Nokian records static sales, profits in 2008, despite poor Q4

ERJ staff report (DS)

Nokian, Finland -- Nokian Tyres plc has reported steady increases in sales and operating profit for the 12 months to December 2008, but sales were sharply down in the final quarter, which pushed the company to a loss for the three months.

For the full year, Nokian reportes sales up by 5.5 percent, to euro 1081 million from euro 1025 million. Operating profit rose to euro 257 million from euro 234 million while net profit fell to euro 140 million from euro 169 million.

In the three months to December, however, sales fell by a quarter to euro 267.7 million from euro 356.4 million in the same period a year before. This sharp decline meant the company recorded an operating profit of euro 46.7 million, but a net loss of euro 12.2 million compared with a net profit of 85 million a year earlier. Nokian said raw material costs in manufacturing (EUR/kg) increased by 2,5% in the final quarter compared to the corresponding period a year earlier.

Nokian said that while the financial crisis makes it difficult to draw up precise forecasts for demand for the full year 2009, Nokian expects the first-quarter net sales and operating profit to be clearly below the previous year.

Kim Gran, President and CEO said, "The steep slowdown in the global economy reduced clearly the demand for tyres at the end of 2008 in all product groups. We started to adjust our operations and cost structure decisively to comply with weaker demand." He continued, "Our focus in 2009 will be on securing cash flow and managing risks. Nokian Tyres has good opportunities to boost its market position. It is our target to increase our market shares and return to a growth path as soon as the economic business environment stabilises”.

Gran said the decline in the global economy led to a steep fall in tyre demand in the last quarter, especially in Russia and other CIS countries.

As a consequence, the company has put on hold its joint venture with Ordabasy Corp. in Kazakhstan. Nokian said the project would not go forward before 2010 at the earliest.

Nokian also said it has, as a precautionary measure to minimise bad debts, recalled euro 24 million-worth of tyres from customers in Russia, the Ukraine and Kazakhstan.

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Press release from Nokian