Wires

UPDATE 2-Finland's Nokian ponders tire changes as climate warms

* Plans to develop new products for changed climate

Russian market expected to stay weak (Adds CEO comments from analyst call)

By Anne Kauranen

Feb 4 (Reuters) - Finnish tire maker Nokian said on Tuesday it will design new products to cope with climate change after its fourth-quarter operating profit fell 14% year-on-year as mild weather cut winter tire demand and new car sales fell.

The drop in new car sales was especially marked in Russia, where Nokian said it expected 2020 operating profit to "decline substantially" because of weak consumer spending.

To protect future sales, the company's CEO said Nokian planned to innovate.

"Winter tire demand in October-December was negatively impacted by the warm winter in Nokian Tyres' key markets," Chief Executive Hille Korhonen said in a statement.

Winter tires account for around 70% of the Finnish company's sales.

"We are concerned and we are aware of what is happening in terms of climate change," she told a conference call, adding it was important for the company to develop new products for demanding driving conditions, including snow, ice and heavy rain.

Although 13.48% lower at 101 million euros ($111.6 million), Nokian's fourth quarter operating profit was above the average of 98.7 million expected by analysts in a Refinitiv poll..

Shares in the company were close to flat at 0.12% at 1500 GMT, having hit a more than four-year low at the end January when the company gave a gloomy outlook for 2020.

Nokian said its net sales increased slightly by 0.5% to 475.8 million euros in the quarter, in spite of soft demand.

Apart from weak sales in Russia, Nokian's profitability has come under pressure from its heavy investment in a new U.S. factory, a new testing center in Spain and a capacity increase for its heavy tires production.

"These growth projects lay an important basis for our future," Korhonen said, adding the new factory's ramp up in Dayton had started successfully.

Its board proposed a dividend of 1.58 euros, also above the 1.55 euros analysts expected on average in the Refinitiv poll. ($1 = 0.9048 euros) (Reporting by Anne Kauranen, editing by Louise Heavens, Philippa Fletcher and Barbara Lewis)