NOKIA, Finland—Finnish tire-maker Nokian will cut 122 jobs and capacity to cut costs, the company said on Sept. 28.
In August Nokian revealed that it was holding talks with its 900 workers based in Nokia to restructure its business to save about $9 million a year.
“Personnel reductions are always unfortunate,” said CEO Ari Lehtoranta, adding that despite the cuts the role of the Nokia factory remained “important, not only for the volumes it produces but also in developing new products and production processes”.
Nokian said it would organize training and support programs for the dismissed employees to improve their re-employment opportunities.
Nokian downgraded its financial outlook for 2015 because of the poor Russian and CIS economies.
“Car tire sales have continued to decline in these areas. The weakened economic situation and the planned production cuts at Nokia plant have created the need to rationalise operations and execute structural changes,” the company announcement said.
Lehtoranta said in August that Nokian's production volumes are lower than they were in 2014 and will likely return back to growth in 2016. The executive added that the growth can be managed with the firm's existing unused capacity for the near term.
“Russia has been able to avoid the worst case economic scenarios and the confidence in the market is gradually returning. However, the situation is very volatile and in most retail segments the volumes have been very low, especially in the second quarter. In new car and tire sales, the Russian market has been lower than we expected, and the tire purchasing has moved more towards lower B and C segments.
The CEO said the firm's performance in North America was excellent. Nokian said it's gained market share because its core segments exceeded market growth for several quarters. The firm reported a sales increase of 26.8 percent compared to the first half of 2014.
Nokian's net sales in the second quarter dropped by 6.5 percent to about $388 million from about $415 million the previous year. Operating profit was down by 11.2 percent to about $90.6 million for the same period.
On a half-year basis, net sales declined by 8 percent to about $704.4 million while operating profit was down by 19 percent to $144.7 million.