NOKIA, Finland — Nokian Tyres P.L.C. suffered an operating loss of $122.2 million last year, a decline the Finnish tire maker blamed on the negative effects of Russia's invasion of Ukraine and Nokian's subsequent decision to divest its Russian operations.
Segment operating income, on the other hand, fell 32% to $232.6 million on 3.6% higher sales of $1.86 billion, resulting in a segment operating ratio of 12.5%, down six and a half points from 2021.
For fiscal 2023, Nokian Tyres management is forecasting revenue growth of up to 15% versus the restated 2022 sales — i.e., negating the Russian business — with segment operating profit ratio of 6% to 8%. Sales in 2023 are expected to be in a range from $1.35 billion to $1.6 billion.
Nokian Tyres President and CEO Jukka Moisio called fiscal 2022 "exceptional and full of major changes" despite a challenging operating environment and praised Nokian employees who showed "exceptional strength and resilience in the midst of the unprecedented events."
Some highlights management noted:
- The heavy tires business posted record sales, profitability and productivity
- The Vianor distribution business delivered record sales;
- North America achieved record sales (up 37.5% to $330 million) and production at the factory in Dayton, Tenn., achieved record production; and inclusion in the Dow Jones Sustainability Europe Index.
In terms of fiscal 2023 and beyond, Moisio stressed that Nokian management laid a foundation for the coming years by:
- Approving the construction of a passenger tire plant in Romania;
- Striking an off-take manufacturing agreement with China's Qingdao Sentury Tire Co. Ltd. for the supply of Nokian-brand tires for sale in central Europe.
- Approving a $174 million expansion of the Dayton factory;
"As we enter 2023, our focus will be on adding new capacity, retaining a competitive premium product portfolio and serving our customers," Moisio said.
"The first half of the year will be demanding as we are lacking supply, but we expect our volumes to start picking up again from the second half of 2023 onwards as we continue to progress our ongoing strategic projects."
Moisio stated fiscal 2023 will be a "new start" for Nokian Tyres to climb back to $2 billion in sales long-term.
As for the Russia-Ukraine crisis, Nokian's board of directors decided in June to initiate a controlled exit from Russia. As part of the process, the company recorded impairments and write-downs of $315 million in the second quarter.
In October, an agreement for the sale of the Russian operations was signed. The sale process is ongoing, Nokian said, and is subject to approval by the relevant regulatory authorities in Russia and other conditions, which creates substantial uncertainties related to the timing, terms and conditions and the closing of the transaction.
