August 5, 2010 / 5:24 AM / 8 years ago

UPDATE 2-N.Renkaat Q2 tops all fcasts, raises 2010 view

* Q2 EBIT 60.9 mln euros, beats all forecasts

* Q2 sales 260 mln euros, also topping all fcasts

* Says positioned to clearly improve net sales and EBIT

* Says 2010 raw material costs to rise by 12 pct vs 2009

* Nokian Renkaat shares up 8.98 pct, outperforming the index

(Adds details, quotes, shares)

By Terhi Kinnunen

HELSINKI, Aug 5 (Reuters) - Tyre maker Nokian Renkaat (NRE1V.HE) reported better-than-expected second-quarter earnings on Thursday, powered by strong demand across all its business, and hiked its sales and profit guidance for the year.

The report sent its shares sharply higher and by 1016 GMT they were up 8.98 percent at 23.90 euros, outperforming a 1.32 percent stronger STXE 600 Automobiles and Parts index .SXAP.

“Both volumes and the EBIT (earnings before interest and taxes) margin were the consequence of good volumes that surprised positively, beating all expectations in the market,” said Handelsbanken analyst Tom Skogman.

“For sure analysts will upgrade their forecasts, not only for this year, but most likely also for the next year,” he said.

April-June operating profit tripled versus a year ago to 60.9 million euros ($80.6 million), beating all forecasts in a Reuters poll where the mean consensus was 43.3 million euros. Sales jumped 36 percent to 260 million euros, also trumping all estimates.

Nokian said improving economies had boosted demand in all tyre categories. However, Chief Executive Kim Gran warned the company would find it tough to keep up, although it was taking measures to increase production at its two plants in Finland and Russia.

“Our inventory levels are quite low and we cannot sell more than we produce. Production will be a bottleneck,” he told a news conference.

Gran said Nokian, a leading winter tyre maker with a strong grip in Russia, was looking into cooperation with a tyre maker, possibly in Asia, to outsource some production in passenger and heavy tyres.

“There might be something in the pipeline in the not far (off) future,” he said, referring to Nokian’s passenger tyre unit.

More than 70 percent of Nokian tyres are made at its plant in Vsevolozhsk, Russia, near St. Petersburg.

Nokian also said rising raw material costs remained a worry, and the firm would seek to push through price hikes of between 2 to 6 percent in all product areas in the second half of the year.

Nokian said in a statement it was positioned to “clearly” improve 2010 net sales and operating profit, tweaking previous guidance for an improvement versus a year ago. (Reporting by Terhi Kinnunen; Additional reporting by Brett Young; Editing by David Cowell, Sharon Lindores) ($1=.7559 Euro)

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