Nokian Q1 2009 Sales Down following 2008 Sales Growth

At the Nokian Tyres’ Annual General Meeting, held on April 2, company president and CEO Kim Gran announced that first quarter 2009 net sales are clearly lower than in the first quarter of 2008 and a net loss is expected. On a more positive note, Gran estimates that the first quarter will be the weakest of the year, and Nokian Tyres’ sales will increase during the other quarters. Full year net sales in 2009 will, however, be weaker than in 2008.

Last year proved to be Nokian Tyres’ 17th consecutive year of profitable sales growth, the company president and CEO told AGM attendees. Net sales of 1.08 billion euros for the financial year ending December 31, 2008 represent a 5.5 per cent increase on 2007 results, and operating profit increased a similar amount – up from 234.0 million euros in 2007 to 247.0 million euros last year. Net profit, at 139.9 million euros, was down 17.2 per cent on the previous year; Nokian attributes this to exchange rate losses.

Growth during the year, Gran reported, saw market share increasing in core markets. This growth included expansion of the company’s Vianor chain to more than 500 outlets in 15 countries following the opening of 141 new centres. Expansion also took place in Russia – capacity at its factory there was enlarged and the share of production carried out in Russia increased, delivering the benefit of improved profitability.

Some 34 per cent of the company’s sales were made in Russia and CIS countries, a region where sales development experienced a 12.3 per cent increase in the year. The home market of Finland accounted for 20 per cent of sales, Sweden 12 per cent and Norway 11 per cent. Western Europe (excluding Scandinavia) generated 12 per cent of sales, and Eastern Europe four per cent. North America accounted for seven per cent of sales.

Segment wise, the sale of passenger car tyres brought Nokian Tyres 741.6 million euros, an increase of 7.3 per cent. Truck tyre sales of 33.4 million euros were slightly up on the previous year’s result, while sales of heavy tyres, at 97.7 million euros, were 3.0 per cent down. Sales through the company’s Vianor network added 308.3 million euros to the company’s total sales, and were 10.7 per cent higher than in 2007.

Russia continues to be a strategic market for Nokian Tyres, and the company reported “very strong” sales development there – a 56.8 per cent improvement – during the first three quarters of 2008. Sales during the final quarter were said to have dropped in line with the market. Sales in Russia amounted to 309.8 million euros in 2008, with CIS sales adding a further 72.6 million euros to this figure. With an A-segment market share of 30 per cent in Russia, Nokian Tyres notes that it is the “clear number one” for premium tyres in Russia and other CIS countries. According to Nokian Tyres estimates, its next competitor here, Bridgestone, holds only 15 per cent of the market in this segment. The Nokian Tyres factory in Russia now operates six production lines seven days a week, and a seventh production line was added in the fourth quarter but has not yet entered service. An additional three production lines are “pending”, says Nokian. Staff numbers at the factory grew by 173 during the year, and stood at 684 at year’s end.

Going forward, Gran acknowledges that the global recession and the knock-on effect of decreased new car sales and other factors have led to the market becoming more challenging in 2009. The company plans to tackle the current situation this year by strengthening its market position and actively launching new products. Further expansion of the Vianor network is also planned. The company expects tyre demand and sales to be lower in 2009.