Nokian to Raise Prices Approx. 3% in June
Nokian Tyres has opted to raise prices in June after almost doubling estimates for the cost of raw materials this year. Nokian Tyres estimates that its raw material cost (EUR/kg) in 2010 will increase by 10-12 per cent compared to 2009 (the company’s previous estimate was 6 per cent) due to significantly increasing raw material prices. According to the company, this will affect its financial results in the second half of the year.
According to an investors note published by Deutsche Bank, Nokian hadn’t originally intended to raise prices so soon, believing product/price mix improvement together with price hikes implemented last year should have been enough to offset the higher raw material costs. However, their view is that the Finland-based company will now need to raise prices by around 3 per cent in order to maintain profitability. “Success of price hike depends on the price discipline of the industry, which should be supported by everybody facing clearly higher raw material costs,” the analysts commented.