NOKIA, Finland (Dec. 12, 2008)—Nokian Tyres P.L.C. is cautioning shareholders it likely won't meet its sales and earnings targets for fiscal 2008 because of weaker-than-expected fourth-quarter sales.
Demand for tires has decreased in all of Nokian Tyres' core markets as a result of lower new car sales, a late start of the car winter tire season and the global financial crisis, the company said.
The outlook for 2009 also has weakened, and Nokian said it is taking measures to adjust inventory and production capacity levels in line with demand along with cutting costs and investments significantly to ensure sufficient cash flow.
Nokian earlier had forecast sales would grow as much as 17 percent this year to $1.6 billion, but management is scaling that back to closer to 5 percent, or about $1.45 billion.
Operating income is estimated to be on par with the 2007 figure of $320 million.
Among the specific actions Nokian is taking is limiting sales in Russia and former Soviet Bloc countries in Eastern Europe and Central Asia while at the same time reclaiming about $40 million worth of tires already sold there to reduce risks related to receivables and exchange rates.