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Market situation

Financial Statement Release 2017

The positive development in global economy is expected to continue in 2018. As we entered 2018, all regions were showing positive development. The global GDP is estimated to grow by 3.8% in 2018 (3.7% in 2017). The GDP growth estimates for the Nordic countries range from +1.9% to +3.0%, whereas for Europe (including the Nordic countries) the number is +2.1% and for the US it is +2.6%. In Russia, GDP is forecasted to grow by approximately 1.5% to 2.0% in 2018.

Raw material prices demonstrated fast growth at the beginning of the year, but the growth levelled off towards the year-end. The global tyre industry responded to the growing raw material prices by announcing price increases. This resulted in a very challenging pricing environment in 2017.

In Europe, sales of new cars increased in 2017 by 3% year-over-year. Car tyre sell-in to distributors increased 3% year-over-year, with winter tyre demand increasing by 3%. Overall, tyre demand is estimated to increase slightly year-over-year in 2018.

In the Nordic countries, new car sales increased in 2017 by 2% year-over-year. The market volume of car tyres decreased by 6%. For the full year 2018, car tyre demand is estimated to increase slightly year-over-year.

In North America, the estimated new car sales were down in 2017 by 1% year-over-year. The market volume of car tyres increased by 1% year-over-year. However, demand for winter tyres increased by 3%. For the full year 2018, car tyre demand is estimated to increase slightly year-over-year.

In the full year 2017, the Russian economy started growing again after a prolonged recession. Real GDP is estimated to have grown by 1.4–1.8% in 2017. However, private consumption remains quite weak after a 15% decline in 2015–2016. Along with consumers’ real income, it gradually started recovering in 2017, but the improvement is unlikely to be rapid. This development is reflected in the retail turnover in Russia, which shows quite moderate signs of growth. In 2017, sales of new cars increased by 12% compared with 2016, with growth starting only in March, picking up since June and finishing the year with a 14% increase in December vs. the same month in 2016. Sales of new cars in Russia are expected to grow by approximately 12–15% in 2018 compared with 2017, driven by the improved economy, deferred demand and low comparison base – from the level of 1.6 million vehicles in 2017 up to 1.8 million in 2018. The total replacement tyre market sell-in in Russia is expected to grow by 3–5% in 2018 compared with 2017, with the winter tyre market growing by 7–9% and summer declining by 2–3%. Both summer and winter tyre sell-in for the 2017 season showed growth, backed by low carry-over stocks from 2016. The consumer sell-out season in Russia remained flat in summer tyres compared with 2016 and showed some growth in winter tyres.

The global demand for special heavy tyres continued to be healthy in 2017. The demand for OE forestry tyres remained strong. The increased use of wood and the good profitability of pulp manufacturers will also support the demand for forestry machines and tyres in the following quarters. During the review period the agricultural segment improved.

In 2017, the sell-in of premium truck tyres was at the same level in Europe, and was up in the Nordic countries by 1%. In Russia, the demand for premium truck tyres decreased by 5% compared with 2016. Truck tyre demand in 2018 is estimated to increase in all of Nokian Tyres’ Western markets; in Russia, demand is estimated to remain at the same level year-over-year.