Red Sea crisis, strikes impact Nokian Tyres results

Nokia, Finland – Nokian Tyres plc was impacted by a series of challenges in the first quarter, including transport disruptions due to the Red Sea crisis and industrial action in Finland.

The Finnish tire maker reported flat sales of €236 million for the three months to 31 March, but segment loss further widened to €15 million, from a loss of €14 million reported last year.

Operating loss stood at €26.2 million, nearly 40% down from a loss of €18.8 million reported for the same quarter in 2023, Nokian announced 29 April.

Segment earnings (EBITDA) increased 11.6% year-on-year to €12.5 million, despite challenges faced by the tire maker.

“The car and tire market continues to be demanding due to economic uncertainties and low consumer confidence,” said president and CEO Jukka Moisio, commenting on the results.

During the quarter, Moisio said Nokian faced additional disadvantages due to shipping disruption linked to the Red Sea crisis and external, political strikes in Finland.

The strikes – from February through to April – prevented shipments, costing Nokian about three weeks of production in passenger car tires and one week in heavy tires, he said.

The negative financial impact of the political strikes and the Red Sea crisis was €20 million in earnings, of which more than half was in the first quarter.

On the progress of the ‘new Nokian’ strategy following the company’s exit from Russia in 2022, Moisio said “important and exciting milestones will be reached in 2024.”

Nokian’s new ‘zero CO2 emission’ tire factory in Romania will start production, while the company will complete an investment phase in the US and launch innovative new products, continued Moisio.

According to its president and CEO, Nokian is also making significant progress with its sustainability efforts, including in terms of reducing greenhouse emissions.

Furthermore, the company announced a long-term purchase agreement for recovered carbon black with a tire recycling joint venture in February (ERJ report).

The agreement will help Nokian Tyres reach its target of increasing the sustainable material content of its tires to 50% by 2030.

Looking ahead, Nokian expects tire ‘sell-in’ activity to grow as well as a pick-up in sales growth and ‘segments operating profit’ in the second half of the year.

 Nokian Tyres' sales and earnings development in Q1 2024