UPDATE 1-Nokian Renkaat turns more confident over winter season

Tue Oct 30, 2012 9:33am EDT

* CEO says not worried about Russian inventories

* Says Central Europe outlook improved in 2-3 weeks

* Early start of the winter may help the tyre maker

* Shares rise 5.3 pct (Adds CEO and analyst comments, share reaction)

HELSINKI, Oct 30 (Reuters) - Finnish tyre maker Nokian Renkaat said the outlook for its winter tyre sales has improved in the weeks since it warned weak demand and inventory overhang would make it miss third-quarter expectations.

Shares in the company jumped 5.3 percent after its chief executive said the outlook in Central Europe had improved since its warning earlier this month sent the shares down 13 percent

"Russia, Scandinavia, I'm not worried about. Central Europe is still a question mark today, but it looks more positive today than it looked, say, 2-3 weeks ago," CEO Kim Gran told a conference call.

Tyre inventory levels in Russia were not worrying, he added after the company confirmed operating profit had fallen to 85.5 million euros ($110.3 million) in July-September, from 95.4 million a year earlier.

Winter tyre inventories at retailers and manufacturers have been high in Europe due to a mild winter in 2011-2012. As overall demand remained weak, companies have lowered prices aggressively.

Handelsbanken analyst Tom Skogman said the CEO sounded surprisingly confident considering the recent profit warning.

"The visibility continues to be weak in Central Europe but the company seems confident it hasn't delivered too many tyres to Russia this year," he said.

Skogman also noted winter started early in Finland and the Moscow area this year, a good sign for winter tyre sales.

Nokian Renkaat last year made 28 percent of its sales in Central and Eastern Europe and 38 percent from Nordic Countries. Around 27 percent came from Russia and CIS countries, a region that has become a strength for the company.

The company repeated its full-year forecast of improving net sales and operating profit. Analysts expected 2012 operating profit to rise 10 percent year-on-year to 419 million euros ($541 million), according to a Reuters poll.

($1 = 0.7749 euros) (Reporting by Jussi Rosendahl and Terhi Kinnunen; Editing by Hans-Juergen Peters)