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Safest tyres for Nordic conditions

NOKIAN TYRES IN RUSSIA. Safest tyres for Nordic conditions. 15.6.2006. DRIVERS BEHIND NOKIAN TYRES SUCCESS. FOCUS BRAND NEW PRODUCTS & INNOVATIONS HIGH INVESTMENTS COMPANY CULTURE. ”The original winter tyre”. NORDIC CONDITIONS –> STRATEGY > FOCUS. Winter & Forest

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Safest tyres for Nordic conditions

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  1. NOKIAN TYRES IN RUSSIA Safest tyres for Nordic conditions 15.6.2006

  2. DRIVERS BEHIND NOKIAN TYRES SUCCESS • FOCUS • BRAND • NEW PRODUCTS & INNOVATIONS • HIGH INVESTMENTS • COMPANY CULTURE ”The original winter tyre”

  3. NORDIC CONDITIONS –> STRATEGY > 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. 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”

  6. MAIN INNOVATIONS • Bear claw stud area improves ice grip and reduces noise and road wear • New evolution version of Nokian’s unique square stud • Quattrotread construction with four different rubber compounds

  7. Car tyres 55% (53%) Net sales 416.2 m€ (364.6 m€) Change +14.2% 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 trucktyres 4% (5%) Net sales 30.1 m€ (31.0 m€) Heavy tyres 10% (9%)Net sales 76.2 m€ (59.6m€) Change +28.0% (year 2004)

  8. OPERATING PROFIT BY PRODUCT AREA 2005 (MEUR)

  9. GROSS SALES BY MARKET AREA JAN-DEC 2005 Sales of Manufacturing units Sales of Nokian Tyres group (year 2004) (year 2004) Others North America Others 0 % (0%) Finland North America 11 % (8%) Finland 0% (0%) 27% (30%) 14% (10%) Other Europe 24% (27%) 13 % (14%) Other Europe 16% (18%) Eastern Europe Sweden Eastern Europe 4 % (4%) 12% (13%) Sweden 5% (5%) Russia & CIS Norway 16 % (17%) Russia & CIS 17 % (13%) 8% (9%) Norway 21% (17%) 12% (13%) Sales increased • Nordic countries +5.5% • Russia and CIS +44.3% • Eastern Europe +21.4% -North America +55.9% Sales increased • Nordic countries +2.7% • Russia and CIS +44.7% • Eastern Europe +17.9% -North America +55.9%

  10. 250 200 150 100 50 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 LE 2009 Q1 2006 RUSSIA SALES DEVELOPMENT IN RUSSIA Nokian Tyres clear # 1 in premium tyres Growth Q1 2006 +35.2% 4 mpcs

  11. 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 >50% of car sales western brands

  12. RUSSIAN CAR TYRE MARKET NEWS 2005 • Russia’s car tire output up 8.5% on year in 2005 • (Federal State Statistics Service) • Russian new car market grows 14% in 2005 • (ASM Holding) • Russia’s car output down 2.5% on year in 2005 • (ASM Holding) • Russia’s car imports up 47.3% to 773,700 vehicles in 2005(Federal Customs Service) • Foreign investment in the Russian economy increased 32.4% to $53.651 billion in 2005 (Federal State Statistics Service) • Russian GDP grew by 6,4% in 2005 • (Federal Statistics Service ) • Russian producer price inflation registers 13.4% in 2005 • (Federal Statistics Service ) • Russia's industrial production grew by 4.0% Y/Y in 2005 • (Federal State Statistics Service)

  13. 63 54 tot. 30,44 32,93 36,35 40,09 44 49 54 63 47 41 Market size (k pcs), expected scenario 35 31 27 23 Market size (k pcs), conservative scenario 30,44 32,93 35,49 37,91 40,17 42,51 44,93 47 A = Top ranked branded western tyres B = Secondline western & new Russian brands C = Traditional Russian tyres MARKET SIZE PROJECTIONS – CAR AND VAN TYRE MARKET IN RUSSIA Market size (k pcs), positive scenario

  14. RUSSIAN PREMIUM TYRE MARKET IN 2005: market shares Estimated total A-segment market shares 2005 by sell-in volume Winter tyres market share > 30% Pirelli Nokian Tyres Michelin Summer tyres market share > 10% Bridgestone Continental GoodYear

  15. 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

  16. WHY PRODUCTION IN RUSSIA? WHY PRODUCTION IN RUSSIA? Benefits compared to production in Finland (2005): • no import duties => 6-15 euros per tyre (min. 6.25 euros/tyre) • lower personnel costs => Finland EUR 45,000-50,000 per year => 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 => 80 MEUR/year benefit in favour of Russia if all benefits fully factored in at 2005 level • estimated realized benefit 50-60 MEUR/year in 2008-2009

  17. VIANOR OUTLETS 2006, 31st March TOTAL: 207 OUTLETS over 10 outlets Vianor Finland • 67 outlets • 3 retreading plants • personnel ~430 Vianor Norway - 43 outlets - 2 retreading plants • personnel ~260 Vianor Russia • 35 outlets Vianor Estonia • 6 outlets • personnel ~30 Vianor Sweden - 55 outlets, + 9 new partner outlets as of 2 May, 2006 - 1 retreading plant • personnel ~360 Vianor Latvia • 1 outlet • personnel 4

  18. VIANOR IN RUSSIA • Significant increase of Vianorin partner network • Wider distribution • More visibility and market presence • No equity investment on distribution chain Murmansk

  19. 31.3.2006: 35 outlets Perm Nishnekamsk Tjumen Ufa Krasnodar Magnitogorsk Krasnodar Ulan Ude 10 VIANOR IN RUSSIA - additional contracts made- organization established- network expansion accelerating planned outlets => approx 100 by theend of 2007 10 10 10

  20. CAPEX AND GROWTH PLAN FOR 2006 => 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

  21. VSEVOLOZHSK TYRE FACTORY

  22. 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)

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

  24. GROUND-BREAKING CEREMONY ON JUNE 2004

  25. OFFICIAL LAUNCH CEREMONY 22 SEPTEMBER 2005

  26. 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

  27. INVESTMENTS AND PRODUCTION VOLUMES Total investment for the Russian factory 2004-2007 approx. 150 m€ 2005 approx. 55 m€ Accelerated timetable Production volumes in Russia 2005: start-up 0.3 million tyres 2006: 1.9 million tyres 2007: 3.1 million tyres 2008: 4.1 million tyres

  28. EXPANSION PLANS • Warehouse commissioning: July 2006 • Mixing will 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

  29. 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 Laaksonen Vice President, Finance & Control Anne Leskelä Manufacturing Manager Oleg Orlov General Sales Manager Dmitry Shmarov 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 Laaksonen Logistics Manager Dmitry Makarov HR Manager Lilia Yasakova Assistant to GM Natalia Belichenko

  30. SALES ORGANIZATION 06/2006 Vice-President Sales & Logistics Kari-Pekka Laaksonen General Sales Manager Dmitry Shmarov 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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