Nokian earnings drop 43% despite currency tailwind

Nokia, Finland – Nokian Tyres plc continued to feel the impact of the Russian war on its third quarter performance, despite positive currency effects during the three months to end of September.

The Finnish tire maker reported a 43% decline in operating profit to €55 million, with positive currency impact of approximately €17 million.

In a 1 Nov 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 €90 million in 2021 to €41 million this year.

Sales for the period grew 5.1% to €466 million, said Nokian, noting that with comparable currencies, net sales fell by 6.4% 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% to €208 million, due mainly to lower volumes and changed factory mix and despite a positive €30-million exchange rate effect.

Sales for the first three quarters grew 13.6% 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,” said Jukka Moisio, president and CEO.

“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 went on to say, 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 US,” 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% 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.