Nokian sells its Russian tyre operation to Tatneft for 400 million euros

Nokian Tyres plc has agreed to sell its Russian operations to Tatneft PJSC for approximately 400 million euros. The precise final purchase price will be affected by factors including net cash, working capital adjustment and foreign exchange rates. Confirming the news, Tatneft issued a one-paragraph statement saying the deal includes the plant in the city of Vsevolozhsk, in the region of Leningrad and that “the closing of the transaction and the purchase of assets is subject to a number of conditions, including obtaining approvals in accordance with Russian law.”

Nokian Tyres has been operating in Russia since 2005. In 2021, approximately 80 per cent of the company’s passenger car tyres were produced in Russia and the business area Russia and Asia represented approximately 20 per cent of Nokian Tyres’ net sales.

The exit from Russia will significantly impact Nokian Tyres’ financial results. Discontinued supply of tyres from Russia will have an adverse impact on sales especially in Central Europe in next two to three years. In order to secure supply of its products, Nokian Tyres has continued to increase capacity at its factories in Finland and in the US and is proceeding with the investment in new supply capability in Europe.

As part of the exit from Russia, impairments of -280.7 million euros related to the Russian assets and a write-down of -20.0 million euros of deferred tax assets in Russia were recorded in the second quarter of 2022.

Nokian Tyres’ assets in Russia and Belarus excluding tax and financial items amounted to 574.5 million euros after the impairments and the write-down at the end of the second quarter and to 590.4 million euros at the end of the third quarter of 2022. Net assets in Russia and Belarus excluding net debt amounted to 480.3 million euros at the end of the third quarter of 2022.