Nokia, Finland – Nokian Tyres has returned to profit in the first half of the year amid strong volume and profit growth, but has warned about the significant impact of raw materials and logistics costs in the months to come.
The Finnish tire maker reported an operating profit of €126 million, up from a loss of €13.7 million in the first six months of 2020.
Net sales grew 37.7% year-on-year to €758 million during the first half, while ‘segments operating profit’ was up 250% at €140 million, Nokian reported 3 Aug.
Nokian linked the performance to ‘continued strong’ demand for tires in the second quarter.
“[Second quarter] Net sales increased by 54.8% with comparable currencies, segments operating profit grew significantly driven by higher sales volume,” said CEO Jukka Moisio.
In the passenger car tires segment, Moisio said, volume growth was particularly strong in Russia.
However, the higher share of Russian volume had a negative impact on the average sales price.
Furthermore, he said, raw material costs started to increase in the second quarter and are estimated to have “a significant negative impact in the second half of the year compared to 2020, together with increasing logistics costs.”
Nokian, said Moisio, is taking mitigating actions to reduce the impact of cost inflation.
As for the full year outlook, Nokian said it expected net sales and operating profit to grow ‘significantly’.
“The global car and tire demand is expected to pick up, but the Covid-19 pandemic continues to cause uncertainties for the development,” it concluded.