Nokian Tyres Records 149 million euros of Net Sales

Nokian Tyres has recorded pre-tax profits of 10.1 million euros in the first quarter, compared with 13.7 million a year ago. In the period January to March 2006, Nokian Tyres Group recorded net sales of 149.4 million euros, an increase of 15.4 per cent on the corresponding period a year earlier. Net sales in Nordic countries increased by 6.9 per cent, in Russia and other CIS countries by 35.2 per cent, in Eastern Europe by 8.7 per cent and in North America by 25.4 per cent from the previous year.

Chief executive Kim Gran said in a statement: “Nokian Tyres’ result of the early part of the year was, as expected, weaker than in the previous year as a result of a weaker sales mix and increased raw material costs.” However analysts report that the results are ahead of expectations. “Nokian should be set to achieve better earnings in the second half year-on-year with growth continuing strong in 2007-2008,” said Deutsche Bank.

Nokian’s heavy tyres sales were strong totalling 21.9 million euros showing an increase of 27.7 per cent on the corresponding period of the previous year. The operating profit for Heavy Tyres amounted to 5.5 million euros. The production capacity of Nokian heavy tyres was in full use, up 19 per cent.

In March, Nokian Tyres’ board of directors made a decision on a 4 million-euro investment to raise the production capacity of heavy tyres in Finland. This means production volumes of radial tyres will increase in late 2006 and early 2007. After the completion of the investment in 2007, the capacity of radial tyres will increase by some 30 per cent and overall capacity by some 10 per cent a year.

Net sales from Nokian passenger car tyres were up by 12 per cent on the previous year totalling 101.8 million euros (2005: 90.9 million euros). Operating profit amounted to 18.9 million euros (2005: 23.5 million), and the operating margin was 18.6 per cent (2005: 25.8 per cent).

Nokian’s strongest sales areas were Russia, the USA and Eastern Europe were the strongest growth areas. The position of Nokian Tyres in Russia improved clearly in 2005, in both summer and winter tyres. The Finnish manufacturer claims it has a 30 per cent share of in the Russian premium winter tyre market, making it making leader in this respect.

In the first quarter Nokian Tyres’ sales in Russia and CIS countries increased by 35.2 per cent compared to the previous year. The distribution network was strengthened by signing new distribution agreements and by expanding the Vianor network.

Nokian’s Vianor tyre chain expanded as planned in Russia, where the number of sales co-operation partners totalled 35 at the end of March.

The first two production lines at the Russian plant operate continuously in three shifts. Production quality and daily production volumes are on target. Construction of the mixing department and the central warehouse began at the end of 2005, and the mixing department has progressed to the roofing phase. The new facilities will come on line in summer and autumn 2006. The installation of the third production line will begin later this year.

Retail business

Nokian’s Vianor retail chain recorded net sales totalling 34.1 million euros (33.2 million euros), representing an increase of 2.7 per cent on the corresponding period of the previous year. Operating profit amounted to -8.8 million euros (-7.0 million euros), and the operating profit percentage was -25.8 per cent (-21.per cent).

Vianor’s sales and profits were weakened from the consumer sales of summer tyres shifting to the second quarter of the year and from the expenses caused by the expanded Vianor network. Most of Vianor’s profits are generated in the second half of the year. The share of Nokian-branded tyres from Vianor’s overall sales was on last year’s level in the Nordic countries. The sales of new and retreaded truck tyres increased over the previous year.

The company’s overall investments in 2006 amount to 92 million euros. Projects include investments made in expanding the company’s Russian plant, totalling 53 million euros, and its Vianor chain, totalling 3 million euros. Other investments target production at the Nokia plant and moulds for new products.