Nokian scales back sales, earnings forecast

ERJ staff report (TB)

Tire Business staff report©

Nokia, Finland -- Nokian Tyres PLC is cautioning shareholders it probably won't meet its sales and earnings targets for fiscal 2008 because of weaker-than-expected fourth quarter sales.

Demand for tyres has fallen in all of Nokian Tyres' core markets due to lower new car sales, a late start of the car winter tyre season and the global financial crisis, the company said.

The outlook for 2009 also has weakened, and Nokian said it is taking measures to adjust inventory and production capacity levels in line with demand along with cutting costs and investments significantly to ensure sufficient cash flow.

Nokian now says its full-year sales in 2009 will be around five percent higher than 2008, at about Euro 1070 million, down from earlier estimates of Euro 1200 million, or 16 percent growth.

Operating income is estimated to be on par with the 2007 figure of Euro 240 million.

Among the specific actions Nokian is taking is limiting sales in Russia and former Soviet Bloc countries in Eastern Europe and Central Asia while at the same time reclaiming approximaely $40 million worth of tires already sold there to reduce risks related to receivables and exchange rates.

The company expects to report currency exchange losses of about Euro 30 million on an inter-company loan due to the depreciation of the Ukrainian Grivna against the US since the end of September.

From Tire Business (A Crain publication)

Press release from Nokian