Nokian lifted by winter tires, Russia

Nokia, Finland – Nokian has registered a “strong performance” in the final quarter of 2016, ended 31 Dec, with year-on-year growth of 9.1% in sales to €460 million and operating profit up 14.4% to €108.5 million.

Mostly thanks to its passenger car tire business unit, which covered 65% of the total group sales, Nokian’s full year results showed a 2.3% growth in sales to €1.39 billion and nearly 5% rise in operating profit to €310 million.

Presenting company figures Offering the company presentation, interim CEO and head of the Russia operation Andrei Pantioukhov said Russia was the biggest contributor in sales in Q4, while the winter season helped by starting early and continuing strongly.

Russia’s economic decline has slowed down but has not turned into growth yet, said Pantioukhov.

While sales of new cars in 2016 continued to decrease, the trend is expected to change.

“The whole year showed a decline of 11% and December was down by 1% vs. previous year. In 2017, the new car market is expected to return to growth,” he said.

The Finnish tire-maker invested €105.6 million throughout 2016 with the figure expected to almost double to €190 million in 2017.

While raw materials cost dropped by 5.3% during 2016 compared to 2015, the costs saw a sharp spike in Q4 with a 5.3% rise compared to the same period in 2015. The trend, Nokian expects, will be upward in 2017, with costs estimated to rise 15-20% in 2017.

In terms of business units, sales of passenger car tires grew 3.1% to €981 million in 2016, with earnings (EBIT) showing a 7.1% rise to €305 million.

The Vianor car service and tire retailing chain, however, was in red with earnings dropping 330% to €-8.1 million. This is the second year in a row the business unit reported a loss, with last year the loss standing at €-1.9 million.

Nokian heavy tires sales were on a par with the previous year at €155 million, though with a drop of 1.8% in EBIT to €28.2 million.

“The sell-in of premium truck tires was up by 3% in Europe, while in the Nordic countries demand was down by 3%,” explained the interim CEO.

In Russia, however, the demand for premium truck tires increased by 33% compared to 2015. Truck tire demand in 2017 is estimated to show some increase or to remain at the same level as in the previous year.

As for previously announced plans for the construction of third production plant, Pantioukhov said the matter is now under further investigation.

“The operative management has presented initial plans regarding the third factory… The decision is to be made during spring 2017,” he noted.