Nokian Tyres addressing higher costs as first quarter loss widens

Nokia, Finland – Nokian Tyres plc has launched a series of cost-cutting measures to enhance profitability, according to new president and CEO Paolo Pompei.

The Finnish tire maker reported a 'segment's operating loss' of €18.5 million during the first quarter, down from a loss of €15.1 million reported the year before.

Segment's earnings (EBITDA) remained on a par with last year at €12.5 million.

Sales for the three-month period grew 14.2% to €270 million, as all regions "outperformed the market", Nokian announced 6 May.

Sales growth, said the company, was mainly due to increasing capacity at Nokian’s Romanian and US factories as well as good availability of finished goods.

“While we want to continue industry leading growth, we need to increase our focus on profitability, which was not at a satisfactory level in the first quarter,” said Pompei commenting on the results.

According to the Nokian leader, the tire maker introduced price increases in the first quarter to offset higher raw material costs.

The effects of the price hikes are expected to be reflected in the coming quarters, Pompei added.

Further performance improvement will be achieved through “commercial and manufacturing excellence and procurement efficiencies,” he noted.

Pompei stated that Nokian had started “a careful review” of its cost base in terms of raw materials, indirect purchasing and manufacturing.

“Changes that we made earlier this year to our management and leadership, will strengthen our central functions to create a more consumer-centric organisation,” he added.

Breaking down segment performance, Nokian reported a 7.3% year-on-year increase in passenger car tire sales during the first quarter to €174 million.

Operating loss

Meanwhile, the segment's operating loss widened from €13.5 million in the first quarter of 2024 to €22.3 million this year.

Heavy Tyres improved profitability from €6.3 million in the first quarter of 2024 to €7.3 million this year. Segment sales rose slightly to €55.8 million.

Nokian’s retail arm Vianor remained in red with an operating loss of €15.4 million, up from a €15.9 million loss a year earlier, while sales grew 5.3% to €59 million.

During the quarter, Nokian said it reached “a significant milestone” at its recently opened production facility in Oradea, Romania, with the start of tire deliveries from the factory.

Focus will now be on gradually ramping up production and delivery to Central and South European customers, said Pompei.

At its US factory, Nokian has increased the production of all-season and light truck tires, improving product availability in North America.

“Currently, there is uncertainty in the market due to evolving tariff situation, but in the long-term, we see great potential for Nokian Tyres in North America,” he said.

According to Pompei, 2025 marks the end of a three-year investment phase, during which Nokian invested €800 million in capacity expansion.

While these investments create short-term pressure on profitability and cash flow, they are "necessary to ensure our long-term success," said the Nokian leader.

As a result, the tire maker aims to increase net sales and improve operating profit this year.

Due to seasonality, the company expects its profit to be generated in the second half of the year.