April 30, 2013 / 6:26 AM / 5 years ago

UPDATE 1-Nokian Renkaat misses forecasts on weak European demand

* Q1 operating profit down 27 pct

* Blames weak European demand, long winter, de-stocking

* Still expects full-year profit growth (Recasts with growth in Russia, decline in Europe)

By Jussi Rosendahl

HELSINKI, April 29 (Reuters) - Finnish tyre maker Nokian Renkaat reported a bigger-than-expected decline in quarterly profit as growth in Russia failed to offset a steep fall in European demand.

The company said car tyre demand in the first quarter fell 13 percent in Europe and 8 percent in the Nordic countries as the region’s recession hit consumer confidence. It also cited pricing pressure, particularly in Central Europe.

Total first-quarter operating profit fell 27 percent to 76 million euros ($100 million), missing the average forecast among analysts for 82 million euros.

It also blamed weather, saying retailers were focused on de-stocking winter tyres from a year earlier when a mild winter left them with high inventories. The latest winter, on the other hand, lasted so long that summer tyre sales were pushed back to the second quarter, it said.

Russia, where Nokian has a factory with annual capacity of 14 million tyres and its own tyre distribution chain, was its strongest card. Sales in Russia grew 3 percent in the quarter to 176 million euros, or 48 percent of group revenue.

Nokian Renkaat said earnings in the first half of the year will likely be weaker than a year earlier, but repeated its forecast for full-year sales and profit to grow thanks to new tyre launches and further market growth in Russia.

Analyst Sauli Vilen from Inderes Equity Research said meeting that annual forecast would be challenging.

“It looks like a wishful outlook. If the market softens at all from here, they will likely need to change the guidance.” ($1 = 0.7634 euros) (Reporting By Jussi Rosendahl; Editing by Ritsuko Ando)

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