Nokian impacted as US, Russia winter tire sales drop

Nokia, Finland – Nokian has seen its sales drop by nearly 2 percent in the first quarter of 2016, to €275.8 million, with currency effects having a negative impact of €14.6 million.

Operating profit, however, increased by 4.6 percent to €50.5 million despite a net profit fall of 70.5 to €39.9 million, which was hit by a €100-million additional taxes and punitive interests.

“Challenges in Russia continue with declining new car sales and tire market,” said Ari Lehtoranta, president and CEO.

Winter tire deliveries both for North America and Russia were lower than last year because of the higher customer inventory levels.

However, Nokian said it had been able to increase summer tire sales in all its markets and winter tire sales especially to central Europe.

Production volumes were higher than last year, while the raw material cost decline continued and lower production cost supported profitability.

Negative impact, according to Lehtoranta, came from the ASP (adjusted selling price) development.

ASP, he said, was impacted by currencies and several mix issues, but also by local price reductions.

"Negative ASP development took down the net sales by 1.9 percent  from last year. Currencies caused a €14.6 million negative impact; thus the net sales would have grown by 3 percent with comparable currencies," he added.

The CEO stressed that Nokian’s sales would be more second-half-weighted this year than last year.

Considering all the timing changes of the deliveries, the second quarter will be weaker than corresponding quarter last year, he said.