Market situation

Half Year Financial Report January–June 2017

The global recovery continues. For 2017 and 2018, growth is expected in all regions. The global GDP is estimated to grow by 3.5% in 2017 (3.1% in 2016). The GDP growth estimates for the Nordic countries range from +1.6% to +3.0%, whereas for Europe (including the Nordic countries) the number is +1.7% and for the US +2.2%. In Russia, GDP is forecasted to grow by approximately 1.5% to 2.0%.

Raw material prices demonstrated fast growth at the beginning of the year, but this growth levelled off in Q2/2017. The global tyre industry responded to the growing raw material prices by announcing price increases. However, the actual price increases implemented in the markets are not yet fully visible.

In Europe, sales of new cars increased in JanuaryJune 2017 by 5% 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 in Central Europe is estimated to grow slightly year-over-year in 2017.

In the Nordic countries, new car sales increased in JanuaryJune 2017 by 2% year-over-year. The market volume of car tyres decreased by 5%. For the full year 2017, car tyre demand is estimated to remain at the same level year-over-year.

In North America, the estimated new car sales were down by 9% in H1/2017 compared with H1/2016. The market volume of car tyres was up slightly year-over-year. However, demand for winter tyres increased 13%. For the full year 2017, car tyre demand is estimated to increase slightly year-over-year.

In the first half of 2017, the Russian economy started growing again after a prolonged recession. Real GDP is estimated to have grown by 1–2% in H1/2017, and the growth forecasts for the full year 2017 are in the range of 1.5–2%. However, private consumption remains quite weak after a 15% decline in 2015–2016. It is expected to start 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 modestly, up to 10% compared with 2016. After the first six months of 2017, sales of new cars increased by 7% compared with the same period in 2016, with growth starting only in March (+9% compared with March 2016) and picking up in June (+15% compared with June 2016). The total replacement tyre market sell-in in Russia is expected to grow by 10–15% 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 showed a slight decline compared with H1/2016, negatively affected by the weather conditions.  

The global demand for special heavy tyres continued to vary strongly between products and market areas in JanuaryJune 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 showed improvement.

In January-June 2017, the sell-in of premium truck tyres was up by 7% in Europe, and in the Nordic countries demand was up by 7%. In Russia, the demand for premium truck tyres decreased by 7% compared with H1/2016. 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.