NOKIA, Finland — Nokian Tyres P.L.C.'s decision to exit the Russian market — a consequence of Russia's war with Ukraine — resulted in a one-time financial charge that pitched the Finnish tire maker into the red in the quarter and half ended June 30.
Nokian reported a second-quarter operating loss of $207 million, due to a $306 million impairment caused by the firm's pending exit from Russia. Sales for the quarter were up 15.8% at $492 million,
In June, Nokian initiated a controlled exit from Russia, where it generated more than $397 million in sales last year. Its factory there is rated at over 17 million passenger and light truck tires a year.
Second quarter operating profit went into red as the company recorded a loss of $207 million, down from the roughly $96 million reported last year. This, Nokian said in an Aug. 2 statement, was due to a negative $295 million booked as non-IFRS exclusions.
Nokian's operating loss hit $146.5 million for the first half, versus earnings of $148 million a year ago, as the firm booked a $302.5 million charge as non-IFRS exclusions. Sales grew 18.5% to $917.4 million, as the year "began with good demand in all markets."
"The war in Ukraine and resulting sanctions cause significant uncertainty to Nokian Tyres' operating environment," the company said.
The tire maker said it expects its exit from Russia to "significantly impact" its financial results in 2022, with the discontinued supply of tires from the country particularly hitting sales in Central Europe in the second half of the year.
The company said it was working on many fronts to secure supply of products for the region, including scouting for a site in Europe for a new factory to replace the one in Russia.
Commenting on the results, President and CEO Jukka Moisio said Nokian was "evaluating different options" for the exit from Russia, adding that discussions with possible candidates are ongoing.
"We will focus on growth opportunities in our other core markets, without a presence in Russia," Moisio said.
"We have continued to increase capacity at our factories in Finland and in the U.S., and are proceeding with our investment in new supply capability in Europe, which is one of our key mid-term priorities."
Business in the Americas grew 46.9% in the first half of 2022 to $163 million, and as such now accounts for 16.6% of Nokian's global sales. Business in Russia and Asia was up 42.9% to $269.7 million.