HELSINKI (Reuters) - Finland’s Nokian Tires NRE1V.HE reported a surprise fall in quarterly earnings on Wednesday and cut its full-year profit outlook, citing issues in Russia and Norway on top of new emissions standards that have had an impact across the sector.
Nokian shares tumbled 14 percent on the latest warning from the automotive industry after a string of trimmed forecasts and weak results from Michelin (MICP.PA), Continental (CONG.DE) and Daimler (DAIGn.DE).
Nokian, which has a large plant in Russia and a smaller one in Finland, said 2018 sales and operating profit were now expected to be flat or slightly higher than 2017, compared with a previous forecast of growing sales and profit.
Third-quarter operating profit dropped 4 percent from a year earlier to 86 million euros ($97.5 million), clearly below analysts’ average expectation of 95 million euros in a Reuters poll.
Quarterly sales fell 2 percent in total - 18 percent in Russia and 4 percent in the Nordic region - while North America and Central Europe showed some growth from a year earlier.
Chief Executive Hille Korhonen said a shorter summer season in Russia resulted in high inventory levels and a lack of warehouse capacity, which is now affecting winter tire demand negatively. The new emissions standards hit car sales in Sweden.
In Norway, booming demand for electric and hybrid cars has led to long customer waiting times and a slowdown in new car sales. In the Nordics, it is customary to purchase new winter tires together with a new car.
“If you want to buy a Tesla, it will take probably more than one year to get one. So in Norway, the market demand would definitely be much higher than the car manufacturers can supply at the moment,” Korhonen told a conference call.
Shares in the company were trading 29 percent lower compared to the start of the year.
“This is surprisingly weak report (from Nokian)... We must lower our estimates due to the changed outlook and weaker-than-expected Q3,” Inderes Equity Research analyst Petri Kajaani said with an “accumulate” rating on the stock.
Nokian is looking to boost growth with a new $360 million plant in the United States, due to start in 2020.
“Construction is proceeding according to plan ... This (plant) will release capacity from our Russian factory for growth in Russia and Europe,” Korhonen said.
($1 = 0.8819 euros)
Reporting by Jussi Rosendahl and Anne Kauranen, Editing by Gopakumar Warrier and David Evans