Nokian Profit Takes a Hit Due to Tax Dispute
For the first nine months of 2017, Nokian Tyres plc has recorded higher net sales in every market area. The company’s net sales are up 16.3%, to almost 1.1 billion euro, compared to 930.5 million euro in 2016.
But the company’s profit took a hit during the third quarter due to 39 million euro in additional taxes and 20 million euro in punitive interest paid. Nokian said the 59 million euro payment was related to the 2011 tax year.
CEO and President Hille Korhonen said, “In October, we received a tax reassessment decision from the Tax Administration regarding tax year 2011. We consider the reassessment decision of the Tax Administration to be unfounded and we are going to appeal to the Board of Adjustment and, if necessary, continue the appeal process in the Administrative Court.”
Net profit for the third quarter dropped 82.8%, from 59.4 million euro to 10.2 million euro. For year-to-date, Nokian profit fell 21.1%, from 160.6 million euro to 127.6 million euro.
Net sales in the third quarter were up 14.5%, from 317.2 million euro in 2016 to 363.1 million euro in 2017.
Operating profit for the third quarter increased 21.3%, to 89.8 million euro from 74.1 million euro. For the first nine months, operating profit grew 20.2%, to 242.8 million euro from 202 million euro.
In North America, net sales grew 16.5% in the first three quarters of 2017.
In a statement, Korhonen said,:
“In January–September 2017, Nokian Tyres demonstrated strong performance in all of its main markets. Our net sales and operating profit improved.
“The passenger car tires business unit showed strong growth during January–September 2017. Net sales increased in all markets. Operating profit increased clearly year-over-year. In Europe, the trend of sales shifting towards the consumer season has continued. We have been responding to the growing demand by increasing the production volumes at both factories and by building a new production line at the Russian factory. The new line has now been taken into use. In the third quarter, raw material costs decreased slightly compared with the second quarter. We estimate that raw material costs will increase by approximately 20% for the full year 2017 compared with 2016. We have implemented the necessary price increases in all markets, and the effect is already visible. We have continued to build the foundation for future growth by launching new products for all our markets.
“Heavy tires increased its sales, operating profit and production volume. All product segments and market areas showed growth. In particular, sales of agricultural tires were strong.”
Nokian reiterated its financial guidance for the full year, and said given current exchange rates, net sales and operating profit are expected to grow "at least 10% compared to 2016."