Nokian Tyres' losses deepen on Red Sea crisis, strikes
Reuters
Published Apr 29, 2024 12:18
Updated Apr 29, 2024 13:23
By Anne Kauranen
HELSINKI (Reuters) -Finland's Nokian Tyres on Monday posted a deeper-than-expected operating loss for the first quarter following its exit from Russia, citing negative impacts from the Red Sea crisis and political strikes in Finland.
The company is also still burdened by its exit from Russia last year following Moscow's 2022 invasion of Ukraine, which led Nokian to sell its Russian plant where it made 80% of its passenger car tyres.
To mitigate the impact, the company has ramped up production at its existing Finnish and U.S. sites, while building a new factory in Romania and sourcing production from China.
The fresh setbacks sent shares down 3.8% in afternoon trading.
The tyre maker's operating loss increased to 26.2 million euros ($28.07 million) from a loss of 18.8 million in the year-ago quarter, missing the average analyst forecast of a 9.1-million-euro loss in a poll provided by the company.
"The negative financial impact of the political strikes and the Red Sea crisis is approximately 20 million euros in EBITDA, of which more than half in Q1," Chief Executive Jukka Moisio said in a statement.
The strikes, which stalled Finland's ports and production at many export companies, led the company to temporarily lay off 350 employees in March.
"Due to the strikes in February-April, we lost in total approximately three weeks of production in passenger car tyres and one week in heavy tyres," Moisio said.
Construction of Nokian's new Romanian factory has progressed as planned, Moisio told a conference call, with first tyres expected to be produced there in the second half of this year and commercial operations starting early next year.
($1 = 0.9334 euros)
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Written By: Reuters
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