NOKIA, Finland (Feb. 9, 2011)—Nokian Tyres P.L.C. expects improved sales and earnings this year based on a full order book, low inventories in the distribution channel, recovering economic conditions in key markets and its own expanding capacity.
“A clear improvement in the drivers for demand in core business brought Nokian Tyres back to a strong growth track,” President and CEO Kim Gran said in presenting Nokian's 2010 results. “The sails are now bulging with strong tailwind as we go into 2011 with thick order books and growing capacity.”
For 2010 Nokian's operating profit doubled to $294.3 million and net income nearly tripled to $224.8 million. Sales rebounded strongly, growing nearly a third over 2009 to $1.4 billion.
The one proviso in Nokian's forecast is the uncertainty about raw material prices. The company said the price for natural rubber at year-end had more than tripled throughout the year—and continues to climb in early 2011—and some materials are in short supply. Nokian, like most of the world's tire makers, was able to offset some of the effect through tire price increases and improved product mix.
Among the drivers for 2010 growth Nokian cited are:
— GDP growth of 3 percent in the Nordic countries and 4 percent in Russia;
— 30-percent new car sales growth in the Nordic countries and Russia;
— Aftermarket sales growth of 10 percent in the Nordic countries and 8 percent throughout the rest of Europe; and
— Heavy snowfalls this winter in key markets.
Sales in North America grew 9.5 percent to $122 million.
By product group, Nokian reported consumer tire sales grew 35.5 percent, heavy tire sales were up 61.8 percent, the firm's captive retail business Vianor's sales grew 29.6 percent and other businesses showed 44.3-percent growth.
Production volume during the year increased by more than 40 percent, driven by the start-up of two production lines in Russia. Two more production lines are due to start operating the second and third quarter of 2011.