Nokian Tyres Says High Inventories In Europe To Hurt H2 Sales
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European distributors are holding back from buying costly winter tyres due to high inventories, Finland’s Nokian Tyres said on Thursday, adding it saw weakness in its Russian market too.
“We expect short-term weakness in sales volume throughout Central Europe to continue during the remainder of the year,” Chief Executive Hille Korhonen told an investor call.
Korhonen said summer tyre inventories in Central Europe were higher than normal, leading distributors to hold back on stocking winter tyres.
“So it seems that the order intake is slower compared to many, many years and they will be ordering goods closer to the season,” Korhonen said, adding oversupply was putting pressure on prices.
Korhonen said the company’s view on the Russian market had worsened through the year.
“There is increasing uncertainty in the Russian market and my meetings with all key distributors in Russia earlier this month confirmed the weakness,” Korhonen said.
Shares in Nokian were 3% lower in late trading.
Questions & Answers
Q.Why are European distributors hesitant to purchase winter tyres?
Why are European distributors hesitant to purchase winter tyres?
European distributors are holding back from buying winter tyres because they currently have high inventories. They also have higher than normal summer tyre inventories, which is affecting their stocking decisions for winter tyres.
Q.What is the outlook for Nokian Tyres' sales volume in Central Europe for the rest of the year?
What is the outlook for Nokian Tyres' sales volume in Central Europe for the rest of the year?
Nokian Tyres expects short-term weakness in sales volume to continue throughout Central Europe for the remainder of the year. The Chief Executive noted that order intake is slower than in previous years.
Q.How is the oversupply of tyres affecting the market?
How is the oversupply of tyres affecting the market?
The oversupply of tyres is putting pressure on prices. Distributors are delaying orders, indicating they will be purchasing goods closer to the season.
Q.What is the current situation in the Russian market for Nokian Tyres?
What is the current situation in the Russian market for Nokian Tyres?
Nokian Tyres' view on the Russian market has worsened throughout the year. There is increasing uncertainty, a weakness confirmed by the Chief Executive's recent meetings with key distributors there.
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