Finland’s Nokian Tyres boosted sales 15.8% to EUR482.1million in the second quarter of 2022.

With comparable currencies, net sales increased by 7.4%, the company said in a statement.

Segments operating profit was EUR 86.3 million, down from EUR89.6 million in H1 2021, with positive currency effects of EUR17 million.

Operating loss was EUR202.8 million versus an EUR81.8 million profit a year previously as EUR289.1 million (EUR7.8 mllion ) was booked as non-IFRS exclusions.

Last June, the Nokian board decided to initiate “a controlled exit from Russia” and, as part of the process, impairments and write-downs of EUR 300.7 million were recorded in the second quarter.

First half sales were EUR898.6 million compard with EUR758 million in January−June 2021 and grew 18.5%. With comparable currencies, net sales increased by 13.9%.

“The year began with good demand in all markets,” Nokian said. “The war in Ukraine started to impact on the operating environment in late February.”

Segments operating profit was EUR 152.8 million (EUR139.9 million), with positive currency impact of EUR 13 million. Operating loss was EUR143.5 million (EUR126.1 million profit) as EUR296.3 million was booked as non-IFRS exclusions.

Guidance for 2022

Nokian said: “The war in Ukraine and resulting sanctions cause significant uncertainty to [our] operating environment. In 2022… net sales are expected to decrease or to be at previous year’s level, and segments operating profit is expected to decrease significantly compared to 2021.

President and CEO Jukka Moisio added: “The second quarter of 2022 was marked by increasing challenges in our operating environment due to the war in Ukraine and the subsequent, tightening sanctions. In June, the board decided to initiate a controlled exit from Russia as it is no longer feasible nor sustainable… to continue operations in Russia. We are evaluating different options for the exit and discussions with possible candidates are ongoing. We will focus on growth opportunities in our other core markets, without a presence in Russia.”

The tyre maker noted demand remained good in April-June, and net sales with comparable currencies grew by 7%. Segments operating profit declined slightly due to lower sales volumes that were driven by supply constraints. It also implemented price increases to offset cost inflation.

“Our exit from Russia will significantly impact our financial results in 2022,” Nokian said.

“Discontinued supply of tyres from Russia will have an adverse impact on sales especially in central Europe in the second half of 2022. We are working on many fronts to secure supply of our products. We have continued to increase capacity at our factories in Finland and in the US, and are proceeding with our investment in new supply capability in Europe, which is one of our key mid-term priorities.”