OTSIKKO, VERSAALI, 28 PT, KESKITETTY

1
NOKIAN TYRES IN RUSSIA
Safest tyres for Nordic conditions
29.9.2006
2
DRIVERS BEHIND NOKIAN TYRES SUCCESS

• FOCUS
• BRAND
• NEW PRODUCTS INNOVATIONS
• HIGH INVESTMENTS
• COMPANY CULTURE

The original winter tyre
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NORDIC CONDITIONS gt STRATEGY gt FOCUS
Winter Forest High growth potential product
segments and market areas Russia, North America,
Eastern Europe
4
NEW PRODUCTS INNOVATIONS

• Minimum 25 of sales new products
• Technological leadership
• High investment on winter tyre development and
  testing

5
SELECTED EXAMPLES OF PRODUCT RANGE
2006
2006
Nokian HKPL 4
Nokian RSi
Nokian NRHi
Nokian HKPL5
Nokian HKPL SUV 5
2006
2006
2006
Nokian Hakka
Nokian Hakka Cvan cargo
Nokian NTR 861
Nokian i3
Nokian Z
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NEW INNOVATIVE PRODUCT FAMILIES FOR 2006 SALES

• Nokian Hakkapeliitta 5
• 38 sizes Largest size range on the market
• Nokian Hakkapeliitta Sport Utility 5
• 27 sizes Largest size range on the market
• The original winter tyre

7
MAIN INNOVATIONS

• Bear claw stud area improves ice grip and reduces
  noise and road wear
• New evolution version of Nokians unique square
  stud
• Quattrotread construction with four different
  rubber compounds

8
NET SALES BY PRODUCT AREA 2005
Net sales 686.5 m 13.8, 14. consecutive year
of growth
Vianor 31 (33) Net sales 235.1 m (223.9 m)
Change 5.0
Retreading operations and truck tyres 4 (5)
Net sales 30.1 m (31.0 m )
Heavy tyres 10 (9)Net sales 76.2 m (59.6
m) Change 28.0
(year 2004)
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OPERATING PROFIT BY PRODUCT AREA 2005 (MEUR)
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GROSS SALES BY MARKET AREA JAN-DEC 2005
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TYRE INDUSTRY COMPARISONS
Net sales growth (index 1995100)
400
350
300
Net sales growth CAGR 1995-2004 Nokian 13,9
Michelin 5,0 Bridgestone 4,1
Continental 10,2
Nokian
250
Michelin
index
200
Bridgestone
150
Continental
100
50
0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Michelin, Continental Former accounting
standards 1995-1998
Source Company data
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RUSSIA UPDATE
SALES DEVELOPMENT IN RUSSIA Nokian
Tyres clear 1 in premium tyres Growth H1 2006
50.2
4 mpcs
250
200
150
100
50
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
H1
LE
2006
2009
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RUSSIAN PREMIUM TYRE MARKET IN 2005 market shares
Estimated total A-segment market shares 2005 by
sell-in volume
Winter tyres market share gt 30
Pirelli
Nokian Tyres
Michelin
Summer tyres market share gt 10
Bridgestone
Continental
GoodYear
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MARKET PROJECTIONS CAR AND VAN TYRE MARKET
RUSSIA
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SALES OF NEW CARS AND CAR PARK FORECAST IN RUSSIA
Sales of new cars
Russian car park forecast
Sales of new cars to grow to 2 million pcs by
2007 gt50 of car sales western brands
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WHY PRODUCTION IN RUSSIA?

• The Russian market is strategically very
  important for Nokian Tyres
• Nokian is one of the most well-known tyre brands
  in Russia
• Tyres have been exported to Russia since 1964
• Currently Nokian Tyres is one of top 3 players in
  the premium segment with a 20 market share (2004
  data)
• The Russian tyre market is expanding rapidly
• Market growth is estimated at 10 15 a year
• Premium segment, which Nokian focuses on,
  demonstrates higher growth
• The factory in Nokia, Finland is running at full
  capacity

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WHY PRODUCTION IN RUSSIA?

