By Anne Kauranen
HELSINKI (Reuters) -Finland’s Nokian Tyres on Tuesday posted a third-quarter operating profit below analysts’ expectations and said it was making good progress in rebuilding capacity following its exit from Russia.
The tyre maker exited Russia in response to its 2022 invasion of Ukraine, and last October sold its Russian plant where it used to make 80% of its passenger car tyres.
The company is now focused on sourcing production from China, while building a new factory in Romania and ramping up output at existing Finnish and U.S. sites.
The new factory “is starting to take shape and is well on track for the first tyres to be produced in less than a year,” Nokian Tyres CEO Jukka Moisio said, referring to the second half of 2024.
Commercial production is expected to begin in 2025, the company said.
The Romanian plant, which will have capacity to make six million tyres per year, will only partially replace lost output from Nokian’s now divested Russian operation that could produce 17 million passenger car tyres.
The company said contract manufacturing would amount to around 1.5 million tyres this year, while its Finnish factory has also increased production.
At its U.S. factory, equipment installations are ongoing and new production lines will start up by the end of this year, it added.
Nokian said the Romanian government had approved an investment subsidy for up to 99.5 million euros for the 650 million-euro factory.
That subsidy “is currently under review and under investigation by the EU Commission”, Nokian supply operations executive Adrian Kaczmarczyk said on a conference call.
Shares in the company were broadly steady on the day at 1407 GMT.
Nokian said it expects strong cash generation in its seasonally strongest fourth quarter.
The tyre maker last week reported preliminary segment figures for the third quarter and lowered its full-year outlook due to weaker demand, sending its shares down.
Operating profit fell to 8.3 million euros ($8.9 million) from 40.7 million in the year-ago quarter, the company said on Tuesday, missing the average of 26.6 million expected by 10 analysts in a poll provided by the company.
($1 = 0.9384 euros)
(Reporting by Anne Kauranen, editing by Anna Ringstrom and Terje Solsvik, Kirsten Donovan)