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Finnish tyre maker Nokian Renkaat will have better results in 2010 due to its lower inventories regardless of whether there is strong market growth, the chief executive said on Tuesday. Nokian Renkaat has suffered in 2009 like other auto industry players as the economic downturn stifled demand and inventories rose. The company has cut jobs and reined in production as a result.
"Our sales will grow and results improve (in 2010) even if markets do not significantly improve, as there is no need for any so-called cleaning (of inventories)," Kim Gran told Reuters in an interview.
"(But) we expect some growth to happen (next year) in our main markets - Russia, the CIS (Commonwealth of Independent States) and the Nordics. Drivers are everything from growth in gross domestic product to a recovery in car sales, of which there already are some signs."
Gran said the fourth quarter was going as had been expected. Nokian Renkaat had said previously it expected October-December operating margin to fall from the previous quarter.
The company will lift production in the new year, probably starting in the first quarter, after a planned 17-day shutdown in December and January at its plants in Finland and Russia, he said.
The CEO said he expected the company's investments would be clearly lower in 2010 because it currently had unused production capacity. He also said the company had made its raw material purchases for the remainder of this year and the beginning of next. He said he expected raw-material costs to rise in the second quarter of 2010 but did not see any major price rises in the tyre industry due to overcapacity.
Rivals like Michelin have been quoted recently as saying they were mulling investments in Russia, Nokian Renkaat's key market. However, Gran said he did not expect any changes in the competition in the near future.
"Customers are the same, production capacity is more or less the same, duties and pricing look to be relatively balanced ... in line with this year," he said. "The biggest change next year is that the economy is more stable, and there is slight growth in sight."

Copyright Reuters, 2009

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