Nokian Tyres: Net sales and profit up in Q1 2017

Net sales were up at Nokian Tyres in the first quarter of 2017 as was, despite increased raw material costs, net profit. Andrei Pantioukhov, the tyre maker’s interim president and chief executive officer, declared that Nokian Tyres “had a strong start of the year” and “demonstrated strong performance in all our main market areas.”

At €325.9 million, net sales were up 18.2 per cent year-on-year during the three months to 31 March. Operating profit was up 16.6 per cent to €58.9 million, however the operating margin decreased from 18.3 per cent to 18.1 per cent. Net profit for the quarter was €45.3 million, up 13.6 per cent on the previous year’s result.

“The first quarter was positive in many aspects,” commented Pantioukhov. “Sales in all our main markets increased compared to the same period in the previous year. All our main market areas reached growth and Russia became the biggest contributor to this growth, like in Q4/2016.”

Nokian Tyres’ net sales in the Russia/CIS region grew 56.1 per cent year-on-year, making it the tyre maker’s second largest region in terms of sales after the Nordic countries. Sales there accounted for 25.7 per cent of Nokian’s total global net sales, up from 19.1 per cent a year earlier. Sales within the region are being boosted by growth in the Russian economy after seven consecutive quarters of recession, however Nokian Tyres expects the pace of recovery in the Russian market to be “quite moderate.”

All regions where Nokian Tyres is active experience a rise in net sales. Growth in the Nordic countries was a modest 5.0 per cent, and the region’s share of total sales declined from 40.8 per cent to 35.8 per cent. The rest of Europe accounted for 25.3 per cent of total sales, with net sales rising 18.5 per cent year-on-year. North America is still the Finnish tyre maker’s smallest region, and although net sales there rose 9.4 per cent in the first quarter of the year, the market’s share of total net sales declined from 13.9 per cent to 12.6 per cent.

Production volumes were higher than during the first quarter of 2016, however raw material costs were an issue. These were up 18.8 per cent year-on-year in the first quarter and accounted for approximately €60 million in additional costs. Nokian Tyres estimates that the cost of the raw materials it uses will increase by approximately 20 per cent for 2017 as a whole. “We have already implemented necessary price increases in all markets, and the full effect of these increases will be seen in the following quarters due to the seasonality of Nokian Tyres’ business model,” says Pantioukhov.

Upon releasing its Q1 2017 results, Nokian Tyres has also revised its guidance for the 2017 financial year. Based upon current exchange rates, it expects net sales to grow by at least ten per cent year-on-year in 2017, and operating profit to increase by more than five per cent.

Full information on Nokian Tyres’ Q1 2017 results can be found in the Tyrepress.com company profiles and reports section.