* Tyre maker to build new plant with 400 jobs in Tennessee
* Nokian eyes central European plant in future
* 2017 sales seen recovering on Russian rouble gains
* Shares fall as raw material costs set to rise 20 percent
(Adds plant details, local job impact, updates share price)
By Jussi Rosendahl
HELSINKI, May 3 Finland's Nokian Tyres
said on Wednesday it would build a new plant in the
United States to boost growth outside Europe and forecast higher
Russian sales, but its shares slid more than 6 percent as
quarterly profit missed expectations.
Nokian said raw material costs would rise 20 percent in the
full year, mainly due to increased oil prices. It said this
would add about 60 million euros ($65 million) to costs, which
analysts expected to hit profits in coming quarters.
Nokian, which has a large plant in Russia and a smaller one
in Finland, said the new U.S. plant would be built in Dayton,
Tennessee with capacity to make 4 million tyres a year.
Construction of the $360 million plant was due to start in
early 2018 with production beginning in 2020, Nokian said,
announcing investment in a factory it has long considered.
"Locating the factory in North America at this point is a
higher priority for us than other possible locations," acting
CEO Andrei Pantioukhov told a conference call.
"To increase our sales in North America significantly ... we
need local production," he said, adding that the firm also
needed a factory in central Europe in the long term and such a
project could be discussed in "a couple of years".
The new factory, planned to create 400 jobs, would focus on
producing tyres for the North American market. Dayton is close
to Chattanooga, where Volkswagen has its U.S.
factory. Nokian said the plant would be expanded in the future.
Last year, Nokian made 43 percent of its sales in the
Nordics, 29 percent in other areas of Europe, 16 percent in
Russia and central Asia and just 11 percent in North America.
Nokian's early investments in Russia and its focus on
high-margin winter tyres have boosted profits.
In 2016, Nokian's operating margin was 22.3 percent,
compared to 13.5 percent at Bridgestone, 13.3 percent
at Michelin and 10.1 percent at Continental.
Nokian's high exposure to Russia cut into its bottom line
after the Ukraine crisis, a slowdown in the Russian economy and
a weakening of the rouble. But a recovery in the value of the
rouble has helped improve the overall outlook.
The company lifted its full-year guidance, saying it
expected at least 10 percent sales growth and more than 5
percent profit growth, compared to a previous forecast of at
least 5 percent for both measures.
First-quarter operating profit climbed 17 percent from a
year before to 59 million euros but failed to match the average
forecast in a Reuters poll of analysts of 62 million euros.
By 1345 GMT, shares were down 6.3 percent at 37.57 euros.
"Impact from raw materials (in the first quarter) was
surprisingly high, which raises concern over profitability in
the coming quarters," said analyst Sauli Vilen from Inderes
Equity Research with a "reduce" rating on the stock.
($1 = 0.9169 euros)
(Additional reporting by Joe White in Detroit; Editing by
Stephen Coates and Edmund Blair)