• Benefits compared to production in Finland
  (2005)
• no import duties gt 6-15 euros per tyre (min.
  6.25 euros/tyre)
• lower personnel costs gt Finland EUR
  45,000-50,000 per year gt Russia EUR 5,000
  per year (inflation 8-12 p.a.)
• 20-25 lower raw material costs (gap to narrow
  with time)
• 40 lower energy costs (gap to narrow with
  time)
• tax holiday for 10 years
• 4 million tyres gt 80 MEUR/year benefit in
  favour of Russia if all benefits fully
  factored in at 2005 level

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RUSSIA

• strong sales growth
• clear market leader with approx. 30 market
  share in premium car winter tyres
• distribution expanded through partner agreements
  and Vianor shops
• two first production lines operate in 3 shifts
• production volumes and quality according to
  targets
• installation of the third production line
  during H2/2006
• construction work of the mixing house and
  warehouse proceeded as planned
• new warehouse taken Into use in June 19,000 m2
  for approx. 600.000 tyres
• first mixing line to be taken into use in the
  autumn 2006 and the second line by the end of the
  year
• total number of personnel working in Russia
  30.6.2006 308

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VIANOR IN RUSSIA

• Significant increase of Vianor partner network
• Wider distribution
• More visibility and market presence
• Limited investment on distribution chain
• Growth via partner franchising concept

Murmansk
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VIANOR IN RUSSIA
- additional contracts made- organization
established- network expansion accelerating
- planned outlets gt approx 100 by the end of
2007
Perm
Tjumen
Nishnekamsk
Ufa
Krasnodar
Magnitogorsk
Krasnodar
10
10
10
10
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VIANOR OUTLETS 2006, August 3rd
TOTAL 228 OUTLETS (166 own, 62
franchising/partner)

• Vianor Finland
• 60 own outlets
• 7 franchising outlets
• 3 retreading plants
• personnel 440

over 10 outlets

• Vianor Norway
• 43 own outlets
• 2 partner outlets
• - 2 retreading plants
• personnel 260

• Vianor Russia
• 2 own outlets
• 37 partner outlets

• Vianor Estonia
• 6 outlets
• personnel 35

• Vianor Sweden
• 54 own outlets
• 16 partner outlets
• - 1 retreading plant
• personnel 360

• Vianor Latvia
• 1 outlet
• personnel 7

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CAPEX AND GROWTH PLAN FOR 2006 gt

• Investments Q1/2006 14.7 m (23.7 m )
• Total investments for 2006 92 m (119.6 m)
• RUSSIA
• capacity ramp-up and investments
• progressing according to plan
• 70 m in 2006-2007
• 53 m 2006
• 4 million tyres in 2008
• VIANOR EXPANSION
• Nordic countries, Russia, Eastern Europe
• own outlets, franchising and tyre hotels
• approx. 10 m in 2006 -2007

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VSEVOLOZHSK TYRE FACTORY
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PROJECT HISTORY WHY VSEVOLOZHSK?

• Proximity to important regional markets in Russia
  and Nordic countries
• Availability of highly qualified work force
• Attractiveness of the investment climate
• Competence and professionalism of regional and
  local authorities
• Industrial zone with prepared engineering
  infrastructure
• Proximity to Finland (transportation of raw
  materials and equipment, possibility to utilize a
  large number of technical specialists from the
  parent company)

