STRENGTHENING MARKET LEADERSHIP IN RUSSIA

Transcription

1 STRENGTHENING MARKET LEADERSHIP IN RUSSIA NOVEMBER 13, 2018 ANDREI PANTIOUKHOV EXECUTIVE VICE PRESIDENT, RUSSIA & ASIA

2 STRENGTHENING MARKET LEADERSHIP IN RUSSIA Russia remains an attractive market for Nokian Tyres. Nokian Tyres continues to target the profitable A+B segments. Our market leadership is strongest ever. Our target is to continue outperforming competition. We are focusing on key building blocks for future growth. Local production in Russia remains a competitive advantage. Russia represents several business risks, but we effectively work to mitigate them. 2

3 NEW CAR SALES IN RUSSIA WILL GRADUALLY INCREASE 2012 peak sales expected to be achieved by 2023: New car sales in Russia (million units) 3,50 3,18 3,00 2,50 2,90 2,65 2,94 2,78 2,49 2,32 2,60 2,86 2,00 1,91 1,84 2,07 1,50 1,47 1,60 1,43 1,60 1,00 0,50 0, f 2019 f 2020 f 2021 f 2022 f 2023 f 3 Source: AEB; Nokian Tyres estimates

4 AND THE TIRE MARKET IS ALSO RECOVERING Growth driven by the B-segment Car, SUV, van tire replacement market (sell-in volume, million tires) Basic scenario C-segment B-segment A-segment CAGR Total +6.0% +4.0% +9.1% +5.7% f 2019f 2020f 2021f 2022f 2023f Note: market segmentation is based on brands relative price positioning and brand image 4 Source: Nokian Tyres estimates

5 WE TARGET 50% OF THE REPLACEMENT MARKET Focusing on winter and summer tires in A+B segments Russia's estimated 2018 replacement tire market (million units) A-segment B-segment C-segment ,3 5,8 3,3 19,4 9,1 12,0 6,2 3,7 Nokian Tyres target segments 7,0 winter summer total 5 Source: Nokian Tyres estimates

6 AND WE ARE THE PRICE LEADER IN WINTER TIRES Optimized product range and pricing are key for profitable market leadership STUDDED TIRES HKPL 9 = 100 STUDLESS TIRES HKPL R3 = 100 SUMMER TIRES 100 Nokian HKPL 9 Nokian HKPL R3 90 A-SEGMENT 80 Nokian HKPL R2 Nokian HAKKA GREEN 2 Nokian HKPL 8 70 Nokian NORDMAN SX2 B-SEGMENT 60 Nokian NORDMAN 7 Nokian NORDMAN RS2 Nokian NORDMAN 5 50 C-SEGMENT 40 6 Source: Nokian Tyres analysis

7 IN 2017, WE REACHED OUR HIGHEST EVER MARKET SHARE OF 30% IN A+B SEGMENTS 2017 market share (%) TOTAL A + B Segment 30,1 Total Market 14,6 A + B Segment Total Market A + B Segment Total Market WINTER 39,8 20,2 SUMMER 19,9 9,2 7 Source: Nokian Tyres estimates

8 AND WE AIM TO KEEP OUTPERFORMING COMPETITION Main building blocks for future growth Successful product policy Strong brand image Leveraging strong distribution Leadership in product performance and quality Comprehensive product portfolio Optimized price positioning within and across A+B segments 8 Best tires for all conditions Ultimate choice by consumers High brand awareness and intent to buy Brand promotion through effective creative solutions Close partnership with distributors Flexible financial terms Effective support of sell- out Multi- channel distribution structure Upgrade of online solutions

9 WE HAVE A MULTI- CHANNEL DISTRIBUTION NETWORK Official distributors Tire retail Automotive Corporate Fleet Customers Integrated wholesale / retail operations Federal retail chains with active online presence Regional or federal wholesale operations Professional tire retail Hakka Guarantee network of ~2,900 POS Controlled / franchised tire retail Vianor 328 shops Car manufacturers (> 20) Loose winter tires and complete wheel programs Car dealers Total ~ 3,100 POS Taxi operators Federal and regional-scale companies with own fleet Leasing companies Car sharing operators N-TYRE + NAD 130 shops Web-shops CONSUMERS 9

10 SUPPORTED BY VERSATILE DISTRIBUTION MODELS Vsevolozhsk factory Official distributors Direct sales and distribution (all channels) Direct sales and distribution (car dealers) Regional warehouses Uncovered territories 10

11 WE PROVIDE EFFECTIVE SELL- OUT SUPPORT Examples of marketing campaigns and actions Hakka Guarantee Discounted tire mounting Franchising support Extended Guarantee for Nokian Tyres products to support sell-out (free repair or replacement of damaged tire) ~ 2,900 POS participate in program Over 700 Authorized shops to provide service 11 Marketing program for consumers to drive sell-out in selected professional tire retail Effective marketing tool to support price positioning Autumn joint campaigns with partners (~700 retail shops) Seasonal advertising support for VIANOR & N-TYRE retail brands, including promotion of VIANOR.ru marketplace

12 PIONEERING IN DIGITAL TIRE BUSINESS Examples of running e-commerce solutions and business models B2B B2C vianor.ru Comprehensive web platform for business-to-business customers Currently covering over 95% of all incoming customer orders Own Nokian Tyres web shop for direct sales from the manufacturer to end consumers Sustainable, flexible and userfriendly marketplace aligned with business needs of Vianor partners and preferences of online consumers 12

13 LARGE- SCALE PRODUCTION IN RUSSIA KEY COMPETITIVE ADVANTAGE ONE OF THE MOST EFFICIENT TIRE FACTORIES IN THE WORLD THE LARGEST EXPORTER OF CONSUMER GOODS IN RUSSIA ANNUAL PRODUCTION CAPACITY 17 MILLION TIRES 24/7 OPERATION IN FOUR 12-HOUR SHIFTS 330 DAYS A YEAR PERSONNEL ~1,600 PEOPLE 100 xx HIGHEST QUALITY LEVEL EXPERIENCED TEAM OF HIGHLY QUALIFIED PROFESSIONAL EMPLOYEES VERY HIGH COMPLEXITY OF PRODUCTION 13

14 WELL POSITIONED TO REDUCE RISK Business risks Action Market risks: a new economic crisis leading to the deterioration of consumers disposable incomes and demand Wide product range covering all segments: switch to cheaper segments in case of weak demand Credit risks: potential bankruptcies of distributors, fraud Flexible financial terms with distributors stock audits Ban of import of tires from Russia to US and/or the EU Lobbying in the US to ensure that ongoing investment project is taken into account in decision-making Business interruption risks due to the actions of Russian authorities: counter-sanctions, import/export restrictions, official checkups Close cooperation with the Russian authorities on all levels; pro-active support of their initiatives; compliance with legislation Technical regulation risks: adoption of unfavorable standards & regulations Lobbying, pro-active participation in technical regulation development and adoption 14

15 STRENGTHENING MARKET LEADERSHIP IN RUSSIA Russia remains an attractive market for Nokian Tyres. Nokian Tyres continues to target the profitable A+B segments. Our market leadership is strongest ever. Our target is to continue outperforming competition. We are focusing on key building blocks for future growth. Local production in Russia remains a competitive advantage. Russia represents several business risks, but we effectively work to mitigate them. 15

16 STRENGTHENING MARKET LEADERSHIP IN RUSSIA NOVEMBER 13, 2018 ANDREI PANTIOUKHOV EXECUTIVE VICE PRESIDENT, RUSSIA & ASIA