Nokian Tyres’ fourth quarter sales have been weaker than expected and the operating profit will be lower than target. The company will not reach its previously communicated sales target for 2008 of EUR 1,150-1,200 million. Group’s net sales in 2008 are estimated to grow approx. 5% compared with the previous year. The operating profit is estimated to be on the previous year’s level.
Demand for tyres has decreased in all Nokian Tyres’ core markets and in Russia and other CIS countries in particular due to lower sales of new cars, a late start of the car winter tyre season and the financial crisis. The company is limiting sales and reclaiming some approx. 30 million euros of the tyres already sold in Russia and CIS countries in order to reduce risks related to receivables and exchange rates. Due to the depreciation of the Ukrainian Grivna by approx. 40% against US dollar from the end of September, the company will report in financial items currency exchange losses of approx. 30 million euros related to US dollar nominated inter-company loan.
The outlook for 2009 has weakened. Nokian Tyres is taking measures to adjust inventory and production capacity levels in line with demand. In addition, the company will cut costs and investments significantly in order to ensure its cash flow.