Nokian Tyres to divest Russian operations to Tatneft for €400m

Finnish tire manufacturer Nokian Tyres has agreed to divest its Russian operations to Tatneft for an expected price of around €400 million.

According to Nokian Tyres, the final amount of the consideration is subject to net cash and working capital adjustment and variations in the exchange rate of RUB/EUR.

In June 2022, Nokian Tyres revealed plans to launch a controlled exit from Russia. After the completion of the sale, the Finnish tyre manufacturing company will cease all its operations in Russia and its employees in the country will be absorbed by the new owner.

Operating since 2005 in Russia, Nokian Tyres saw nearly 80% of its passenger car tires manufactured in Russia. The Russia and Asia business area represented around 20% of its net sales, said Nokian Tyres.

The Finnish tire manufacturer said that its exit from Russia will substantially affect its financial results with the discontinued supply of tires from the country badly impact sales, particularly in Central Europe in the coming two to three years.

For securing the supply of its products, Nokian Tyres said that it has continued to ramp up capacity at its Finland and American factories, and is moving ahead with its plans of investing in new supply capability in Europe.

The tyre manufacturer stated: “Nokian Tyres’ assets in Russia and Belarus excluding tax and financial items amounted to EUR 574.5 million after the impairments and the write-down at the end of the second quarter and to EUR 590.4 million at the end of the third quarter of 2022.”

The deal is contingent on approval from the relevant regulatory bodies in Russia and other conditions. Due to this, there are considerable uncertainties about the timing, terms and conditions, and the closing of the deal, said Nokian Tyres.