A jaunty nautical appraisal of this year’s outlook greeted shareholders upon the release of Nokian Tyres’ 2010 financial statements.
The man at the helm, president and CEO Kim Gran, stated that "a clear improvement in the drivers for demand in core business brought Nokian Tyres back to a strong growth track. The sails are now bulging with strong tailwind as we go into 2011 with thick order books and growing capacity.”
According to the company’s Feb. 9 stock exchange release, Nokian Tyres navigated its way to a 32.5% sales increase during 2010, reaching sales of 1,058.1 million euros. This was accompanied by a more than doubling of operating profit from 102.0 million euros in 2009 to 222.2 million euros last year.
Net profit for the year was 169.7 million euros, up 191% year-on-year. Nokian also reports that earnings per share increased from 0.47 to 1.34 euros while cash flow from operations improved 159% to 318.8 million euros. The company’s Board of Directors proposes a dividend of 0.65 euros per share, up 65% from the 2009 dividend.
Broken down into segments, net sales from passenger tires amounted to 714.7 million euros, up 35.5% on the previous year. Production volume in this segment increased 40% during 2010 following the introduction of two new production lines (lines seven and eight) in Nokian’s factory in Russia.
Heavy tires accounted for 81.0 million euros’ worth of sales in 2010, up from 50.1 million euros a year earlier. In terms of tonnage, segment production volume in 2010 was double that of 2009. Truck tire sales reached 41.2 million euros last year, a year-on-year increase of 44.3%. Net sales from the company’s Vianor network increased 12.5% to 307.9 million euros.
Despite the positive results, a fly in the ointment at Nokian was, as has been the case for all manufacturers, raw material prices. Speaking on the industry as a whole, Gran observes that between early 2009 and the end of 2010 the price of natural rubber more than tripled, and while price increases on tire products have been implemented, some negative effects on profitability have been experienced, especially for producers in developing countries.
“Going into 2011 our order book is all-time high and it provides us with a good opportunity to increase sales, again operating more selectively,” Gran concluded. “We will also continue to launch new product lines, increase prices and improve mix to offset higher raw material costs. Low inventories in the distribution channel and our growing production capacity offer a good starting point for further profitable growth in 2011.” (Tyres & Accessories)
