Nokian has much catching-up to do

Nokia, Finland – Nokian Tyres plc has a lot of ground to make up if it is to fully restore passenger car tire sales to levels seen before its exit from Russia, the group’s latest financial figures show.

For first half 2023, Nokian reported passenger car tire sales of €285.9 million, compared to €525.8 million in the same period of 2021 – the year before Russia’s invasion of Ukraine.

In June last year, Nokian announced plans for a controlled exit from Russia, signalling that the move would significantly impact sales, especially in central Europe, for up to three years.

The Finnish tire maker completed the withdrawal process this March: finalising the sale of its Russian tire production operations to local energy major PJSC Tatneft, for €285 million.

Nokian had, the previous year, generated sales of €336 million from its tire production operations, based in Vsevolozhsk, near Saint Petersburg.

Production capacity at Vsevolozhsk was listed at 17 million radial passenger car and light truck tires a year, and employment at over 1,600 people.

To recover market-position, Nokian is increasing capacity at its tire factories in Finland and the US, establishing a new plant in Romania and entering offtake supply deals.

In 2021, about 80% of Nokian’s passenger car tires were produced in Russia, while its business area ‘Russia and Asia’ represented around 20% of the group’s net sales.

Nokian is now investing €650 million to establish a passenger-car and SUV tire facility located in Oradea, north west Romania.

With 500 employees, the plant is slated to have an annual capacity of 6 million units, with "expansion potential in the future.”

First tires are to be produced in the second half of 2024, with large-scale tire production to start in early 2025, according to Nokian.

In the US, Nokian announced this January that it was targeting expanding the capacity of its Dayton plant to 4 million tires per year by 2024. 

Current investments are focused on adding light truck tire capacity to the Dayton production-mix in 2023, in addition to enhanced production of all-season and all-weather tires.

On another front, Nokian has targeted achieving between 1 million and 3 million units of additional supply via off-take agreements, running between 2023 and 2027.

The programme already includes a contract manufacturing deal with Chinese tire maker Qingdao Sentury Tire Co. Ltd to supply Nokian tires to the central European market.

As announced last December, production was set to start at Sentury's production facility in China by mid-2023, with the first Nokian tires scheduled to reach the market in the second half.