Nokian makes €106m dividend cut to help fund new European plant

Nokia, Finland – Nokian Tyres has progressed plans to expand its European production capacity, using a reduction in dividends to partly fund the establishment of a new facility.

Last week, Nokian's board of directors proposed that a dividend of €0.55 per share be paid for the financial year ended 31 Dec 2021.

At approximately €76.1 million in total, the figure is €106 million lower than the board’s earlier dividend proposal at €1.32 per share, Nokian announced 8 April.

Citing the recent construction of its US plant in Dayton, Tennessee – which cost around €350-400 million – Nokian said the dividend-cut would cover nearly 25% of the funding required to set up another facility.

The decision to invest in new European capacity follows Moscow's war on Ukraine, which has put Nokian's Russian operations under pressure.

The company announced 22 March that it was continuing to operate its passenger car tire plant in Vsevolozhsk, Russia while ‘actively looking for additional capacity’ elsewhere.

By continuing to operate the Russian plant, Nokian said it wanted "to make sure that the factory is operated and controlled by Nokian Tyres also in the future.

“We no longer invest into the Russian production,” the Finnish tire maker emphasised in the 22 March statement.

Nokian generated €336 million, about 20% of group sales, from its tire production operations in Russia last year.

The company's 1,600-employee plant near Saint Petersburg has capacity to produce 17 million units/year of radial passenger car and light truck tires.