Nokian CEO renews focus on finances, manufacturing

NOKIA, Finland—With many key investments coming to fruition and a better understanding of the COVID-19 impacts, Nokian Tyres P.L.C. has a new focus: cashflow, promotion and increasing productivity.

"In the past, we've had a number of important initiatives. Now, as these programs are coming to an end, we have to look internally with promotional programs, targeting new segments," President and CEO Jukka Moisi said in Sept. 8 conference call that marked 100th day as CEO.

"Long-term strategy, we are comfortable with where we are at, but that may have to be adjusted as the markets stabilize. … We clearly see that COVID is a temporary setback. If recovery continues, we are in a good position."

Moisio, former president and CEO of global packaging company Huhtamaeki Oyj, was appointed May 27 to replace Hille Korhonen.

He said the company cut costs significantly and temporarily idled production earlier in the year because of the pandemic. The moves, he said, helped with short-term cashflow, though the company was able to keep its inventory levels "well managed."

The Finnish tire maker reported a net loss of $24.7 million in the first half of the year, compared with a net profit of nearly $300 million the year before.

"We have a strong manufacturing know-how," he said. "The brand is well known in markets and segment where we have historical good position.

"And we have a strong team. The (COVID-19) impact could have been really significant, but our team reacted well."

Moisi said some of the company plans moving forward include bringing its Russia and Dayton, Tenn., plants up to capacity. There also will be a focus to increase heavy tire production and efficiencies at the company's oldest plant in Nokia.

Nokian is working to add a second shift to production at the Dayton plant, Moisi said. The plan then is to add a third shift and bring production to capacity—4 million tires annually. It will take three to four years to reach capacity at the plant in eastern Tennessee. He also said Nokian will expand its network by adding more distributors and dealers, as well as new promotions and marketing efforts.

While the company doesn't plan to release new products in the U.S. in the second half of the year, it will be looking to update some products and add others to fill gaps in its lineup.

"Clearly, molds for new products is an important part of the investment plan moving forward," Moisi said, adding that while investments in molds will go up, capital investments overall will decrease. "… We have gaps in our lineup, especially in North America, and filling those gaps is important. And we want to make sure we remain competitive in Russia and Europe."

Financially, the company is targeting 5 percent growth through the rest of the year. While he noted it was conservative, he called it "a good target to achieve." He said when the market stabilizes, 20 percent growth is a "realistic" target.

"We have an established system in place," Moisi said. "We need to maintain what we are doing. Increasing productivity and new products will be where we will grow."