Nokian Tyres sales up by 18 percent, boosted by success in Russia and eastern Europe

Helsinki - Nokian Tyres plc reported an 18.3 percent rise in sales to €349.4 million and an operating profit of €48.6 million for the first half of this year.

The Finnish tyre manufacturer boosted sales in Russia and Commonwealth of Independent States countries by 50.2 percent, in Eastern Europe by 35.7 percent and 22 percent in the US.

Nokian Tyres chief executive Kim Gran said the company posted increased sales and earnings ''in spite of the challenging market situation''.

''Raw material prices rose sharply, which increased the production costs and weakened the profitability of manufacturing,'' he said.

''Inventory levels were higher and receivables larger than a year earlier, but the situation will normalise once the winter season begins in the second half.''

Nokian said its half-year performance was weakened by lower profit margins for summer tyres and a €4.2 million credit loss reserve due to the bankruptcy of an Italian importer.

The company also revealed that it had invested €51.4 million this year into expanding its Russian plant, down from €60.4 million in 2005.

Sales for passenger car tyres during the six months rose by 19.9 percent to €222.1 million, with an operating profit of €45.8 million.

The heavy tyres division reported a 24.4 percent increase in first-half sales of €45.2 million and a 76.7 percent rise in operating profits of €10.9 million, with forestry and special radial tyres having the biggest impact.

Nokian's Vianor tyre retail chain, however, reported a €4.3 million loss for the six months, compared to a modest profit of €600000 the same period last year.

The setbacks comes despite Vianor's expansion in Russia, which has netted 39 partners by June, and an agreement with Sweden's Amring Verkstader in May, which brought another 19 partner outlets.