tires.
Made for demanding conditions
Going into 2024, executing on our growth strategy and improving our activities continues. Despite the current economic slowdown, we expect passenger car tire sell-in to grow in 2024, and with our increasing capacity and competitive product portfolio, we are ready to seize this opportunity. In the Heavy Tyres business, the focus is on expanding capacity and strengthening distribution. Widening product portfolio and enhanced digital capabilities support growth in the long-term. Vianor's excellent distribution capabilities strengthen our position in the Nordics.
Important milestones will be reached in 2024, when we celebrate the 90th anniversary of our innovation, the winter tire. Our new factory in Romania will start production, the US investment phase will be completed, and new innovative products will be launched. Our strong balance sheet enables us to both invest in growth while continuing to reward our shareholders.
I want to warmly thank our customers and shareholders for their support, and above all, our employees for their commitment. Nokian Tyres is made for demanding conditions, which is why I am confident that we will emerge even stronger in 2024.
JUKKA MOISIO
PRESIDENT AND CEO
OUR VISION
WE LEAD THE WORLD TO DRIVE SMARTER .
Strategy Review Report by the Board of Directors Financial Statements Governance Non-Financial Information Remuneration | 9 |
A market of
600 million tires
Nokian Tyres passenger car tires are mainly sold in the replacement tire market, selling tires to consumers via dealers. According to Global Data, the size of the replacement tire market for passenger car tires, SUV tires, and pick-up truck tires in Nokian Tyres' primary markets in the Nordic countries, Central Europe, and North America amounted to approximately 600 million tires. The U.S. Tire Manufacturers Association (USTMA) estimates that the North American market covers nearly half of the total market.
According to Global Data, the demand for tires will grow moderately in Nokian Tyres' primary markets during 2024-2027. The yearly growth rate is estimated to be approximately 2 percent in the Nordic countries and North America and approximately
1 percent in Central Europe. The number of electric cars and SUVs is growing constantly, further increasing the demand for larger-size tires in all markets.
Nokian Tyres' heavy tires are sold in both the original equipment and replacement markets. Nokian Tyres estimates that the size of the global market for heavy tires was slightly over USD 30 billion in 2022. Smithers estimates that the market is expected to grow
5.5 percent per year until 2027. The growth rate is the highest, over 6 percent per year, in the market for tires used in the mining and construction industry and for harbor vehicles. The market for tires used in heavy industry vehicles will grow approximately 5 percent per year, and the market for special tires for forestry and agricultural machinery will grow approximately 4.5 percent.
MADE FOR DEMANDING CONDITIONS:
JOHANNA HORSMA
Our industry is in a state of flux; the need for renewal is here to stay
Nokian Tyres' products are made for demanding conditions. In recent years, the conditions have also been demanding for the company and its personnel. According to Nokian Tyres' Chief Transformation Officer Johanna Horsma, in the new operating environment, growth and success still stem from the things the company is already strong or the best at.
Johanna sees that Nokian Tyres is now in a good position: "We quickly had clear plans in place after it was evident that the operating conditions in Russia had became unsustainable. The exit from Russia was a significant change that required plenty of effort. We had no ready-made model for it, but we had to come up with the means along the way. The entire team did a tremendous job."
"The need for renewal has become permanent for all companies in the car and tire industry. To ensure efficient operations, industrial companies are, due to global risks, considering the relocation, capabilities, and processes of their factories."
Cross-cutting changes are always challenging. Our advantage is that in our industry, we are a fairly small, international company focusing on niche segments and offering premium products. We can operate quickly and agilely with the help of strong expertise, a good team,
and co-operation.
According to Johanna, Nokian Tyres' strengths also include the company's size and low hierarchy. "Cross-cutting changes are always challenging. Our advantage is that in our industry, we are a fairly small, international company focusing on niche segments and offering premium products. We can operate quickly and agilely with the help of strong expertise, a good team, and co-operation."
Megatrends are shaping the tire industry
Strategy Review Report by the Board of Directors Financial Statements Governance Non-Financial Information Remuneration | 10 | ||
Long-term megatrends are shaping the car and tire industry. Climate change mitigation, the evolving weather and driving conditions, and new technologies guide tire design and increase the demand for sustainable and innovative tires.
One of the primary industry-shaping trends is the increasing number of new car models and the more common use of SUVs and crossover models. With the electrification of driving, tires must not only be more durable and have higher load capacity but also will be quieter and have a lower rolling resistance.
Each tire type - summer tire, non-studded tire, studded tire, all-season tire, and all-weather tire - is designed to provide safe driving in different conditions. Due to the changing weather conditions caused by climate change, the demand for all-season and all-weather tires is growing.
Nokian Tyres is responding to the change in the tire industry created by the megatrends by investing and focusing on product develop- ment.
1. Digitalization and connectivity
The digital transformation of society is gaining speed, and the number of digital innovations is also increasing in the tire industry. Automation and robotics are changing design and manufacturing. The use of data and connectivity create new business models and redefine the value networks.
3. Autonomous vehicles
Many significant companies in the car industry are developing smart autonomous vehicles for various uses. Self-driving cars would be even more aware of their surroundings and could optimize driving and route selection based on maximum security.
2. Electrification
Most new cars will soon be EVs. Traditional car brands are investing in EVs, and more brands are focusing solely on EVs. The electrification of driving is also influencing tire design.
4. Environment
Climate change, the green transition, regulation, and standards encourage the development of environmentally and climate-friendly production processes and tire tech- nologies. Read more about these topics in Nokian Tyres' Sustainability Report, published in late March 2024.
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Nokian Tyres plc published this content on 29 February 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2024 11:12:25 UTC.