Nokian sales up 40%; profits double in H1

ERJ staff report (DS)

Nokia, Finland -- Nokian Tyres group's net sales increased by 41.4 percent to EUR 628.0 million (EUR 444.2 million in 1-6/2010). Operating profit more than doubled to EUR 165.6 million (EUR 82.0 million).

Kim Gran, President and CEO said, “A flying start for 2011 was followed in Q2 by further strong growth in our core business. The first semester was a success for us as we beat all previous H1 results.

Gran said production output in terms of tonnes increased by 53 percent year on year, but sales grew by 'only' 41 percent, while average selling prices also increased. Despite these increases, said Gran, the market could still have absorbed more Nokian tyres.

Sales of passenger car tyres in the six months were up by 47.0 percent representing 69.8 percent (64.7 percent) of the group's total sales. Heavy tyres' sales increased by 52.8 percent and were 8.4 percent (7.5 percent) of the group's total sales.

Raw material cost (EUR/kg) in manufacturing increased in the review period by 35.8 percent year-over-year. Fixed costs amounted to EUR 165.9 million (147.6), accounting for 26.4 percent (33.2 percent) of net sales. Total salaries and wages were EUR 87.2 million (68.4).

Production output (pcs) grew by 48 percent compared with the corresponding period a year earlier, boosted by the increased capacity in Russia. Productivity improved along with high utilization and capacity increases. The production capacity will increase further as the line 9 in Russia is now on stream and line 10 will commence production in the end of Q3. The plant in Nokia is back to 7 days/week full capacity as from August. The company will also increase off-take contract manufacturing.

In passenger car tyres, said Nokian, the average Selling Price increased compared to H1/2010, thus compensating for the raw material cost increase of 35.9 percent versus the corresponding period a year earlier.

Gran continued, "Nokian Tyres' core markets, Northern European economies and especially Russia, have shown positive development. In Europe there has been uncertainty related to the governmental borrowing and its effects to financial markets but so far it has had minor input on the private sector's spending. The uncertainty in macroeconomics has increased globally and may convert into weaker demand. "

The aftermarket sales volume for car tyres in the review period increased in the Nordic countries by an estimated 2 percent and in Europe by 4 percent year-over-year. Tyre industry deliveries to distributors increased by over 50 percent in Russia, trailing the improving economy, lower stocks of distributors and strong consumer confidence.

In the second quarter of 2011 Nokian Tyres Group recorded net sales of EUR 338.8 million (260.4), showing an increase of 30.1 percent on the corresponding period a year earlier. Sales increased in the Nordic countries by 15.7 percent and in Russia by 101.3 percent. The consolidated sales in Russia and CIS grew by 88.4 percent. In Central and Eastern Europe sales grew by 22.9 percent while in North America sales increased by 33.8 percent.

Sales of passenger car tyres were up by 47.0 percent representing 69.8 percent (64.7 percent) of the group's total sales. Heavy tyres' sales increased by 52.8 percent and were 8.4 percent (7.5 percent) of the group's total sales.

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Press release from Nokian Tyres