Nokian Tyres
Publishing its third quarter results Nokian Tyres announced it achieved pre-tax profits 35.8 million more than doubling the previous year’s total of 16.9 million euros. Nokian’s results were well-received by analysts who applauded the company’s consensus beating results. According to Deutsche Bank, Nokian’s EBIT was 6 per cent higher than analysts’ collective projections and 19 per cent above Deutsche’s estimate.
Earlier in the year, the European tyre and rubber industry formed the ETRMA as a successor to BLIC. The idea was to update the way that this industry association was organised and position it to inform the European legislature on subjects relating to tyre and rubber manufacture. Following the completion of this changeover, Tyres & Accessories interviewed ETRMA secretary general, Fazilet Cinaralp and got a clearer picture of the role and function of the organisation.
On the Helsinki Stock Exchange, Nokian Tyres’ shares fell slightly to 15.35 euros after the company was downgraded by analysts Morgan Stanley from “overweight” to “equal weight”. Nokian’s valuation has outperformed others in the market since July, says Morgan Stanley, but is now starting to appear stretched. Another factor is the possibility of increased competition in Russia, following reports that Bridgestone has acquired land in St. Petersburg.
Nokian Tyres has received an announcement from Invesco Asset Management according to which as a result of a share transaction concluded on 17 July 2006, the holdings of AMVESCAP PCL, for and on behalf of funds managed by its affiliates, now represent more than five per cent of the voting rights and share capital in Nokian Tyres plc. AMVESCAP PCL, for and on behalf of funds managed by its affiliates, now holds a total of 6,653,883 Nokian Tyres’ shares, representing 5.45 per cent of company’s 122,032,270 shares and voting rights.
Following positive second quarter reports Nokian Tyres is back “on the road again,” according to Deutsche Bank analysts. “Going forward we are seeing an improved mix driven by new products (Hakkapeliitta 5), less Nordic competition due to fast growth in the German winter tyre market, continued strong growth in Russia and raw material prices contracting clearly from recent peak levels,” said the analysts. The Deutsche Bank market watchers said they are pojecting more than 20 per cent earnings per share growth in 2006 and 2007.
Driving in the north calls for tyres designed for Nordic conditions. To meet these demands Nokian Tyres has developed brand-new summer tyres especially suitable for the rough, wet and grooved roads, and for the challenging and changeable conditions in Russia and the Nordic countries. The Nokian Hakka, a new summer tyre family featuring four different tyres and a wide range of sizes, joins the Hakkapeliitta winter tyre range, celebrating its 70th anniversary this year. The new products will be available in Nordic and Russian tyre outlets in the spring of 2007.
An announcement from Nokian Tyres said that the company had increased its share capital by a total of 29,650 euros on 21st August. The new shares will be traded on the Helsinki Stock Exchange, together with the old shares, from the following day. The increase means that Nokian’s share capital now stands at 24,406,454 euros.
Nokian’s net sales grew to 349.4 million euros (18.3 per cent) in the first half of 2006. During the same period operating profit amounted to 48.6 million euros (2005: 46.1 million), up 5.4 per cent. However profits before tax fell 10.8 per cent to 42 million euros in the period. Nokian Renkaat shares soared 18 per cent higher in response to the news.
Nokian Tyres’ new HP 5 winter tyre has been well received in the market and pre-season sales have started well. According to a Deutsche Bank report analysts believe this and price increases are good signs for the company’s performance in the second, third and fourth quarters. Nokian is reported to have stirred up the market by taking market share by aggressive pre-season sales in the second quarter of last year before being “hit by competition” in subsequent quarters. “However, it seems the biggest pressure is now behind us due to the sharp increase in raw material prices. Management commented that most competitors have announced price hikes for the winter season and that these look likely to stick,” the report concluded.
European Tyre and Rubber Manufacturers have held the first meeting of the newly formed European Tyre & Rubber Manufacturers’ Association or ETRMA. The new association will replace BLIC (Bureau de Liaison des Industries du Caoutchouc). Francesco Gori of Pirelli was elected as president, and Groupe Michelin’s Eric de CromiÈres Michelin was named vice president. Fazilet Cinaralp was appointed secretary general.
Nokian Tyres has recorded pre-tax profits of 10.1 million euros in the first quarter, compared with 13.7 million a year ago. In the period January to March 2006, Nokian Tyres Group recorded net sales of 149.4 million euros, an increase of 15.4 per cent on the corresponding period a year earlier. Net sales in Nordic countries increased by 6.9 per cent, in Russia and other CIS countries by 35.2 per cent, in Eastern Europe by 8.7 per cent and in North America by 25.4 per cent from the previous year.
The Nokian-owned Vianor AB tyre retail chain is to partner with Amring Verkstäder AB in Sweden. Following the agreement, nine Amring outlets have joined the Vianor tyre chain and become Vianor Partner outlets as of 2 May 2006. The agreement gives Amring outlets the rights to utilize Vianor brand and chain marketing, Vianor’s call centre services and personnel training programmes.
Nokian Tyres Annual General Meeting accepted the profit and loss statement for 2005 and discharged the Board of Directors and the President from liability. A decision was made on a dividend of 0.23 euros per share. The matching date will be 11 April 2006 and the payment date 20 April 2006.
In 2005 the production of all Nokian-branded truck tyres was transferred to the Bridgestone plant in Bilbao, Spain, which features top-notch production technology in the field. The tyre carcasses and moulds of the whole product portfolio have been redesigned. The new carcass clearly enhances driving properties and mileage, while the sturdy bead area makes the tyre sit well on the rim and improves driving qualities. In addition, the longer useful life of the tyre carcass and the strong rubber used in tread grooves clearly enhance retreading options, writes Nokian in a press release. All Nokian truck tyres feature rubber compounds suitable for Nordic conditions, which provide good grip on slippery roads and durability on rough road surfaces. The new Nokian NTR-861 and Nokian NTR-844 for trucks and buses round off the range and offer a safe and durable solution for year-round use. These winter-rated M+S tyres can be mounted on the vehicle all year round.
Nokian Tyres’ Board of Directors has approved a plan to invest 4 million euros in order to expand heavy radial tyre production capacity. This will mean an increase in Nokian Tyres’ total investments in 2006 from 88 million euros to 92 million euros.
The investment includes the whole production process; ie component manufacturing, tyre assembly and curing at the Heavy Tyre plant in Nokia, Finland. The investment will mean a capacity increase of the Nokian Tractor Industrial 2 product line, launched in 2004, and of the Nokian Country King product line, launched in 2005, to better meet the strong growth in demand.
The increase in radial tyre capacity will come on-stream towards the end of this year and in early 2007.
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