Demanding market, high inventories impact Nokian sales

Nokia, Finland – Nokian Tyres plc has posted a 17% year-on-year decline in third quarter sales, to €276.1 million  reflecting a “demanding" tire market and high inventories.

'Segments operating profit', however, was up at €19.6 million, compared to a loss of €17.9 million reported for the same period last year.*

Profitability “continued to improve” in the third quarter, reported Jukka Moisio, president and CEO, with earnings margin up close to 17% compared to 2.2% reported last year.

At the same time, the car and tire market “continued to be demanding, and inventories in the distribution were on a high level,” Moisio added.

According to the Nokian leader, customers’ focus on inventory-management together with low consumer confidence affected third quarter sales negatively.

Despite lower volumes, margins were strong, he added, noting that the company had improved market-share in the “premium winter tires” segment.

Commenting on developments during the third quarter, Moisio said Nokian’s ongoing project for the construction of a zero CO2 emissions tire factory in Romania was “starting to take shape.”

The project, he went on to say, “is well on track for the first tires to be produced in less than a year.”

For the final quarter of 2023, which is the most important season for the winter tire specialist, the Finnish tire maker expects “cash-generation to be strong”.

“While the market environment is currently challenging, it does not affect our long-term financial targets,” Nokian's CEO concluded.

*Nokian's sales figures for the third quarter of 2022 were amended from €466 million to €333.5 million to reflect its exit from Russia, completed this March. Nokian's initial 'segments operating profit' of €55 million for third quarter 2022 was lowered to a loss of €18 million in its 2023 reporting. Nokian explained that the 'non-IFRS' figure excluded cost-factors around a ramp-up of its US tire factory, preparations for its factory in  Romania, as well as other items. The initial figure was, therefore, "not indicative of the group’s underlying business performance.”