HELSINKI (Reuters) -- The Nordic region's top tire maker, Nokian Renkaat, posted forecast-beating quarterly profit on Friday and said strong demand for car tires would boost 2003 sales and earnings, sending its shares higher.
Nokian shares have risen a hefty 38 percent in 2003, helped by strong earnings, and got a fillip earlier in the year when Japan's Bridgestone Corp. bought a 19-percent stake in the firm.
"The outlook is positive in Nokian tires' key market areas," the company said in a statement. "The demand for passenger car winter tires, high-speed summer tires and heavy special tires is estimated to increase further."
Nokian reported second-quarter profit before extraordinary items of 11.2 million euros ($12.72 million), up 75 percent from the year-earlier figure of 6.4 million euros and above all estimates in a Reuters poll.
The Finnish company, one of the most profitable in the global tire industry due to its focus on expensive winter tires, said the earnings had also been boosted by expanding sales of high-performance summer tires.
Sales rose six percent to 115 million euros, slower than expected due to a drop in sales at Nokian's loss-making Vianor Nordic retail chain, but analysts said this was not a worry given the strong outlook for the key winter season.
"We are seeing the same reasons (for a strong result) as we saw in the first quarter, and if you look at the last part of the year it looks really good," said Opstock analyst Jari Raisanen, who rates Nokian Renkaat stock "accumulate".
"Consensus for (2003) earnings per share is going to be much higher than before this quarter, so the share's valuation right now is not so bad," he said.
Nokian has also looked east to tap growing markets in Russia in particular, and the firm said sales from its Russian joint venture with Amtel Group would begin in the second half of the year.
Chief Executive Kim Gran told a news conference that Slovakia in particular could be of interest when it comes to production given the country's lower cost base and taxes.
"The new European Union member countries will provide a really good option for transferring production," he said.