Improved core business gives Nokian a ‘flying start’ to 2011

The quarter one results released by Nokian Tyres plc on May 6 show the group’s net sales to have increased 57.3 per cent to 289.2 million euros in the three months to March 31, 2011 and profit up 211.1 per cent year-on-year to 62.4 million euros. For the rest of 2011, the Finnish tyre maker anticipates operating profit, which during the first quarter jumped 241.8 per cent year-on-year to 183.8 million euros, will “improve clearly” compared with 2010; this may be helped by a 30 per cent increase production capacity during the year, largely in its Russian plant. The challenge posed by raw material costs remains, however, and Nokian anticipates these will this year be 30 per cent higher than in 2010. To counter this, Nokian is preparing for “further tyre price increases during 2011.”

“Continued clear improvement of demand in core business gave Nokian Tyres a flying start for 2011,” said company president and CEO Kim Gran. “The first quarter was a success for us, as we beat all former Q1 results. Sales grew significantly in our core markets – Northern Europe and Russia – trailing the economic growth, booming new car sales and improved consumer confidence. We continue to win market share with new test winning products and the expansion of distribution network spearheaded by Vianor. A larger share of Russian sales, with sales mix weighting more clearly on premium tyres combined with price increases were sufficient to compensate for the significantly increasing raw material cost.”

Sales of passenger car tyres rose 65.0 per cent during the quarter and accounted for 74.0 per cent of the group’s total sales, up from 68.1 per cent in the first quarter of 2010. Winter tyre sales represented 49 per cent of these sales, roughly the same as in the corresponding period a year earlier. The lion’s share of sales growth was witnessed in Russia, where winter tyre sales “improved clearly” and summer tyre sales doubled year-on-year. Heavy tyre sales increased 68.7 per cent year-on-year and were 9.1 per cent of total sales, a growth of 0.9 per cent compared with a year earlier. Strongest sales growth was seen in forestry, mining and radial tyres. Sales through the Vianor retail network decreased 0.6 per cent year-on-year and formed 13.5 per cent of the group total, as opposed to 20.7 per cent in the first quarter of last year. Sales of other operations were up 73.9 per cent and represented 3.4 per cent of total sales, up from 3.0 per cent a year earlier.