Nokian Tyres reaches deal to sell operations in Russia
31 Oct 2022
Finnish group selling Russian operations to Tatneft PJSC for around €400m, subject to various factors
Nokia, Finland – Nokian Tyres plc has signed an agreement to sell its Russian operations to Tatneft PJSC for around €400 million, the Finnish tire maker has announced.
The final “debt-free and cash-free” purchase price depends, among other factors, on net cash and working capital adjustments and exchange-rate movements said the 28 Oct statement.
The transaction, added Nokian, is subject to approval by the relevant regulatory authorities in Russia and other conditions that create “substantial uncertainties related to the timing, terms and conditions and the closing of the transaction.”
Once completed, the sale will end all Nokian operations in Russia, with the company’s personnel there to transfer to the new owner.
In June, Nokian announced plans for a controlled exit from Russia, where it has been operating since 2005 – signalling that the move would significantly impact its financial results.
In 2021, about 80% of the company’s passenger car tires were produced in Russia and the business area Russia and Asia represented around 20% of the group’s net sales.
“Discontinued supply of tires from Russia will have an adverse impact on sales especially in Central Europe in next two to three years,” stated Nokian.
To recover market-position, Nokian is increasing capacity at its tire factories in Finland and the US, and is proceeding with the investment in new supply capability in Europe.
In the second quarter of 2022, Nokian has posted impairments of €280.7 million related to its Russian assets and a write-down of €20.0 million of deferred tax assets in Russia.
“Due to the significant uncertainties, final accounting implications including translation differences among other things can only be assessed when the transaction has been duly completed, its statement noted.
Nokian has valued its assets in Russia and Belarus, excluding tax and financial items, at €574.5 million, after the impairments and the write-down at the end of the second quarter and at €590.4 million at the end of the third quarter of 2022.