Nokian gets N.A. growth expectations back on track

NOKIA, Finland—With the uncertainty of COVID-19-related business interruptions of 2020-21 largely behind it, Nokian Tyres P.L.C. is working to get its North American growth expectations back on track.

Nokian still expects to double revenue in North America over a three- to five-year period, based on increased sales of snow and all-season tires, said Anna Hyvonen, executive vice president, Nordics, Vianor and North America, speaking at the Capital Markets Day conference recently.

The North American growth targets support Nokian's overall goal of increasing global revenue by 25 percent over the next few years to approximately $2.35 billion.

Nokian's sales in North America in 2020 and 2019 were $195 million and $232 million, respectively, or 13 percent of global revenue. For the first nine months of 2021, revenue generated in North America jumped 40 percent to $197 million.

Nokian has targeted a doubling of its sales in North American since 2017, when it committed to building a factory in the U.S. At that time, Nokian's sales in the region were roughly $165 million, meaning the firm's sales should rise to more than $300 million by 2021, by which time the company's tire plant in Dayton, Tenn., should have running at near full capacity.

The emergence of COVID-19 and the global pandemic waylaid that trajectory.

To deliver its renewed growth goal, Nokian has targeted sales of 4 million tires throughout the U.S. and Canada, up from 2 million presently. Nokian nearly doubled its workforce there this year, to roughly 325 workers from 175 at year-end 2020.

Nokian also said it would build on its "strong customer relationship" in snow-belt areas in Canada and northern U.S. "to secure a share of the winter market."

"We will maintain our market leader position in Canada and increase our in-store share in the U.S.," Hyvonen said.

To help increase volumes, Nokian has plans to expand its all-season product offerings and distribution network in the region.

One product launched this year, the Nokian One all-season passenger tire, has become the best-selling product in Nokian Tyres' history in North America, according to Vice President of Sales Tommi Heinonen.

The Nokian One passenger line complements the Nokian One HT, an all-season light-truck/SUV product with a symmetrical, non-directional tread pattern and aramid-reinforced sidewalls that debuted in mid-2020.

"Overall, it has been an excellent year for us," Heinonen said. "Strong sales and a lot of new product launches."

Having already introduced new tires for the North American market, the manufacturer aims to expand its all-season range in premium (A segment) and mid-tiers (high B segment).

Output from Nokian's Dayton, Tenn., factory is "the key, when it comes to the North American all-season products," Hyvonen said, citing the light truck market as a particular growth-engine.

"The light truck vehicle count is growing approximately 5 percent per year. It is the most interesting segment for us," she said.

In terms of distribution, the official said Nokian's market penetration in Canada is higher than in the U.S., with over 1,000 point-of-sale locations.

"In Canada, the aim is to capture the growth potential in Ontario and in Montreal area and grow the winter market share," she said.

In the U.S., Nokian has close to 5,000 point-of-sale units and is expanding its footprint with wholesale partners and with large retailers.

"To support growth in all-season products, we will expand, especially in south and west, and develop our own distribution network further in the northeast," Hyvonen said.

The company will also focus on enhanced forward planning with clients and delivering directly from the factory to key customers.

An example of this is Nokian's deal to supply Discount Tire/America's Tire with an all-weather tire, the Encompass AW01, on an exclusive basis.