The board of Nokian Tires is recommending a quick dividend with loss-making earnings per share and a rapidly falling stock price
The operating result of the segments for tire producer Nokia tires from October through December was 13.5 million euros, with a total revenue of 411.3 million euros.
According to the experts that monitor the company, information provided by Vara Research predicted an average revenue of 437.1 million euros for the fourth quarter, down from last year’s turnover of 512.6 million euros.
The operational profit for all business areas was anticipated to be 29.1 million euros, down from 88.0 million euros from October to December of last year.
The analyst predictions were wildly different from one another. For instance, the projection for the entire segment’s performance ranged from a loss of 19.3 million euros to a profit of 56.2 million euros.
Nokian Tires lost 0.11 euros per share. It was anticipated that earnings per share would decrease to 0.18 euros from 0.27 euros.
The final year for Nokian Tires was difficult. About 80% of the company’s passenger car tires were produced in Russia in 2021, which in February of last year launched a significant offensive against Ukraine.
A factory was opened in Romania, a liaison agreement was made with the Chinese company Qingdao Sentury Tiren about the production of passenger car tires, and Nokian Renkaat indicated that it was selling its operations in Russia and in talks with additional contract manufacturers.
The sale of the Russian operations is happening, according to the financial statement release.
Over the course of the year, operating profit declined.
Nokian Tires had an annual revenue of 1.8 billion euros and an operating profit of 221.2 million euros across all of its sectors. Analysts anticipated that the sectors’ combined operating profit would decrease to 237.2 million euros from 324.3 million euros, while turnover would increase to 1.8 billion euros from 1.7 billion euros.
1.27 euros were lost each share. An average loss per share of EUR 0.92 was predicted. The profit per share for the previous year was 1.50 euros.
In order to more accurately reflect how the business is being managed by the company after leaving Russia, Nokian Tires would also modify its financial data. Business operations in Russia and other items that do not accurately reflect the company’s operational development are not included in the adjusted data.
With Russia excluded, the segments’ combined turnover dropped from 1.9 billion euros the year before to 1.4 billion euros last year. The total operational profit for the segments last year, excluding Russia, was 17.8 million euros, down from 210.1 million euros the year before.
The board suggests an aggressive dividend.
The Nokian Tires board is recommending that a dividend of 0.35 euros per share be paid in May from last year’s earnings.
The board also suggests that the general assembly agrees to give the board permission to decide whether to distribute a second dividend installment in December that cannot exceed EUR 0.20 per share.
The typical analyst prediction called for a dividend of 0.14 euros. From the 2021 result, a dividend of EUR 0.55 per share was given out.
According to Nokian Tires, the segments’ combined turnover will be between 1.3 billion and 1.5 billion euros this year, and their combined operating profit margin will be between 6 and 8 percent.
Operating profit across all categories last year was 12.5 percent. The segments’ combined operational profit percentage was 1.3 percent when Russia was excluded.
Beginning in 2023, company operations in Russia and other items that do not accurately reflect the operational evolution of Nokian Tires’ business are excluded from segment total net sales and segment total operating profit.
Due to the seasonal nature of the business, the overall operating profit for the segments is anticipated to be earned in the second half of the year.
“The year’s first half is difficult.”
CEO Jukka Moisio stated in the announcement that “in 2023, we will focus on increasing production capacity, strengthening our line of premium, competitive products, and providing superior customer service.”
“Due to the weak supply, the first half of the year will be difficult, but as strategic projects move forward, we anticipate that starting in the second half of 2023, our volume will begin to increase once more. The year 2023 will mark a fresh beginning for Nokian Tires as it works toward a long-term revenue of two billion euros.”
After the findings were revealed, Nokian Tires was down 7.5% at 10.48 euros, which took almost fifteen minutes.