Nokian Tyres revenues, profits down in 2009

first_imgNet sales of Nokian Tyres Group amounted to EUR 798.5 million (2008: EUR 1,080.9 million), down by 26.1% compared to 2008. Operating result was EUR 102.0 million (EUR 247.0 million). Earnings per share were EUR 0.47 (EUR 1.12), and result for the period was EUR 58.3 million (EUR 139.9 million). The North American operation, headquartered in Colchester, Vermont, was one of the brightest spots for the Finnish company. Net sales in North America were EUR 84.5 (EUR 80.7). Sales in North America have been helped by a recent law in Quebec requiring snow tires in winter. Nokian suffered in Scandinavia, but mostly in the Russian group, where sales were off more than EUR 200. Nokian is best known for its Hakkapeliitta brand. Cash flow from operations improved to EUR 123.1million (EUR 9.5 million). The Board of Directors proposes a dividendof EUR 0.40 (EUR 0.40) per share. In 2010, the company is positionedto improve net sales and operating result compared to 2009.Kim Gran, President and CEO:“Eventually, after taking decisive action in a tough market we achievedquite satisfactory results in 2009. The launch of our new winter tyre,Hakkapeliitta 7, has been a great success and has helped us to maintainhealthy prices and strengthen our market leader position on our coremarkets. Prices were increased on all core markets to compensate fordevaluations but did not fully cover the changes in sales and marketmix. The Vianor chain was expanded by 116 shops and now consistsof over 600 outlets.The streamlining measures aiming at a lighter cost structure andfull utilization of a lower cost production in the Russian plant wereimplemented as planned. Our actions will have a strong impact on ourresults for years to come. Manufacturing operations booked improvedresults and margins in the fourth quarter year-over-year signaling thatactions taken in 2009 are starting to have a positive effect.Our target was to provide strong cash flow and eliminate receivablerisk. Cash flow from operations improved by EUR 113.6 million year-over-year due to cost cuts, lower investments, inventories and reducedtrade receivables. Investments were cut by EUR 94.7 million andinventories by EUR 90.9 million year-over-year. At the end of 2009,current receivables were EUR 72.7 million lower than a year before.Wages and salaries were cut by EUR 44.6 million and fixed costsexcluding salaries by EUR 24.2 million compared to 2008.We have already set our minds to return to the growth track,expecting that in 2010 we will have a good possibility to increaseour sales, instead of merely focusing on cost savings. Sales will besupported by a slowly recovering economy on our core markets andour distributors’ quite moderate carry-over stocks after this winter.Russian and Nordic markets have stabilized and are showing earlysigns of growth. In spite of some encouraging signals, we will stillbase our actions on a gradual rather than a rapid recovery.A strong growing distribution, good seasonal logistics, an improvedcost structure with production inside duty borders of Russia and CISand new products will give us a good chance to strengthen ourmarket leadership in the core markets and to return to profitablegrowth in 2010.”Market situationThe sharp downturn in the global economy that started in late 2008continued during 2009, although the second half of the year showedsome positive signs. The aftermarket sales volume for passenger cartyres in 2009 declined in the Nordic countries by an estimated 10%year-over-year. Tyre deliveries shrank drastically in Russia and the CIScountries, trailing the declining economy and reduced car sales.As car manufacture volumes decreased significantly, there was anexcess supply of summer tyres which resulted in price erosion of somevolume sizes. USA introduced a duty program in September 2009 forthe next three years (35%, 30%, 25%) for car tyres manufactured inChina. This is expected to put further pressure on economy segmentsummer tyre prices on all non-US markets.Source: Nokian Tyres plc annual report. www.nokiantyres.com(link is external)last_img

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