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PROJECT HISTORY IMPORTANT MILESTONES
2003
2004
2005
2006
11 Feb
5 May
23 June
Sep
Jan
Feb
6 June
22 Sep
Oct
Jan
July
15 Mar
Investigation on possible investment in Russia
Official inauguration ceremony
Start-up of second production line
Commissioning of warehouse
Decision of NTs Board on Vsevolozhsk investment
Ground- breaking ceremony
Roofing celebration
Production of first Hakkapeliitta 4
tyres
Start of earth works On site
Start of construction works
Production of first Hakkapeliitta 5 tyres
Start of equipment installation
Production start-up
Start of 2 nd stage Construction works
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GROUND-BREAKING CEREMONY ON JUNE 2004
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OFFICIAL LAUNCH CEREMONY 22 SEPTEMBER 2005

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VSEVOLOZHSK FACTORY TODAY

• Installed two production lines
• Approx 300,000 tyres were produced in 2005
• Production is running at full capacity in a 24/7
  mode
• Daily output in the range 5,500 6,100 tyres/
  day
• Vsevolozhsk-produced tyres delivered to
  customers in key markets since September 2005
• Number of personnel in Russia in June 2006
  270
• 210 employed in production, both blue- and
  white-collar
• Products currently produced winter tyres
• Nokian Hakkapeliitta 5, Nokian Hakkapeliitta 4,
  
• Nordman and summer tyres Nokian i3
• Production range continuously expanded

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EXPANSION PLANS

• Warehouse commissioning July 2006
• Mixing start-up autumn 2006
• Planned production capacity by 2008 4 million
  tyres a year
• third and fourth production lines to be
  installed in 2006 2007
• Ultimate planned production capacity 8 million
  tyres a year
• further expansion possible

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NOKIAN TYRES RUSSIA ORGANIZATIONAL STRUCTURE 2006

• Nokian Tyres LLC
• Nokian Shina LLC
• Vianor LLC/Vianor SPb LLC

Senior Vice President, Strategy Antero Juopperi
Vice President Production Services Esa Eronen
General Manager Andrei Pantioukhov
Vice President, Sales Logistics Kari-Pekka Laaks
onen
Vice President, Finance Control Anne Leskelä
General Sales Manager Dmitry Shmarov
Manufacturing Manager Oleg Orlov
Vice President,Communicat. IR Raila Hietala-
Hellman
Marketing Communications Supervisor Anna Gorokhova
Finance Manager Irina Ushakova
Vice President, Personnel Safety Sirkka Hagman
Vice President, Sales Logistics Kari-Pekka Laaks
onen
Logistics Manager Dmitry Makarov
HR Manager Lilia Yasakova
Assistant to GM Natalia Belichenko
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SALES ORGANIZATION 06/2006
General Sales Manager Dmitry Shmarov
Vice-President Sales Logistics Kari-Pekka
Laaksonen
Sales Assistant XXX
Sales Analyst Ekaterina Arkhipova
RRep Moscow Vitaliy Maslov M
Regional Sales Manager Irina Surkova M
Customer Service Supervisor Svetlana Ivanova
Logistics Manager Minna Metsälä
RRep Golden Ring Danil Abramov
Regional Sales Manager Max Chizhov
RRep Ural Dmitry Musalnikov
RRep Far East Andrei Isachenko
Regional Sales Manager Kirill Sevrukov
CS Coordinator Natalia Titova
RRep Siberia Eugeny Khanko
DSD SRep SPb Frol Skipin
CS Coordinator Alla Demchenko
Heavy Tyres Sales Mgr Jukka Hautala
Sales Mgr PC2 Artyom Prigoda M
RRep North-West Alexey Krivosheev
CS Coordinator Olga Tikhomirova
Car Dealer SRep SPb M. Shalanzev
Automotive KAM Oleg Poluyansky M
Sales CDB Mgr K. Kivelä
CarDealerSRepMoscow V. Vyrypaev M
RSM (2) XXX
CS Coordinator Olga Zarechneva
RRep Central Russia Kirill Shabinsky
RSM Rodion Savelyk
BDM Vianor M. Kudrov
Sales Coordinator Darja Kuznetsova M
RRep Southern Russia V. Kajukov
TBR Manager XXX
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