Reuters logo
UPDATE 2-Weak Russian economy to hit Finland's Nokian, YIT this year
February 5, 2015 / 7:09 AM / 3 years ago

UPDATE 2-Weak Russian economy to hit Finland's Nokian, YIT this year

* Nokian Q4 EBIT 77.5 mln euros vs 72.9 mln in Reuters poll

* YIT Q4 core EBIT 31 mln euros vs 28 mln in Reuters poll

* Both forecast falling profits due to Russia

* Shares rise (Adds share reactions, analyst comments)

By Jussi Rosendahl

HELSINKI, Feb 5 (Reuters) - Finnish tyre maker Nokian Renkaat and builder YIT on Thursday reported lower fourth-quarter profits partly due to exposure to the weak Russian economy and said this would hit their performance this year.

Nokian, which has a large plant near St Petersburg, and YIT, known as Russia’s biggest foreign house-builder, have come under pressure from the fall in the rouble and Russian consumer demand, partly the result of fallout from the Ukraine crisis.

Both companies generated about 26 percent of their sales in Russia last year.

Nokian forecast slightly declining sales and profit this year and said first-quarter profit would be clearly down year-on-year due to the delayed start of winter tyre sales in Russia which would result in sales shifting to the following quarters.

But the company’s 16 percent drop in fourth-quarter profit to 77.5 million euros surpassed analysts’ average forecasts in a Reuters poll as cheaper raw materials offset weak sales.

Nokian also held its dividend at 1.45 euros per share, surprising the market and sending its shares up 10 percent in early Helsinki trade. The stock is still down about 15 percent from a year ago.

“The fourth quarter for Nokian was strong given the circumstances, and dividend yield gives support to the stock,” FIM brokerage said in a note.

YIT reported results slightly ahead of consensus forecasts, with a 26 percent fall in core profits from a year ago. The company halved its dividend to 0.18 euros per share from 0.38 euros last year, roughly in line with forecasts.

YIT’s shares, down about 40 percent in the last 12 months, rose 0.2 percent by 0850 GMT.

“Russian sales and profitability held up somewhat better than expected in the fourth quarter as the weaker rouble accelerated demand for apartments,” analyst Petri Aho from Inderes Equity Research said in a note.

YIT said the outlook for Russia was difficult to predict. It estimated its 2015 sales growth, at comparable exchange rates, between negative 5 percent and plus 5 percent, while its core operating margin was expected to fall.

“Consumers’ purchasing power is estimated to weaken,” YIT said, also pointing to rising inflation that would increase construction costs. “Access to mortgage financing is estimated to weaken, but the mortgage rates are expected to remain stable,” YIT said. (Reporting By Jussi Rosendahl; Editing by Balazs Koranyi and Jane Merriman)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below