NOKIA, Finland — Nokian Tyres P.L.C.'s mid-term growth strategy, covering the next three to five years, includes doubling its sales revenue in North America, the Finnish tire maker told financial analysts during its recent capital markets day.
Based on the company's fiscal 2020 and 2021 results to date, that would put the company's sales in North America at nearly $475 million, at current currency exchange rates.
Corporate-wide, Nokian is targeting 13.5% annual growth through 2024 to roughly $2.4 billion, executives told the financial community during the presentation. As such, North America would represent nearly 20% of the company's global sales, up from 13% currently.
Nokian's latest financial forecasting puts North America back on track for a doubling in sales after the COVID-19-impacted sales decline in fiscal 2020. The company has been targeting a doubling in sales for North America since disclosing its plan in 2017 for a U.S. factory.
Nokian's market strategies will include developing distribution through "selected wholesale partners" and going direct with large retail accounts with an emphasis on the South and West.
Earlier this year Nokian secured an exclusive distribution arrangement with Discount Tire/America's Tire with the Encompass AW01, an all-weather tire backed by a 60,000-mile warranty.
Some specific initiatives cited by Anna Hyvonen, executive vice president, North America, Nordics and Vianor in her presentation are:
- Joint product development with industry-leading retailers and distributors;
- Build brand awareness and consumer pull; and
- Competitive sell-in and sell-out programs for wholesalers and retailers.
Ms. Hyvonen also said Nokian will continue to build on customer relationships to secure a larger share of the winter tire market as well as expand its all-season tire offerings.
In Canada, Nokian is looking to "realize Ontario market potential" with an undisclosed wholesale partner while continuing to grow current retail and wholesale partnerships in Quebec, particularly in Montréal.
The mid-term plan will aim to maintain the company's "leading position" in Nordics and Russia, while increasing market share in North America and central Europe.
Mid-term refers to a three- to five-year time framed, based on a cumulative 12 months from mid-2020 through mid-2021.
During that period, Nokian sold roughly 2 million tires in North America, Nokian Tyres President and CEO Jukka Moisio said in his presentation.
"The ambition is to increase that number to 4 million units [over the next few years]," he added.
Mr. Moisio said the tire maker had completed its "investment phase" and was now focusing on new products and supply chain growth to achieve the target.
In central Europe, Nokian expects to increase unit sales by 50% over the 6 million units sold there over the mid-2020 to mid-2021 period.
In the medium term, the tire maker aims to increase that figure to 9 million units, through high-value growth in profitable segments and expanding geographical reach and brand awareness.
Furthermore, Nokian highlighted plans to increase revenue from its heavy tires unit by a third to about $350 million. To that end, the tire maker will target growth in "premium segments," further strengthen position in forestry and expand in agriculture and on-road products.
In the first half of 2021, Nokian the tire maker reported sales of $890 million and segment operating profit of $165 million, yielding an operating ratio of 18.5%.
Supporting Nokian's growth plans for North America is its factory in Dayton, Tenn., which began commercial operation in January 2020 and recently went to 24/7 operation. The company doubled the size of the workforce there since early 2021 to 300 and added a third production shift in mid-May.
