Nokian Will Leave Russia
Nokian Tyres plc plans to exit Russia, which will mean closing its tire plant in Vsevolozhsk. A year ago the company said that plant produced 80% of its passenger tires.
Nokian's board of directors has decided to "initiate a controlled exit from the Russian market.
"Due to the war in Ukraine and the subsequent, tightening sanctions it is no longer feasible nor sustainable for Nokian Tyres plc to continue operations in Russia. The exit preparations will start immediately, and the company will evaluate different options for the exit."
The company says its assets in Russia and Belarus totaled about 400 million euros on May 31. The company will record impairments of about 300 million euros during the second quarter.
“For the past months, we have witnessed shocking events in Ukraine. We have followed the situation with great sadness and we, along with the whole international community, unequivocally condemn the war, which has caused unspeakable suffering to so many”, says Jukka Moisio, president and CEO of Nokian. “Our short-term focus has been on adapting to the fast-changing, highly uncertain operating environment, and maintaining control of our operations in Russia.
“After a thorough consideration and assessment of various options, we have decided to rebuild Nokian Tyres without a presence in Russia and focus on growth opportunities in our other core markets. This was not an easy decision given we have over 1,600 dedicated employees in Russia whose expertise we highly value as well as many long-standing customer and supplier relations built over the past 17 years."
Nokian has been operating in Russia since 2005, and the plant in Vsevolozhsk was the company's second. (Its third plant opened in the U.S. in 2020.) As a region, Nokian's Russian and Asian business represented approximately 20% of the company's net sales.
But since April, when the European Union announced new sanctions against Russia, the company has been prohibited from importing tires from Russia into the EU, as well as raw materials. The company said "the sanctions have a significant impact on Nokian Tyres' ability to manufacture tires in Russia, and ability to sell tires both in Russia and in the EU, specifically in central Europe."
The sanctions haven't affected Nokian's "heavy tyres" business, as all of those tires are produced in Finland.
In recent months Nokian has worked to increase capacity at its other factories in Finland and the U.S. Nokian has also decided to invest in new capacity in Europe.