NOKIA, Finland—Nokian Tires P.L.C. saw its sales drop by nearly 2 percent in the first quarter of 2016 to $313 million, with currency effects having a negative impact of $16.6 million.
Net profit also dropped 70.5 percent to $45.4 million thanks to about $114 million in additional taxes and punitive interests.
Winter tire deliveries both for North America and Russia were lower than last year because of the higher customer inventory levels. However, Nokian said it had been able to increase summer tire sales in all its markets and winter tire sales especially to central Europe.
“Challenges in Russia continue with declining new car sales and tire market,” President and CEO Ari Lehtoranta said.
Production volumes were higher than last year, while the raw material cost decline continued and lower production cost supported profitability.
Negative impact, according to Lehtoranta, came from adjusted selling price development that was impacted by currencies and several mix issues, but also by local price reductions.
“Negative ASP development took down the net sales by 1.9 percent from last year. Currencies caused a ($16.6) million negative impact; thus the net sales would have grown by 3 percent with comparable currencies,” he added.
The CEO stressed that Nokian's sales would be more second-half weighted this year than last year.
Considering all the timing changes of the deliveries, the second quarter will be weaker than corresponding quarter last year, he said.