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Nokian Tyres plunges into the red as Russia exit weighs
Global Banking & Finance Review®
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HELSINKI (Reuters) – Finland’s Nokian Tyres reported a loss for the second-quarter on Tuesday as its exit from Russia weighed heavily on earnings and the company said it expects profitability to weaken significantly this year.
HELSINKI (Reuters) – Finland’s Nokian Tyres reported a loss for the second-quarter on Tuesday as its exit from Russia weighed heavily on earnings and the company said it expects profitability to weaken significantly this year.
Shares in the tyre maker were down 7.3% by 1208 GMT after initially falling more than 10% following the results as the company provided no significant update to its contingency plans for replacing its Russian production.
“Discontinued supply of tyres from Russia will have an adverse impact on sales especially in Central Europe in the second half of 2022,” Chief Executive Jukka Moisio said in a statement.
Moscow’s attack on Ukraine and sanctions put in place by the European Union have forced Nokian to halt production at its largest production plant near St Petersburg in Russia, where the company used to make 80% of its passenger car tyres.
Inderes analyst Rauli Juva said the second-quarter numbers were largely in line with expectations and that overall they had little importance for the company’s future or its valuation.
“Perhaps the most impatient had expected some kind of news on their plans,” he said.
In June Nokian said it would wind down its operations in Russia, which would decrease the value of its Russian net assets by between 300 million and 400 million euros in the second quarter.
Impairments and write-downs amounted to 300.7 million euros in the quarter, Nokian said.
A transition period, however, had allowed the company to continue production and transportation of tyres to warehouses closer to its customers until mid-July and Nokian in June had raised its sales outlook, saying net sales would be closer to what they were in 2021 instead of decreasing significantly.
Nokian in April said it was looking for new production capacity and plans to open a new production facility in Europe.
Its shares have plunged nearly 70% this year.
French rival Michelin has also announced it would pull out of Russia, handing its business to a new entity under local management by the end of the year.
Nokian swung to an operating loss in April-June of 203 million euros ($207.6 million) from a year-ago profit of 81.8 million, missing the 33.1 million euro profit mean estimate in a company-provided poll.
($1 = 0.9780 euros)
(Reporting by Essi Lehto and Anne Kauranen, editing by Terje Solsvik and Susan Fenton)
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