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UPDATE 1-Russia and higher prices help pump up Nokian profit
November 1, 2017 / 8:46 AM / 18 days ago

UPDATE 1-Russia and higher prices help pump up Nokian profit

* Q3 profit up 21 pct yr/yr

* Growth in Russia and North America

* Shares rise 5 percent (Adds share reaction, comment, background)

HELSINKI, Nov 1 (Reuters) - Growth in Russia and North America combined with price increases to offset rising raw material costs helped Finnish tyre maker Nokian Tyres to report better than expected quarterly profits on Wednesday.

Nokian, which has a large plant in Russia and a smaller one in Finland, said third-quarter operating profit rose 21 percent from a year earlier to 90 million euros ($105 million), above analysts’ average expectation of 82 million euros in a Reuters poll.

It repeated its forecast of sales and profit growth of at least 10 percent in 2017 despite a 20 percent rise in raw material costs.

Shares in the company rose 5.8 percent by 0825 GMT and are now 17 percent higher since the beginning of the year.

“Our market share has been increasing in Russia and growth there has been more positive than what we have been anticipated,” Chief Executive Hille Korhonen told a news conference, adding that stronger rouble also helped boost sales.

Raw material costs turned slightly lower in the third quarter compared to the previous quarter, and she added that price increases to mitigate the increased costs had been implemented.

Nokian is looking to boost growth with a new production line at the Russian plant as well as a plan to build a new $360 million plant in the United States.

“Their main markets are expected to grow around 2-3 percent annually in 2017 and 2018... Following their better-than-anticipated Q3 report, we see some pressure in our estimates for this year,” said Petri Kajaani, analyst at research firm Inderes, with an “Accumulate” rating on the stock. ($1 = 0.8599 euros) (Reporting by Jussi Rosendahl; Editing by Terje Solsvik and Keith Weir)

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