Russian growth a Q1 highlight at Nokian
Nokian Tyres president and CEO Kim Gran says the Finnish tyre maker got off to a “flying start” in 2012 and made clear improvements in both production and sales. In a stock exchange release dated 9 May, Gran shared that “sales improved in all our markets with growth in Russia again outshining other areas. Productivity gains, a tight ship and an improved ASP guaranteed a good financial result.”
This good financial result for the first three months of 2012 includes net sales of 384.3 million euros, a 32.9 per cent year-on-year improvement. Operating profit, at 105.0 million euros, was up 45.3 per cent year-on-year, while pre-tax profits jumped 46.2 per cent to 102.2 million euros. Profit for the period was 87.6 million euros, a year-on-year improvement of 40.3 per cent.
Elaborating on the company’s performance during the January – March quarter, Gran said Nokian’s sales “came in equally from our strong winter tyre range and the new test winning summer tyre range”, which is spearheaded by the Hakka Blue and Hakka Green. “The ratio summer versus winter tyre sales remained at approximately previous year’s level at 50/50. However, the weight of SUV tyres in our sales mix continued to increase, which improved ASP.”
Other highlights during the quarter include the opening of 22 new Vianor retail outlets; the chain now consists of 932 shops in 24 countries. Gran says Nokian is “well on track” to reach its target of exceeding 1,000 stores by the end of 2012.
Both Nokian factories – in Nokia, Finland and Vsevolozhsk, Russia – operated at full utilisation during the quarter, Gran reports, helping the tyre maker increase its output tonnage by 38 per cent in comparison with the opening quarter of 2011. “The ramp-up of capacity continues as the new factory in Russia will commence production with two new lines during 2012,” he added. “Personnel for the new lines are being recruited and are already in training. First tyres from the new plant will be produced in June.” This growth in output occurred solely through the company’s passenger car and truck tyre businesses, with the first of these increasing 39 per cent in tonnage and 37.5 per cent (to 315.9 million euros) in sales during the quarter. Net sales of Nokian’s heavy tyres declined 4.8 per cent year-on-year to 27.0 million euros during the quarter, while output tonnage sank ten per cent.
Commenting on the remainder of the current year, Gran said Nokian is “well positioned to improve operations in our core markets in 2012, as especially Russia and CIS offer continued growth potential. Our car tyre order book is strong and inventory levels in distribution are normal in our core markets, which improve visibility to our first half sales and results. However, distributors’ high winter tyre carry-over stocks in Central Europe cause some uncertainty when planning the production levels for H2/2012.” The company views itself as being positioned to improve net sales and operating profit compared with 2011.