Nokian starts to counter Russian effect

Helsinki – Nokian Tyres plc has managed to partly offset the impact of lower oil prices and the weakened Russian economy on its business with operational improvements and gains in market-share, the group said 5 Feb.

For the October-December 2014 period, operating profit at the Finnish tire maker fell 16.9 percent to €77.5 million on net sales 7.7-percent lower at €380.0 million compared to the previous year.

For full-year 2014, net sales fell 8.7 percent to €1,389.1 million, with currency factors accounting for €99.9 million of the decline. Operating profit dropped 19.9 percent to €308.7 million.

“The drastic oil price drop combined with further weakening of Russian and CIS currencies and economies had a negative impact on our sales and thus on our financial performance,” said Ari Lehtoranta, president and CEO of Nokian Tyres.

“Our teams, however, were able to strengthen our market position in all markets and continue to improve our operational efficiency. This together with higher than estimated material cost reductions helped us to deliver good financial results. I am especially happy for the record strong cash flow.”

The company’s performance, Lehtoranta noted, was helped by declining raw material cost, improved productivity.

And, he concluded: “Even if the market development visibility in Russia and CIS is very poor at the moment, we remain confident about our future. We start 2015 with a strong balance sheet, better than ever product range, constantly expanding distribution and a well performing organisation.”

For 2015, Nokian expects that, with stable exchange rates, net sales and operating profit will decline slightly compared to 2014. First quarter operating profit, its statement added, will be significantly below last year, as a delayed start of winter tire sales in Russia will result in sales shifting to the following quarters.