Turnover And Profits Up For Nokian
Things improved in Nokian’s main markets, with demand for car tyres growing in Eastern Europe (including Russia) and the Nordic countries, with Nokian boosting sales and market shares in these areas as well as Europe generally and the USA. This can be largely attributed to price increases, in improved sales mix (featuring new products) and reduced raw materials costs (down 6 per cent). Sales concentrated on high profit margin products such as winter tyres, which accounted for 46 per cent of sales in 1H.
Below are brief details of the performances of the various product groups for the first half of 2002. Car Tyres Net sales increased 18.3 per cent to 94.
4 m Euros (79.8 m Euros) and operating profit was 14.0 m Euros (9.
2 m). Sales were particularly good in Sweden, helped by the closing down of the Gislaved factory, and profitability was raised by a round of price increases. Heavy Tyres This sector continued to be affected by global economic uncertainty, although demand for special heavy tyres began to pick up.
Sales were up slightly – 0.7 per cent – to 25.1 m Euros (24.
9 m Euros), while operating profit more than doubled to 1.3 m Euros (0.6 m Euros).
Nokian increased the prices of its heavy tyres, despite strong price competition. Bicycle Tyres Sales were static at 2.8 m Euros, with the best markets being the USA, Canada, Japan and the Philippines.
Retreading Materials This sector continued to suffer, with demand shrinking across Europe, although sales of Noktop truck tyre retreading materials rose, plus Nokian increased its prices. Overall, net sales fell 7.6 per cent to 4.
3 m Euros (4.6 m Euros). Vianor Nokian’s retail chain generated sales of 87.
6 m Euros (77.0 m Euros); an increase of 13.8 per cent.
Despite this, there was an operating loss of -2.5 m Euros (-1 m Euros), with a further goodwill depreciation of 4 million Euros. Nokian says that Vianor raised its market share and the priority was to get fixed costs under control, which led to the closure and sale of some uneconomic sales outlets in Finland.
The Vianor chain currently consists of 162 outlets. Roadsnoop This is Nokian’s pressure monitoring system, linked to the driver’s mobile phone. The launch was rescheduled for August, due to manufacturing difficulties, but the company is optimistic about the sales prospects for the product.
Outlook The outlook for the second half of the year is described by Nokian as “positive”, despite the general economic uncertainty, with the company poised to outperform its 2001 performance. Most of the group’s money is made in this period, particularly the final quarter, and the outlook is especially bright for winter tyres. Heavy snow last year helped clear dealers’ stocks, plus it is three years since winter tyres were made compulsory in Sweden so many will be coming up for replacement.
Off-take manufacturing in Poland, Indonesia and the USA will provide Nokian with additional capacity. Looking further ahead, a major initiative is the signing of a letter of intent with Russian company Amtel Holding to create a joint venture company to produce up to three million Nokian and Nordman brand tyres a year in Russia and the CIS countries (for more details, see the August issue of Tyres & Accessories). The first Nordman brand tyres will be produced this Autumn, the first Nokian tyres in 2004, and full capacity by 2007.
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