Nokian Tyres plc Interim Report January–September 2022

July–September 2022

• Net sales were EUR 466.2 million (443.5 in July−September 2021) and grew by 5.1%. With comparable currencies, net sales decreased by 6.4% driven by lower passenger car tire supply volumes. Tire imports from Russia to Europe and North America ended in July.
• Segments operating profit was EUR 54.9 million (96.9), with positive currency impact of approximately EUR 17 million. The decline was driven by lower passenger car tire supply volumes and changed factory mix due to lower production in Russia. Operating profit was EUR 40.7 million (89.1). EUR -14.2 million (-7.8) was booked as non-IFRS exclusions.
• Segments earnings per share were EUR 0.26 (0.54). Earnings per share were EUR 0.18 (0.50).
• Cash flow from operating activities was EUR -99.2 million (-81.0).

January–September 2022

• Net sales were EUR 1,364.7 million (1,201.5 in January−September 2021) and grew by 13.6%. With comparable currencies, net sales increased by 6.4%. The year began with good demand in all markets. The war in Ukraine started to impact on the operating environment in late February. Tire imports from Russia to Europe and North America ended in July.
• Segments operating profit was EUR 207.6 million (236.8), with positive currency impact of approximately EUR 30 million. The decline was driven by lower passenger car tire supply volumes and changed factory mix due to lower production in Russia. Operating profit was EUR -102.7 million (215.2). EUR -310.4 million (-21.6) was booked as non-IFRS exclusions.
• In June, the Board of Directors decided to initiate a controlled exit from Russia. As part of the process, impairments and write-downs of EUR 300.7 million were recorded in the second quarter. After the review period in October, an agreement for the sale of the Russian operations was signed.
• Segments earnings per share were EUR 1.19 (1.35). Earnings per share were EUR -1.16 (1.22).
• Cash flow from operating activities was EUR -322.9 million (-96.1).

Guidance for 2022 (updated on October 28, 2022)

The war in Ukraine and resulting sanctions have a significant negative impact on Nokian Tyres’ supply capacity and performance. In 2022, Nokian Tyres’ net sales is expected to be at previous year’s level or increase, and segments operating profit is expected to decrease significantly compared to 2021.

Jukka Moisio, President and CEO:

“In the third quarter of 2022, our focus was on planning and taking the first steps to build the new Nokian Tyres without Russia. Today, we are pleased to announce that we will invest approximately EUR 650 million in a new greenfield tire factory in Romania – the first zero CO2 emission factory in the tire industry. The investment is a vital element in getting additional capacity and enabling our future growth, and we expect the commercial production to start in 2025. At the same time, we have continued to increase capacity at our factories in Finland and in the US.

In June, the Board of Directors decided to initiate a controlled exit from Russia as it is no longer feasible nor sustainable for Nokian Tyres plc to continue operations in Russia. In October, an agreement for the sale of our Russian operations was signed with Tatneft PJSC. Upon the closing of the transaction, all our operations in Russia will end.

In July-September, our net sales with comparable currencies decreased, reflecting changes in our passenger car tire supply as tire imports from Russia to Europe and North America ended in July. Heavy Tyres’ net sales declined slightly due to supply constraints. Vianor delivered a solid sales performance. Segments operating profit declined due to lower passenger car tire supply volumes and changed factory mix. However, we have succeeded in implementing price increases in a high-inflationary environment.

I want to thank all Nokian Tyres’ employees for their hard work and dedication as we move forward. Despite of the challenging times, we have been able to start building the new Nokian Tyres, increase production in Finland and in the US, and develop and launch high performing new products within our core segments.” …

Source: Nokian Tyres