Nokian maintains $2.1 billion sales goal under new growth strategy

NOKIA, Finland—Nokian Tyres P.L.C. has maintained a near-term target of increasing sales to $2.1 billion under a new growth strategy, shaped largely by its recent exit from Russia.

The Finnish tire maker has initiated "comprehensive measures" to build new capacity to reach the revenue milestone by 2026-27, President and CEO Jukka Moisio said.

For the period between 2023 and 2025, Nokian will undergo a significant "investment phase," Moisio said in a recent capital markets day presentation. This, he said, will see a capacity increase in Nokia; the ramp-up of factory in Dayton, Tenn.; and the completion of the new greenfield tire plant in Romania.

The phase will also see the tire maker increase its use of contract manufacturing, which is currently being carried out in partnership with Sentury Tire of China.

Under the 2026-27 "growth phase," Nokian will increase market penetration through new products, higher capacity and enhanced operational capabilities, the CEO said.

Breaking down the volumes, Nokian's "own capacity" is to exceed 15 million units per year by 2027, supplemented by 1 million to 3 million units from a "network of contract manufacturers." Of total "own production," the Nokia facility will contribute 35 percent and Dayton 25 percent, with the remaining 40 percent coming from Nokian's currently-under-construction facility in Oradea, Romania.

The tire maker has, meanwhile, revised its passenger car market targets in central Europe, while maintaining previous targets for the U.S. and Nordics.

Whereas in 2021 Nokian aimed to increase unit sales by 50 percent in central Europe, the updated vision is just to "safeguard market presence and then grow."

In the U.S., the tire maker still aims to increase unit sales by 100 percent over the short-term, while in Nordics it intends to strengthen its No. 1 position.

In terms of profitability, the Finnish tire maker has targeted "high single digit" growth in operating profit in the investment phase and 15 percent during the growth phase.