HELSINKI (Reuters) - Finnish tyre maker Nokian (TYRES.HE) said on Tuesday its first-quarter operating profit fell sharply, hit by high inventories in Russia, mild winter and coronavirus outbreak.
Nokian’s January-March operating profit fell to 9 million euros ($9.75 million) from 53.9 million a year earlier and missing the average 26.5 million expected by analysts in a Refinitiv poll. [L8N2CJ2RT].
Quarterly sales fell 18% from a year ago to 280 million euros, missing the average analyst forecast of 287 million euros.
Shares in Nokian fell on the news and were down 2.3% by 1125 GMT.
At the end of March, Nokian scrapped its 2020 sales and profit guidance, while it also decided to temporarily lay off its 1,630 Finnish employees for up to 90 days. [L8N2BK2YW]
“Going forward, we expect the second quarter of 2020 - as we see the situation today - to be severely impacted by COVID-19,” Chief Executive Hille Korhonen said in a statement.
Nokian, which has invested heavily in Russia and makes 85% of its passenger car tyres in Russia, said it expects the sales of new cars in Russia to decline 20–25% this year as COVID-19 related restrictive measures hit the economy.
“The total replacement tire market sell-in in Russia in 2020 is expected to decline by 15–20% compared to 2019, driven by weak demand and high carry-over stocks,” it said.
Reporting by Tarmo Virki and Anne Kauranen, editing by Louise Heavens