Good 3Q results from Nokian
Nokian Tyres has put in an impressive third quarter performance, with better-than-expected operating profit of 21.7 million Euro, giving an operating margin of 16.6 per cent. Much of this performance was due to a strong product mix, especially in sales of high-value winter tyres and high performance tyres. In fact, these two sectors accounted for 64.4 per cent of Nokian’s car tyre sales during 3Q – a quarterly growth of 35.5 per cent.
Once again, Nokian was strong in its core market of the Nordic countries, where two thirds of the company’s sales are made, and Nokian’s market share in these countries rose to an impressive 31.5 per cent. Financial analysts believe that Nokian can do even better in the fourth quarter, with increased sales of winter tyres and they are forecasting a 4Q operating margin of almost 20 per cent. The analysts have revised their yearly net profit forecast upwards to 44 million Euro (Nokian itself has forecast 45 million) but they warn that next year the growth in the Scandinavian market will more likely be at a slower rate.
Another plus point for the analysts is the performance of Nokian’s shares, which are rated by MorganStanley as „underweight“. Something that has helped to keep the share price buoyant was the purchase earlier this year of two million Nokian shares by Bridgestone, for just over 78 million Euro. The deal gave Bridgestone a stake of 18.9 per cent in Nokian and, at the time, was described by the Japanese company as purely „a business investment“. Looking at the 3Q figures for Nokian, it would appear to have been a wise one.