Nokian to set up third plant, expand Russian facilities

Nokia, Finland – Nokian Tyres is planning to increase its capacity in Russia as well as setting up a new plant in an undisclosed location, according to CEO Ari Lehtoranta.

Speaking at a financial result conference call on 8 May, Lehtoranta said that an extra line was going to be installed at the Russian plant in Vsevolozhsk, near Saint Petersburg.

"We have space in our present factory for only one new production line, and we are going to implement that and increase the mixing capacity as well," he said.

The Nokian boss added that the company was looking at eastern Europe as the location for a third Nokian tire plant.

This would support the growth in central Europe which represents around a quarter of revenues, though the CEO also mentioned North America and Asia as possible locations for the new plant.

"We will need a third factory at some point in time [and] are looking at the proper timing," said Lehtoranta, who went on to say that a decision would be made in the first half of 2016.

Nokian’s net sales decreased by 9.8 percent to €281.3 million in the first quarter of 2015, down from €311.9 million the previous year. Of this drop, some €29.1 million could be attributed to exchange rates, added the Finnish tire-maker.

Operating profit was also down by 29.4 percent to €48.3 million, from €68.4 million in the previous year.

The company said it expected that, due to current exchange rates, its sales and operating profit would decline slightly compared to 2014.

According to Lehtoranta, biggest negative impacts have come from currency valuations and delay in the start of the winter tire sales in Russia.

“While the whole market has gone down in Russia and CIS, we have been able to improve market share, volumes and margins in all other markets,” he added while stating that Nokian had improved in the area of expanding distribution and improved productivity.

“The competitiveness of our product portfolio continues to improve; we have launched new winter tires and all-weather tires for central Europe and North America,” he went on to say.