Nokian sales and profits were up for first nine months of 2006

Nov. 3, 2006

Nokian Tyres plc's net sales for the first nine months of the year were up by 19.8% to 533.9 million euros, compared with 445.6 million euros for the same period a year ago, the company has reported.

Operating profit amounted to 85.6 million euros compared to 65.1 million euros in 2005.

Kim Gran, president and CEO, said, "The positive trend continued at Nokian Tyres accelerating further in July–September: sales increased, profits improved and market shares of car winter and summer tyres grew significantly.

"Strong growth continued at heavy tires, and both new and retreaded truck tires sold better than the year before."

Although affected by higher raw material and production costs, the company saw the average car tire prices increase in the third quarter as a result of the good sales mix and price increases carried out in September. "Inventories and receivables were higher than a year earlier, but they are expected to normalize once the winter season begins in the last quarter of the year," Gran noted.

"The outlook for the last quarter looks good, but sales growth in the last quarter of the year will be more moderate than in January–September due to the good winter tire pre-sales in the second and third quarters.

"Final sales figures will depend on the timing of the winter season and on our own delivery capacity. The expenses for the development of business and production in Russia, as well as higher option costs and financing expenses, will tax profit growth as planned.”

The company noted that a challenging situation in the European tire markets continued. In the Nordic countries, car summer and winter tire sales volumes were down from the previous year. Western European replacement markets grew slightly compared to 2005 with growth focusing on winter tires.

The net sales of Nokian passenger car tyres in January to September increased to 344.2 million euros compared to 281 million euros in 2005, or 22.5% over the previous year. Operating profit improved and was 81 million euros compared with 67.7 million for the same period in 2005. The operating profit percentage was 23.5% versus 24.1% in 2005.

Passenger car tire sales were good throughout the review period, especially in July–September. Increased tire prices and a good sales mix were credited for the increase.

The company is expecting sales of its newest winter tire, the Nokian Hakkapeliitta 5, to take off in the last quarter.

Nokian's production volume rose as a result of capacity increase at its Russian plant.

In September, Nokian Tyres introduced a new Nokian Hakka summer tyre to complement its traditional Nokian Hakkapeliitta winter tire family. Sales of the four different types of summer tires will begin next spring in Nordic and Russian tire outlets.

The net sales of Nokian heavy tires in January to September totalled 65.7 million euros compared with 54.2 million euros for the first nine months of 2005, showing an increase of 21.3% over the corresponding period of the previous year.

The operating profit for heavy tires increased to 15.3 million euros compared with 9.3 million euros in 2005, and the operating profit percentage was 23.3% (versus 17.2%).

The company reported strong demand for heavy special tires and icnreased sales in all product groups and in all its key market areas in both original equipment and replacement markets. Profitability improved due to good productivity development and price increases, the company noted.

The production capacity for heavy tires was in full use, with production volumes increasing some 16%, Nokian said. The company's 4 million euro facility investment, made in March, will further increase heavy tire production volumes. After the completion of the investment in 2007, the capacity of radial tires will increase by some 30% and overall capacity by some 10% a year.

Nokian Heavy Tyres introduced a new type of radial forestry tyre in the review period: the Nokian Forest Rider. The tire is designed for medium-sized cut-to-length forestry machines.