Market situation

Interim Report January–September 2017

The economic recovery continues in company’s main markets. For 2017 and 2018, growth is expected in all regions. The global GDP is estimated to grow by 3.6% in 2017. The GDP growth estimates for the Nordic countries range from +1.9% to +3.3%, whereas for Europe (including the Nordic countries) the number is +2.1% and for the US +2.1%. In Russia, GDP is forecasted to grow by approximately 1.5% to 2.2% in 2017.

Raw material prices demonstrated fast growth at the beginning of the year, but this growth has levelled off. The global tyre industry responded to the growing raw material prices by announcing price increases. However, the actual price increases are to be seen after the winter tyre season.

In Europe, sales of new cars increased in January–September 2017 by 4% year-over-year. Car tyre sell-in to distributors was down 1% year-over-year, with winter tyre demand increasing by 2%. Overall, tyre demand is estimated to remain at the same level year-over-year in 2017.

In the Nordic countries, new car sales increased in January–September 2017 by 2% year-over-year. The market volume of car tyres decreased by 8%. For the full year 2017, car tyre demand is estimated to decrease slightly year-over-year.

In North America, the estimated new car sales were down by 1% in 1–9/2017 compared with 1–9/2016. The market volume of car tyres was flat year-over-year. However, demand for winter tyres increased by 4%. For the full year 2017, car tyre demand is estimated to increase slightly year-over-year.

In the first three quarters of 2017, the Russian economy started growing again after a prolonged recession. Real GDP is estimated to have grown by 1.5% in 1–9/2017, and the growth forecasts for the full year 2017 are in the range of 1.5–2.2%. However, private consumption remains quite weak after a 15% decline in 2015–2016. It gradually starts recovering in 2017, but the improvement is unlikely to be rapid. This development is reflected in the retail turnover in Russia, which shows only marginal signs of growth. Sales of new cars in Russia are expected to grow by 11–13% compared with 2016, driven by improved economy, deferred demand and low comparison base. After the first nine months of 2017, sales of new cars increased by 11% compared with the same period in 2016, with growth starting only in March, picking up since June and reaching almost 18% in September vs. the same month in 2016. The total replacement tyre market sell-in in Russia is expected to grow by ~15% in 2017 compared with 2016. 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 H1/2016, negatively affected by weather conditions, and is expected to grow in winter tyres, depending on the dynamics of the winter season.

The global demand for special heavy tyres continued to be healthy in January–September 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 also has showed improvement.

In January–September 2017, the sell-in of premium truck tyres was up by 2% in Europe, and in the Nordic countries up by 3%. In Russia, the demand for premium truck tyres decreased by 6% compared with 1–9/2016. Truck tyre demand in 2017 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.