Nokian Tires’ shares will fall after the decision to stay in Russia

Nokian Tires’ share prices fell more than 14 percent on afternoon compared to Friday’s closing price.

Last Thursday, the tire company told analysts it plans to continue production in , although many of its competitors announced their intention to suspend operations in Russia in response to its February 24 attack on Ukraine.

Helsingin Sanomat was the first to talk about the company’s plans, which were outlined in an analyst call.

Nokian Tires has estimated that demand will exceed supply after competitors leave Joonas Korkiakoskimarket analyst at financial analysis firm Inderes.

If this is the case, ’s market share in Russia may increase, Korkiakoski explained in its report.

"The company itself [Nokian] did not say that they would benefit from the situation, but rather that it was an observation made by analysts about the mechanisms of a purely market ," Korkiakoski told .

Other leading tire , such as Bridgestone, Continental and Michelin, have announced that they have temporarily suspended their operations in Russia.

Inderes released a report on Friday estimating that only a small percentage of Nokian Tires dealers would end up refusing to the company’s Russian tires.

However, analysts also said that if the war drags on, it could negatively change customers’ perceptions – possible developments could adversely affect Nokia’s reputation.

The company’s options – whether to continue operating in Russia or not – are difficult, as the company manufactured more than 80 percent of its passenger car tires in the country last year.

According to Korkiakoski, if Nokia divested its operations in Russia, the company would lose about half of its net sales, EUR 750-850 million, and two-thirds of its operating profit of about EUR 200 million.

The analyst said Nokian Tires plans to increase production in and the . The company also plans to establish a new production plant in , but not in Russia, according to Korkiakoski.

Yle did not get a Nokian Tires representative to comment.

Source: The Nordic Page

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