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UPDATE 2-Tyre maker Nokian Renkaat cuts profit outlook
August 9, 2013 / 6:26 AM / 4 years ago

UPDATE 2-Tyre maker Nokian Renkaat cuts profit outlook

* Q2 EBIT 120 mln euros vs 117 mln euros in poll

* Cuts 2013 profit outlook

* Russia growth slowing down

* Shares up 2 pct (Adds comment, share reaction, details)

HELSINKI, Aug 9 (Reuters) - Finnish tyre maker Nokian Renkaat reported stronger-than-expected quarterly results and said a recent slowdown in Russia, its core market, would likely be temporary.

Nokian Renkaat on Friday lowered its full-year outlook, saying it now expects “flat to some growth” in full-year sales and operating profit amid more moderate growth in Russia. It previously expected annual growth.

Despite the cautious forecast, the company’s shares rose about 2 percent as investors focused on second-quarter results which showed earnings before interest and tax (EBIT) rose 7 percent to 120 million euros ($161 million), compared with a market consensus forecast of 117 million.

Inderes equity research analyst Sauli Vilen said its operating margin of 28.7 percent, up from 27.2 percent a year earlier, was particularly impressive.

“The market had concerns about how the margins would hold in the difficult market,” he said.

Nokian Renkaat said the improved margin was due to new, more cost-effective production lines in Russia as well as lower raw material costs.

Consumer confidence in Russia had recently been held back by higher interest rates but that was likely temporary, it said.

The company produces 14 million tyres a year at its main factory in Vsevolozhsk, Russia, and it plans its boost capacity to 15 million by the end of the year. ($1 = 0.7471 euros) (Reporting by Jussi Rosendahl; Editing by Ritsuko Ando and David Cowell)

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