HELSINKI (Reuters) – Finland’s Nokian Tyres <NRE1V.HE> on Wednesday cut its full-year profit outlook after reporting a surprise fall in quarterly earnings, dented by unfavourable currency moves and high inventory levels in Russia.
Nokian, which has a large plant in Russia and a smaller one in Finland, said 2018 sales and operating profit are now expected to be flat or slightly higher from 2017, compared with a previous forecast of growing sales and profit.
Third-quarter operating profit dropped 4 percent from a year earlier to 86 million euros ($97.5 million), clearly below analysts’ average expectation of 95 million euros in a Reuters poll. [nL8N1XA55A]
Quarterly sales fell 2 percent in total – 18 percent in Russia and 4 percent in the Nordic region – while North America and Central Europe showed some growth from a year earlier.
“Net sales in July−September were negatively impacted by high inventory levels of summer tires in Russia and lower new car sales in Sweden and Norway,” Chief Executive Hille Korhonen said in a statement.
Rivals Michelin <MICP.PA> of France and Continental <CONG.DE> of Germany have also trimmed their forecasts in the past months, citing slower growth, higher costs and Europe’s new emission standards. [nL8N1WY6Q5][nL8N1VD23D]
“(Nokian) still makes good margins with passenger tyres but sales are weaker, especially in the Nordics and Russia, and currency headwind is significant. I expect the share price to fall,” said OP Bank analyst Jari Raisanen, who has an “accumulate” rating on the stock.
($1 = 0.8819 euros)
(Reporting by Jussi Rosendahl, Editing by Sherry Jacob-Phillips and Gopakumar Warrier)