REVIEW BY THE PRESIDENT AND CEO
Interim Report January–March 2022, April 27, 2022
Jukka Moisio, President and CEO:
“For the past two months, we have witnessed shocking events in Ukraine. We have followed the situation with great sadness and we, along with the whole international community, unequivocally condemn the war, which has caused unspeakable suffering to so many.
The war in Ukraine started to impact our operating environment in late February. However, the year began with good tire demand and in January−March, our net sales with comparable currencies increased by 21.9% and segments operating profit improved. The result was driven by price increases that we implemented in a wide range of markets and products to offset high raw material and other cost inflation.
At these difficult times, our first priority has been to help our Ukrainian colleagues and their families stay safe, and support all Nokian Tyres employees. To secure supply of our products, we immediately activated contingency plans in February, including shipping tires closer to our customers, securing the raw material supply, and transferring production of selected key product lines from Russia to our other factories. To reduce reliance on the Russian production and to diversify our manufacturing footprint, we have continued to increase capacity at our factories in Finland and in the US, and we are expediting our plans to invest in new capacity in Europe.
The war in Ukraine will significantly impact our financial results in 2022, especially starting from the third quarter. Due to high uncertainty and dynamic environment, it is impossible to estimate the ultimate impact on our overall performance at the moment. The sanctions have a significant impact on our ability to manufacture tires in Russia, and thus our ability to sell tires in Russia and in Central Europe.
Our short-term focus will be on adapting to the fast-changing, highly uncertain operating environment, maintaining control of our operations in Russia and securing cash flow. We have a strong product portfolio, and although there will be difficulties in the short term, we will do our utmost to ensure supply of our products to customers. In the mid-term, adding new supply capability to Europe will be one of our key priorities. At the same time, the Board is evaluating long-term strategic paths in the changing operating environment.
I would especially like to thank all Nokian Tyres employees for their perseverance and resilience during this difficult time.”