Helsinki – Nokian Tyres has outlined its strategy for a return to profitable growth following the challenging period for the company, at an event for investors and analysts in Helsinki.
Difficulties over the past years, particularly in its key Russian markets, led to cutbacks at Nokian, including a plan to decrease the annual output of passenger car tire production at its Nokia factory.
The restructure, which involves 150 job cuts is intended to delivers savings of around €8 million a year.
Looking to the future, president and CEO Ari Lehtoranta, said Nokian’s product portfolio, strength in core markets, expanding distribution channel and improved cost structure would enable it to grow sales and margins.
As a sign of confidence, Lehtoranta said the company was continuing with previously announnced plans to build a third tire factory – though a decision would be made later than mid-2016, a senior Nokian official recently told ERJ.
“The decision of the factory and its location will be made by Q4/2016. I feel very confident that we have now started our journey back to profitable growth,” Lehtoranta said at the 17 Nov analysts event.
Setting out financial targets for 2016-2018, the Nokian boss aaid aims was to “grow faster than the market with healthy profitability.”
Based on the current market outlook, Lehtoranta said this would result to minimum 4-5 percent average annual sales growth to 2018, with an operating profit level of at least 22 percent.
“Nokian Tyres is on track to reach the financial targets. Our operating profit level in January-September 2015 was 21.5 percent, despite the economic challenges in Russia and delay of the winter season,” he commented.