NOKIA, Finland—Nokian Tyres P.L.C. is projecting solid sales and earnings growth after reporting double-digit gains in earnings and sales in the quarter ended March 31.
Citing a "strong position in the core markets, investments in growth markets, a strong distribution and competitive products," Nokian management is projecting sales growth in 2017 of at least 10 percent with operating profits rising by more than 5 percent.
Nokian's operating and net income for the period jumped 16.6 and 13.6 percent, respectively, to $62.7 million and $48.2 million, while sales grew 18.2 percent to $346.7 million. The operating ratio was essentially unchanged at 18.1 percent.
The Nokia-based tire maker—which announced plans May 3 to build a $360 million plant in the U.S.—pointed to sales growth in all of its main markets for the positive results. In particular, the Russian market, Nokian's single largest market, rebounded on the strength of a Russian economy that showed growth after seven consecutive recessionary quarters.
Production volumes were higher and currency exchange swings yielded a positive impact of nearly $23 million.
At the same time, raw material costs rose 18 percent over the 2016 quarter. For the full year, Nokian expects materials headwinds of roughly $64 million. To counter these, Nokian said it has implemented necessary price increases in all markets, the full effect of which will be seen in the following quarters.
During the quarter, the company made investments of $18.4 million, in production at its Russian and Finnish factories, molds for new products, ICT and process development projects and expansions within its Vianor distribution arm.
In terms of segments, passenger car tires showed 22.5 percent growth, followed by heavy tires and Vianor at 5.9 and 4.7 percent respectively.
Sales in Russia and the CIS jumped 56 percent, while business in Europe and North America rose 18 and 9.4 percent, respectively.