From next year, Qingdao Sentury Tire will manufacture passenger car tyres under the Nokian brand name for the Central European market. Under a recently-signed contract manufacturing agreement between Nokian Tyres plc and Qingdao Sentury Tire Co., Ltd., production of a selected range of Nokian-designed and -tested tyres will commence in the first half of 2023, with products reaching the market in the second half of the year.
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.
In addition to our live social media reporting and reporting the highlights of the 2022 Tyre Industry Conference in last month’s magazine, the December edition of Tyres & Accessories brings you curated coverage of the NTDA chairman and chief executive speeches as part of our “Looking back, Looking forward” review-of-the-year feature. With so much having taken place within the tyre market, the nation and the world as a whole, the two speeches offer a distinctly tyre distribution perspective on key issues relating to the associations growing membership, how it is developing relationships with other trade and charitable bodies and how it is investing in the future of the business via training initiatives.
Global tyre businesses have exited the Russian tyre business as a direct consequence of the Russian government’s decision to invade Ukraine. We all knew this was coming, following initial announcements from the likes of Michelin, Bridgestone and Nokian along those lines in the second quarter of 2022. However, the news that Nokian sold its much-lauded St. Petersburg operation to Tatneft at the end of October indicates that the exodus is underway. And that, in turn, means significant tyre production capacity within Russia has changed hands, something that has an inevitable impact on those departing, those remaining and the wider tyre business. In this column, we take a look at how Michelin, Bridgestone and Nokian have been negotiating their respective exits from Russia and ask what it might mean for the future.
Nokian Tyres’ is investing around 650 million euros in a new passenger car tyre factory in Romania. The new greenfield factory will be located in Oradea in the North-West of Romania, near the Hungarian border. The annual capacity of the factory will be 6 million tyres, with expansion potential for the future. According to an official statement, the site will also house a distribution facility for storage and distribution of tyres. Construction is scheduled to begin in early 2023 and the first tyres are estimated to be produced in the second half of 2024. Commercial tyre production is expected to start in early 2025.
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 acquired a property adjacent to its headquarters and factory in Nokia, Finland. With the addition of this 27,000 square metre building, the Nokian Tyres site in Nokia approaches 150,000 square metres in total.
The EU ban on tyre imports from Russia has hit one company particularly hard: Nokian Tyres. Prior to February 2022, the Finnish manufacturer produced 17 million tyres a year in a factory near St. Petersburg, 82 per cent of its global output. Ten million of these were exported, mainly to Europe. This has no longer been possible since 10 July, with consequences for Nokian Tyres’ Central Europe sales region.
At a time when it is investing in new European capacity and exiting Russia, Finland’s Nokian Tyres has announced a reorganisation of its structure and management. These measures centre upon a combining of all Passenger Car Tyres commercial operations under the leadership of Anna Hyvönen, who currently serves as executive vice-president North America, Nordics and Vianor. Bahri Kurter, executive vice-president Central Europe at Nokian Tyres, is leaving the company to “pursue his career outside of Nokian Tyres.”
Omni United has appointed Olli Seppälä as its global head of R&D. The former head of R&D at Nokian, Seppälä brings with him expertise in passenger, light truck and heavy-duty tyres. His remit is to drive forward Omni’s product research, design, development and testing.
Due to the war in Ukraine and subsequent, tightening sanctions, Nokian Tyres plc has determined that it is “no longer feasible nor sustainable” to continue operations in Russia. The Finnish tyre maker’s Board of Directors thus decided today to initiate a controlled exit from this market. Exit preparations start immediately and Nokian Tyres will evaluate different options for its departure, with “due consideration to local employees and legislation.”
Nokian Tyres is “preparing for the future” by purchasing three hectares of land near its factory in Nokia, Finland – but it says this site won’t be home to its planned European manufacturing facility. The tyre maker says the property’s location in the immediate vicinity of its factory and headquarters “enables synergies in future development projects.”
Although the war in Ukraine and subsequent sanctions continue to “cause significant uncertainty” for Nokian Tyres’ operating environment, especially in regards to its business in Russia, on Friday the company reported that demand for its tyres has nonetheless remained good. For this reason, and after successfully implementing price increases to mitigate the impact of inflation, Nokian Tyres has raised its net sales guidance for 2022.
Olli Seppälä, formerly head of research and development at Nokian Tyres, parted ways with the tyre maker last week. The decision to move on after almost two decades wasn’t one taken lightly, Seppälä reports, adding that he leaves a company that “has a stronger product portfolio than ever” as well as “even better products in the pipeline and capable, talented employees who lead and drive the company forward.”
The effects of the Ukraine war are not present in Nokian’s first quarter reporting, published on 28 April. The company has seen good levels of Q1 growth versus 2021, especially in its car tyre sales, but also in its commercial tyre business. However, with the manufacturer highly leveraged on Russian manufacturing and European sanctions against the country ramping up, it has announced to investors that all bets are off regarding its 2022 forecasts. The negative effects are largely related to passenger car tyre sales – Nokian explains that its “Heavy Tyres” are produced in Finland. It adds that while it has stopped the distribution of these products in Russia, “Nokian Tyres has never sold tyres to the Russian army, and the Russian Federation is not a customer of Nokian Tyres.”
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