NOKIA, Finland (Feb. 12, 2010)—Nokian Tyres P.L.C. is poised to return to profitable growth this year, management said recently, based on the company's position in growth markets and control on internal costs.
Nokian management is basing its forecast largely on the firm's “strong expanding distribution, good seasonal logistics and improved cost structure” in its operations in Russia and other former East Bloc nations, where Nokian derives more than a fifth of its annual sales.
Nokian management did not quantify the forecast, which coincided with the release of the firm's fiscal 2009 results. Last year Nokian reported net income of $81 million on sales of $1.11 billion.
Raw materials costs could be a variable that impacts the firm's ability to improve, management noted. Nokian anticipates materials costs could rise 6 percent this year, and raising prices to compensate is expected to be a challenging proposition in the firm's core markets.
After suffering a 48-percent drop in sales in the eastern European trading area, Nokian anticipates recovery there this year based on signs that the demand decline has bottomed out, inventories are low and currencies throughout the region have stabilized.
For 2010 Nokian expects to make capital investments of about $69 million, a drop of 42 percent.