Well-known tire companies' profits rebounded strongly

In 2024, Nokian Tires achieved a substantial increase in profits thanks to a strong sales recovery in Central and Northern Europe.

In 2024, Nokian's full-year net sales reached 1.2898 billion euros (9.76 billion yuan), an increase of 10.6% in comparable currencies. Profits also changed the embarrassment of the past two years, with the department's EBITDA of 185.2 million euros (1.401 billion yuan), and the department's operating profit reached 71.4 million euros (540 million yuan), with an operating profit margin that was the same as in 2023.

Different from the previous estimate, in the fourth quarter when winter tires and all-season tires should have been hot-selling, that is, Nokian's flagship products should have been selling well, Nokian did not show the expected strength.

Nokian is still under test in the fourth quarter
In the last three months of 2024, Nokian's net sales reached 415 million euros (3.14 billion yuan), an increase of 13.1% in comparable currencies.

However, both the EBITDA and operating profit of the department declined to 67.1 million euros and 71.9 million euros (508 million yuan and 544 million yuan), respectively; the EBIT margin and operating profit margin fell to 16.2% and 8.7%, respectively, with a decline of more than 3%.

However, similar to previous performance, the fourth quarter still contributed the most to the full-year profit. In 2024, Nokia began to turn losses into profits in the second quarter, and showed a continuous growth trend in the third and fourth quarters.

Nokia believes that the recovery of sales in the Central European market helped Nokia to achieve a rebound in profits.

However, it is worth noting that with the help of Nokia's North American factories and Asian factories, Nokia's profit level in the fourth quarter only recovered to the level of the first quarter of 2022, which is still a considerable distance from the glorious 2021. It can be seen that Nokia has not yet stepped out of the shadow of the closure of the Russian factory.

However, with the full production of the Romanian factory, the increase in supply capacity may help Nokia regain its glory before 2022. In terms of the track, passenger car tires are still Nokian's "leading lady".

Passenger car tires increased revenue but not profit
In the fourth quarter of 2024, driven by strong sales in the Central European market, Nokian's net sales of passenger car tires increased by 20.7% to 238.2 million euros (1.8 billion yuan); full-year passenger car tire sales reached 779.9 million euros (5.901 billion yuan).

Sales in the fourth quarter accounted for as much as 30%. However, in the fourth quarter, the profit of passenger car tires declined significantly, and the department's operating profit margin remained at only 5.7%, a decrease of 5.4 percentage points from the same period in 2023. The decline in profit margins resulted in Nokian's passenger car tire profits in the fourth quarter of only 13.6 million euros (102 million yuan).

Although dragged down by the decline in profit margins in the fourth quarter, overall, Nokian's passenger car tire business performed well, with a departmental operating profit margin of 6.7%, about 1.1 percentage points higher than last year, and operating profit of 52.2 million euros (394 million euros).

The third and fourth quarters were the two quarters with the fastest sales growth for Nokian, with year-on-year growth of 35.4% and 28.6% respectively. Nokian's heavy-duty tires had the same sales performance in the fourth quarter as in 2023, but thanks to the strong aftermarket, the department's operating profit margin increased to 13.8%.

However, for the whole year, due to weak market demand, its sales fell 8% from the same period last year (2023 fell 3.4% from 2022, which shows that the market demand has not been good in the past two years).

Nokian chain stores
And Nokian's chain store VIANOR also saw a decline in profits. In the fourth quarter of 2024, its sales rose by 6.7%, higher than the average growth rate of sales for the whole year.

However, in terms of profit, Nokian achieved profitability in the fourth quarter, but the operating profit was 11.2 million euros, with an operating profit margin of 8.3%; the full-year loss was 3.8 million euros.

Without the profit support in the fourth quarter, Nokian's chain stores may perform even worse.

Nokian analyzed that the main reasons for the poor performance of its chain stores were the increase in costs caused by inflation and the weak demand in the B2B market.

Nokian said that it will take a variety of measures in 2025 to ensure that its chain stores are more adaptable to the market and demand and improve profitability.

Outlook for 2025
In 2025, Nokian will continue to improve sales and profit performance through the full production of its Romanian factory.

However, Nokian also said that its sales volume is expected to change little from 2024-the development of the global economy and the uncertainty of geopolitical conflicts may cause fluctuations in its business performance.

 According to the financial report, Nokian's Romanian factory will be responsible for 40% of its global supply capacity and become its main tire supply factory.