In 2012, Nokian Tyres performed well in a challenging environment and recorded all time high sales and profits combined with excellent cash flow. Our position is very strong in core markets, the company is debt-free and we are able to further develop our business from a healthy position.
Uncertainty and slowing growth continued in the global economy. Doubt about the direction of the US economy, slower growth in China and continuing problems in Europe weakened the economic situation, and with it consumer confidence and spending. From an economic development point of view, our core markets Russia and the Nordic countries were among the best of the developed world.
Nokian Tyres sales in Russia grew more than three times faster than the overall market, by almost 50%, further strengthening our market leader position. In the Nordic countries sales came in as planned, we gained winter tyre market share and continue to be a clear market leader. The weak economic situation in Central Europe combined with high carry-over inventories in distribution resulted, however, in a dramatic drop in demand in the region, and in the second half of the year our sales also suffered.
Due to decisive and rapid changes in production, allocating a higher share of our production and sales to Russia and support from reduced costs we managed to end the year with reasonably good results. We managed to increase car tyre sales volumes, improve sales mix and overall ASP, and to improve our market position.
Strong market position
For many reasons, we are looking into 2013 with confidence. Our main markets in Russia and Northern Europe are looking comparatively healthy, offering us a good base for profitable business. Europe’s economies are also expected to recover towards the end of 2013, which we expect will give a boost to demand and sales growth.
Our product range is better than ever before, which has improved our competitive position. This is a result of our overwhelming test wins in 2012 combined with the greatest launch in our history as three-quarters of our range of winter tyre models will be revamped for 2013. I expect that the new generation of Hakkapeliitta winter tyres and top-class summer tyres will strengthen our position at the top of sales statistics.
Increasing our sales and market share require an extensive, well-managed distribution chain. It is again encouraging that we managed to open 127 new Vianor outlets, now totalling 1,037 in 26 countries. The latest countries to be added to the network were France, Serbia and Bosnia-Herzegovina. Our objective is to continue to strengthen our distribution channels, and to open more than 100 new stores in 2013.
The growth of our production capacity continued with the opening of a new factory next to the current one in Russia. The factory’s degree of automation, productivity and quality represent the absolute peak in the industry. For this reason, our productivity improved and our production output increased despite a harsh market environment. With the new factory up and running, we presently have an inbuilt capability to increase output rapidly to meet market growth without capital expenditure, and further to increase output by 50%, merely by adding lines in Russia.
I would like to thank our customers for their faith in us, and our personnel for their fine performance in 2012. Through seamless co-operation, we will continue to achieve excellent results. I am convinced that we have the capacity to continue with profitable growth and thus to create added value for all our stakeholders in the coming years.