Nokian Tyres: “substantial uncertainties” relating to timing of Tatneft deal closure

At the end of June, Nokian Tyres announced that it was executing a “controlled exit” from Russia. By August Russian news sources were reporting that Nokian was accepting “binding offers” for its Russian tyre plant up until the end of September. At the end of October, Nokian confirmed that it had agreed terms with Tatneft to sell its Russian tyre operations for roughly 400 million euros. More than a month later, Nokian Tyres spokespeople are speaking of “substantial uncertainties” relating to the Tatneft deal.

Following reports of challenging circumstances within Nokian’s Central Europe region as well as suggestions from industry sources that the Tatneft deal is not progressing as well as had been expected, Tyres & Accessories invited Nokian Tyres representatives to give their perspective.

In answer to our questions, Nokian Tyres’s corporate communications team confirmed that “the transaction has not yet been closed” and that there are “substantial uncertainties” relating to the finalisation of the Russia exit deal with Tatneft:

“The transaction is subject to approval by the relevant regulatory authorities in Russia and other conditions, which creates substantial uncertainties related to the timing, terms and conditions and the closing of the transaction.”

Asked whether an incomplete Russian exit would impact Nokian’s Romania greenfield factory project, which is strategically critical to replacing production capacity that had previously been located in Russia, Nokian representatives confirmed that the “Romania factory is not dependent on the Russia exit deal.”

So how is the Romania greenfield factory project being funded? “[The] Romanian factory project is funded with regular financing facilities supported by strong balance sheet and cash flow from operating activities.”