HELSINKI - The Nordic region's largest tire maker Nokian Renkaat posted a surprise profit for the seasonally weak first quarter on Tuesday on the back of robust winter tire sales and profits, sending its shares to three-year highs.
The company, one of the most profitable in the sector due to its focus on high-end winter and specialty tires, repeated its target of improving 2003 net sales and profit versus last year.
"The demand for car winter tires, high-speed summer tires and heavy special tires is estimated to continue its growth in Nokian's ... major market areas," the Finland-based firm said in a statement.
Nokian Renkaat posted a January-March profit before extraordinary items of 1.6 million euros ($1.80 million), swinging from a loss of four million a year ago and at the top end of estimates in a Reuters poll.
Net sales rose 13 percent year-over-year to 96 million euros.
Sales at Nokian's key passenger car tires' unit rose 20 percent to 57.8 million euros, while operating profit at the unit soared 40 percent to 10 million euros.
Analysts welcomed the result, saying the cautious outlook was fair as most of Nokian's profits come in the fourth quarter.
"The sales were clearly higher and fixed costs lower as the company was able to continue winter tire sales longer due to colder weather lasting longer in Q1," said Opstock analyst Jari Raisanen, who has "accumulate" recommendation for the stock.
Nokian's performance has been helped by fast growth in key eastern European and Russian markets while the broader industry including giants such as Goodyear and Michelin wrestle with weak tire demand in more developed markets, especially in the United States.
But while Nokian has tapped the Russian market for growth, the firm last month cut its sales goal for a joint venture with Russia's Amtel.
Chief Executive Kin Gran told Reuters at a news conference the previous target for the Russian joint venture of making five million tires annually starting in 2005 still held.