Nokian Renkaat Stock Falls on Bridgestone Russia Strategy
Nokian Renkaat Oyj (NRE1V), the Nordic region’s biggest tiremaker, fell to a two-month low after global industry leader Bridgestone Corp. (5108) announced plans to open its first plant in Russia in 2016.
Nokian Renkaat dropped as much as 3.8 percent to 31.19 euros, the lowest intraday price since Feb. 6, and was trading down 3.5 percent at 1:11 p.m. in Helsinki in the biggest decline among Finnish benchmark stocks. Volume was 62 percent of the three-month daily average.
Bridgestone, the world’s largest tiremaker, will invest $380 million in a factory making passenger vehicle tires in Russia, the Tokyo-based company said on April 12. The Russian economy will grow 2.4 percent in 2013, compared with the 5 percent medium-term target set by Prime Minister Dmitry Medvedev, according to the Economy Ministry. Russian industrial output probably fell for a third month in March as the European sovereign-debt crisis hurt exports and investment.
“Part of the the stock’s drop probably has to do with Russia’s weaker economic prospects, but more important, it’s about Bridgestone’s plans to build a new plant in the country,” Rauli Juva, a Helsinki-based analyst at Nordea Bank AB, said by phone. “Increasing competition could affect Nokian Renkaat’s market share or pricing power.”
Russia and other former Soviet republics increased their share of Nokian Renkaat’s revenue to 35 percent last year from 27 percent in 2011. Total sales more than doubled to 1.6 billion euros ($2.1 billion) last year from 798.5 million euros in 2009. Continental AG (CON), Europe’s second-largest tiremaker and the region’s second-largest car-component manufacturer, said today that first-quarter sales and operating profit fell from year- earlier figures.
“Continental’s comments may have also frightened somebody, but it’s still unclear whether their weak quarter has to do with tire sales or something else,” Nordea’s Juva said.
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