Nokian Tyres Anticipating Lower Net Sales and Operating Profit

Nokian Tyres reports that its fourth quarter sales have been “weaker than expected” and the company’s operating profit will be lower than the set target. The company says it will not reach its previously communicated sales target for 2008 of 1,150-1,200 million euros. This downward revised estimate comes in spite of an anticipated five per cent growth in group net sales during 2008, and operating profit that is estimated to be on the previous year’s level.

Demand for tyres has decreased in all of Nokian Tyres’ core markets, particularly in Russia and other CIS countries as a result of lower new car sales, a late start to the passenger car winter tyre season and the financial crisis. The company says it is limiting sales and reclaiming some approximately 30 million euros of the tyres already sold in Russia and CIS countries in order to reduce risks related to receivables and exchange rates. Due to the depreciation of the Ukrainian grivna by around 40 per cent against the US dollar from the end of September, the company will report in financial items currency exchange losses of approximately 30 million euros related to US dollar nominated inter-company loan.

The company says its outlook for 2009 has weakened. Nokian Tyres is taking measures to adjust inventory and production capacity levels in line with demand. In addition, the company will cut costs and investments significantly in order to ensure its cash flow.