In three out of the four regions where Nokian Tyres plc breaks down its net sales, the company’s performance in the third quarter of 2020 topped what those regions had sold in the same period a year ago. In the Americas, sales increased 25%.
And not surprisingly, in light of COVID-19, the third quarter was the company’s strongest yet of this year, with total quarterly sales of 349.9 million euros, down from 354.4 million euros in 2019.
Jukka Moisio, CEO and president of Nokian, said, “In July-September 2020, our sales with comparable currencies increased, driven by North America and Central Europe. Net sales of passenger car tires increased in all areas except Russia, where we have successfully continued the measures to reduce high carry-over stocks in the distribution channel.”
Moisio also noted that the tiremaker’s heavy tires business and Vianor retail stores business “maintained their previous year’s performance level, which is a good achievement in a volatile market environment.”
He added, “Good development was partly driven by some sales shifting from the second quarter to the third quarter as result of improved customer confidence. We have responded to the changes in demand with fast measures. At the same time, we have continued to manage costs prudently while preserving cash and maintaining our strong balance sheet. In the third quarter, operating cash flow developed positively and was significantly higher than in the comparison period.
“Nokian Tyres has made significant investments in recent years. The investment phase is starting to be behind us, which will further support our free cash flow generation. Now we need to make sure that we benefit from these investments in the best possible way. In the Nokia factory, we will continue to increase heavy tires production, while the passenger car tire manufacturing will focus on the production of high-quality premium car tires and prototyping.
“The fourth quarter of the year is typically seasonally strong to us, however, the uncertainty in the market continues. We have proven the resilience of our business model and the ability of our team to adapt to the changing market conditions. Going forward, top-line growth continues to be our top priority. Expanding product portfolio will be a key driver for boosting sales.”
The third quarter
For the quarter, the 349.9 million euros in sales were matched by 52.5 million in profit, up from 51.1 million recorded a year ago.
Regionally, sales in the Nordics, Europe and the Americas increased, while Russia and Asia sales dropped by 39.3%.
In the Americas, sales grew to 54.3 million euros, up from 43.3 million euros a year ago. The Nordics grew 2.2%, to 139.1 million euros from 136 million euros; and the rest of Europe increased 5.1%, to 111.7 million euros from 106.3 million euros.
Nokian’s passenger tire sales were down 0.7% globally, to 254.9 million euros compared to 256.7 million euros in the third quarter of 2019. Heavy (commercial) tire sales were down 4.5%, 49.8 million euros compared to 52.2 million euros.
Nine months of 2020
With the first nine months of the year combined, Nokian’s overall sales are down 18.9% from 2019, 900.4 million euros compared to 1.1 billion euros.
The drop-off in Russia/Asia remains severe — down 47.6% from sales in 2019: 127.9 million euros this year compared to 244.2 million euros last year.
In the Americas sales are off by 16.2% so far in 2020, 119.3 million euros compared to 142.4 million euros a year ago.
So far this year, Nokian says COVID-19 has taken approximately 50 million euros from its segment operating profit. Lower sales in Russia have cost another 50 million euros. Plus there are other losses tied to low factory utilization. Segments operating profit totals 110.1 million euros so far in 2020, down from 230.4 million euros for the first three quarters of last year.
