NOKIA, Finland — Nokian Tyres P.L.C. management is stepping up plans to build a second factory in Europe to replace the capacity at its 16-year-old plant in Russia, the future of which is uncertain due to the industrial fallout of Russia's invasion of Ukraine.
To expedite the decision, management is cutting the dividend payment this year completely and will re-allocate the $117 million it would have paid out toward the construction of a new plant in Europe.
The company earlier had notified shareholders it would reduce the payout by over half.
Nokian did not disclose a timetable for selecting a site for the new plant. The company opened a dedicated tire testing facility in Santa Cruz de la Zarza, Spain, in May 2021.
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Nokian's plan to build new capacity in Europe is in addition to ongoing commitments to increase capacity at its factories in Finland and the U.S., aiming to become geographically more diversified in its manufacturing operations.
Nokian said it no longer is investing into production in Russia, but it continues operating the plant in Vsevolozhsk to ensure property remains under Nokian Tyres control.
Nokian said the funds it's committing to a new plant represent about 25% of the investment it budgeted for building the Dayton, Tenn., factory, which opened in October 2019.
Regarding the situation in Russia, Nokian said it has suspended shipments of passenger tires to Russia and ceased the sale/distribution of heavy tires there as well. It stressed that it has never sold tires to the Russian army, and the Russian Federation is not a customer.
It also reiterated that all of its heavy tires are designed and manufactured in Finland, while truck/bus tires are designed in Finland and produced in the European Union, although Nokian did not say where or by whom.