Nokian earnings drop in second quarter, first half

NOKIA, Finland—Nokian Tyres P.L.C. suffered double-digit drops in operating income for the quarter and half-year periods ended June 30 on slightly lower sales revenue.

Nokian management cited the negative effects of lower passenger tire sales volume in Central Europe, currency exchange losses and higher material and production costs for the earnings drops.

Operating profit fell 12.8 percent and 12.6 percent, respectively, for the quarter and half-year, to $105.7 million and $166.3 million, Nokian said. Sales were off 2.3 percent in the quarter to $470.9 million and 0.3 percent for the half-year to $857.1 million.

Net earnings fell 16.5 percent in the quarter to $82 million but more than doubled in the first half to $300.7 million due to extraordinary gains related to rulings on tax disputes from the years 2007−11.

For fiscal 2019, Nokian expects net sales in markets "with comparable currencies" to be slightly higher than in fiscal 2018 and operating profit to be lower, especially considering "significant" additional operating costs related to the firm's considerable ongoing capital investment projects.

"Despite market uncertainties, we will continue to pursue our growth agenda going forward," Nokian President and CEO Hille Korhonen said. During the first half, Nokian made capital investments totaling $166 million, including at its U.S. plant in Dayton, Tenn.

During the periods under review, North America was a bright spot for Nokian, reporting sales gains of 10.5 percent and 3 percent in the quarter and half-year, to $61.2 million and $109 million, respectively.