Nokian: Sales Up, Profits Unchanged
Nokian’s net sales between January and September were up 13.7 per cent to 445.6 million euros compared with 392 million the year before. Operating profits totalled 65.1 million euros, virtually the same as last year. According to Nokian, the company’s target is to increase sales while keeping operating profit margins constant.
“Heavy investments in Russia, the changes in Vianor’s business structure, winter tyre pre-sales in early 2005 and stiffer competition burdened the performance of Nokian Tyres. This has not made us change our targets: we aim at strong, profitable growth in the tyre markets. The sales mix was weaker than in 2004, bringing down the July-September sales and result of Nokian Tyres. Contract manufactured tyres accounted for a clearly bigger share of passenger car sales in the third quarter compared to the corresponding period a year earlier.
Winter tyre pre-sales was active during the first half of the year, with sales increasing by 36 per cent from the previous year. Tyre retailers’ winter tyre inventories were on a high level, and they will start to decrease when consumer sales get going in the last quarter. Demand for heavy tyres increased, and sales hit record numbers. Despite the more challenging market situation, we are well positioned to improve our sales over the last year and to achieve an operating profit in line with last year. We expect the sales mix to clearly improve from the third quarter once winter tyre sales begin in October-December.”
Meanwhile market analysts maintained their “buy” rating. Given weaker than expected Q3 numbers and Q4 guidance, the market took a view that margins longer term will fade from the 2004 peak level. We maintain our Buy, albeit we believe it will take a while before confidence is restored,” the Deutsche Bank representatives commented.