Russia weighs Nokian Tyres down in H1 2014

Few tyre makers depend as heavily on the Russian market as Nokian Tyres, and the Ukraine crisis therefore lefts its mark on the company in the first half of this current financial year. Kim Gran, president and chief operating officer of Nokian Tyres, said the Russia and CIS markets “proved to be more challenging than estimated” in the January to June 2014 period due to the crisis’ escalation, and a “clear drop in sales value” occurred as a consequence. Both unit volumes and sales in the region declined; Nokian’s sales in Russia dropped 31.4 per cent year-on-year between 1 January and 30 June to €230.9 million while sales in the CIS countries plummeted 66.0 per cent to €6.9 million. Combined, the region experienced a 33.3 per cent decrease in sales, to €237.8 million. Most of this decrease in sales value resulted from the weakening of the Russian rouble.

Total company net sales amounted to €681.5 million in the first half of 2014, down 9.4 per cent year-on-year. Operating profit declined 19.1 per cent to €159.1 million, with the margin decreasing from 26.1 per cent in the first half of 2013 to 23.3 per cent. Net profit dropped 29.8 per cent to €104.8 million.

“Nokian Tyres performed well in all markets in relation to market conditions,” commented Gran. He added: “Reductions in input costs, raw materials, improved productivity and good development in the West were not enough to compensate for the negatives in Russia/CIS.”

Nokian Tyres views itself as positioned to outperform local market development in its main market areas both this year and going forwards. This year the company’s sales volumes are expected to grow, and its market position improve, in the Nordic countries, Central Europe and North America. A declining sales volume is anticipated in Russia and the CIS, however. The company’s states that full-year net sales and operating profit look set to be lower than those achieved in 2013.

Further financial and company information for Nokian Tyres can be found here.