Nokian profits slip despite positive currency impact

NOKIA, Finland—Nokian Tyres P.L.C. continued to feel the impact of the Russia's war on Ukraine in its third quarter performance, despite positive currency effects during the three months to end of September.

The Finnish tire maker reported a 43-percent decline in operating profit to $57 million, with positive currency impact of approximately $17.6 million.

In a Nov. 1 statement, Nokian linked the earnings decline to lower passenger car volumes and changed factory mix due to lower production in Russia.

Operating profit more than halved from $93 million in 2021 to $42 million this year.

Sales for the period grew 5.1 percent to $483 million, Nokian said, noting that with comparable currencies, net sales fell by 6.4 percent due mainly to lower volumes.

The manufacturer said its tire exports from Russia to Europe and North America ended in July, further impacting volumes.

Over the nine months to end of September, operating profit declined 12.3 percent to $215 million, due mainly to lower volumes and changed factory mix, despite a positive $31 million exchange rate effect.

Sales for the first three quarters grew 13.6 percent to $1.3 billion, as "the year began with good demand in all markets."

"In the third quarter of 2022, our focus was on planning and taking the first steps to build the new Nokian Tyres without Russia," President and CEO Jukka Moisio said.

"Today, we are pleased to announce that we will invest approximately €650 million in a new greenfield tire factory in Romania," he added.

The investment, Moisio said, is "a vital element" in creating additional capacity and enabling future growth, with commercial production scheduled to start in 2025.

"At the same time, we have continued to increase capacity at our factories in Finland and in the U.S.," said the Nokian boss.

Nokian initiated a controlled exit from Russia in June and announced in October that it was selling its production site in Vsevolozhsk to Tatneft PJSC.

In 2021, about 80 percent of the company's passenger car tires were produced in Russia and the business area Russia and Asia represented around 20 percent of the group's net sales.