Nokian's Sales in the Americas Cut in Half
Nokian Tyres’ business in the Americas was among the regions hit hard in the second quarter of 2020, with sales falling by more than half. The company has also delayed the recruitment of a second shift of workers for its new U.S. factory.
Globally, the tiremaker reported a 34.9% drop in tire sales from April through June, 270.7 million euros compared to 415.7 million euros a year ago. In the Americas, sales fell 51.1% to 27.1 million euros from 55.4 million euros.
Nokian reported a loss of 24.8 million euros for the second quarter, compared to a profit of 73 million euros for the period a year ago. The loss of 22.4 million euros for the first half of the year compared to a profit of 267.6 million euros for the first half of 2019.
In addition to COVID-19 and the economic slowdown that has occurred as a result of the pandemic, Nokian says its global sales were also affected by a previously announced plan to reduce high carry-over stocks in the passenger distribution channel in Russia.
In its Russian and Asian region, Nokian said sales fell 60% in the quarter.
The sales of passenger tires were most seriously disrupted, with a 44.8% decrease globally, 163.9 million euros compared to 296.8 million euros for the same period in 2019.
Nokian says it has adjusted tire production according to demand in Russia and Finland, home of its initial factories. Overall production output decreased by 39% in the first half of 2020.
The company’s Dayton, Tenn., factory began producing tires for the market earlier this year, not long before the factory was forced to temporarily shut down due to COVID-19. At the end of the first quarter Nokian noted it was postponing its plan to hire a second shift for the U.S. factory.
Nokian says it has 260 Nokian Authorized Dealers in the U.S.; they’re part of a global network of 2,226 locations that cover 24 European countries, China, Japan and the U.S.
‘Excellent’ performance by Vianor
A high point in Nokian’s latest financial report was its company-owned and partner-owned Vianor stores. Nokian owns 186 stores in Finland, Sweden, Norway and the U.S., and operates another 966 with partners. (There are only 10 in the U.S.) The stores are located in the Nordic countries, Russia and Central Europe.
In the second quarter, net sales for the company-owned Vianor stores dropped 9.9%; for the first six months of the year sales only fell 7.8%. CEO and President Jukka Moisio noted, “Vianor’s performance was excellent in the difficult circumstances.”
More from the CEO
Moisio offered this additional commentary:
“I am pleased that our rapidly implemented measures to prevent the COVID-19 spread and to maintain business continuity have proven to be effective. This would not have been possible without a high level of commitment and flexibility of our team members. Despite the exceptional situation, our strategy and short-term priorities are clear: We provide our customers with world-class products and services while keeping costs in strict control and protecting cash flow by cutting back investments, managing working capital, and delaying activities.
“Nokian Tyres has a strong balance sheet, and we have further strengthened our liquidity position in the first half. In addition, cash flow from operations turned positive in the second quarter as we managed our cash flow and took manufacturing downtime to reduce inventory levels.
“Looking beyond the current headwinds, there are many opportunities around us to develop business further. We have invested significantly in the past quarters, and the capacity and capability now available will help us increase sales when the market rebounds. With our valued brand and a strong, capable team that has performed well during this exceptional situation, we will be successful in quarters to come.”