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UPDATE 2-Nokian Tyres plans to cut 450 jobs in Finland

Published 12/09/2008, 09:18 AM
Updated 12/09/2008, 09:20 AM

(Adds analyst, shares, background)

HELSINKI, Dec 9 (Reuters) - Finland's Nokian Tyres Oyj said on Tuesday it planned to cut 450 jobs in its central Finland plant due to decreased demand.

The company said it would scrap weekend shifts at the factory and reorganise operations there, cutting annual production capacity to about 4.5 million tyres next year from the current 6 million.

Analysts downgraded their sales estimates following the cuts.

"I expect their sales to fall 6 percent at the group level next year from this year," Ohman analyst Lauri Pietarinen said. "There is also a risk this year's results are not going to be as good as the company has guided."

The company has said it sees 2008 sales and operating profit up this year from last year, but fourth-quarter results would fall year-on-year.

Winter tyres are important for Nokian, and the fourth quarter has usually the biggest impact on sales and profits of the company.

The move would lower Nokian's costs by about 30 million euros ($38.6 million) annually, it said.

"We are able to increase our production rapidly in both factories once the tyre market recovers," CEO Kim Gran said in a statement.

Nokian Tyres also has a manufacturing plant in Vsevolozhsk, Russia.

"This move makes it possible that if demand does not fall as much as they now expect, tyres could be imported to Finland from the Russian plant, where costs are lower" Ohman analyst Lauri Pietarinen said.

Shares in the company traded flat at 8.98 euros by 1405 GMT, trailing the Helsinki bourse general index, which was up 0.8 percent. (Reporting by Sakari Suoninen; Editing by David Holmes and Rupert Winchester)

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