NOKIA, FinlandNokian Tyres P.L.C. has downgraded its earnings and sales expectations for 2014 due to a weaker forecast for the economy in Russia and and the former Soviet Bloc nations.
Nokian cited a clearly devalued Russian rouble for hurting the Russian economy and the purchasing power of Russian consumers.
The Nokia-based tire maker derived 34 percent of its fiscal 2013 sales from business in Russia and other eastern European and central Asian nations of the Confederation of Independent States.
Nokian said it expects sales and earnings to fall short of its 2013 performance due to the situation in Russia, despite growth expectations in other key markets in the Nordic countries, Central Europe and North America. Previously Nokian had projected sales growth in 2014.
In fiscal 2013, Nokian reported an operating profit of $512 million on sales of $2.02 billion, declines of 7.1 and 5.7 percent, respectively, from 2012. Net profit was $244 million.
Nokian also noted it continues to have competitive advantages from having manufacturing operations in Russia.
It exports more than half of its Russian tire factory production, and is experiencing higher margins in this business as a result of the difference between production costs in roubles and export sales in euros.
However, the tire maker said, this is not enough to fully compensate for the weaker market conditions in Russia.
On the plus side, Nokian said it expects earnings to benefit by about $40 million due to lower raw materials purchasing costs.