Finnish prosecutors have decided to press charges against six former members of the Nokian Tyres plc board as well as past president & chief executive officer Ari Lehtoranta; all were associated with the company in the period between 2015 and 2016. It additionally intends to impose a corporate fine upon the company, to a maximum of 850,000 euros. The prosecutor has also decided to press charges for suspected abuse of insider information against four persons who were employees of Nokian Tyres in 2015. In a statement supplied to Nasdaq Helsinki yesterday, Nokian Tyres stresses that “all persons charged deny their involvement in any criminal activity”
Nokian Tyres’ investment in Sigmavision and the installation of its SnapSkan tool via tyre and car service chain Vianor is targeting “improved safety” for “millions of drivers”, the Finnish tyre manufacturer states. The free and fast technology measures the depth of tyre treads on the go and informs the driver of the results, serving motorists on their everyday routes, in locations such as car parks.
Immediately following the announcement of his departure from Nokian, Ari Lehtoranta has been unveiled as the new president and CEO of Caverion Corporation, a supplier of energy-efficient technical solutions for buildings, industries and infrastructure on whose board he has sat since 2013 (as chairman since 2015). He will assume the new position on January 1, 2017.
Nokian Tyres’ president and CEO Ari Lehtoranta has resigned in order to “pursue new opportunities outside of Nokian Tyres”. According to the company, Lehtoranta will continue in his present position until the end of 2016. Lehtoranta only joined Nokian in May 2014 and will be remembered for his decision to own up to company’s magazine tyre test manipulation in February 2016.
Although Nokian Tyres’ net sales decreased 1.9 per cent year-on-year to €275.8 million in the first quarter of 2016, the Finnish company increased its operating profit by 4.6 per cent to €50.5 per cent and nudged its operating margin up from 17.2 per cent to 18.3 per cent. Net profit for the January to March quarter amounted to €39.9 million, 70.5 per cent lower than the result recorded a year earlier; the reason for this was the return of €100.3 million worth of taxes and interest for 2007 to 2010 to the company’s books in the first quarter of 2015. Excluding this one-off event, profit rose 13.8 per cent year-on-year. Earnings per share amounted to €0.30 during the quarter.
“I didn’t have any choice.” – Ari Lehtoranta, president and CEO of Nokian Tyres, is convinced his decision to go public about the Finnish manufacturer’s manipulation of tyre tests in Europe over decades was the right decision. Lehtoranta, who has led the company since October 2014, wonders why Nokian Tyres went to the effort of supplying specially-made test tyres – particularly as the company’s non-manipulated products have always gained good results in tyre tests.
In an interview with Tyres & Accessories, Lehtoranta explains why it is now important to take part in the current public discussions on the subject and, through these talks, develop new industry-wide transparency rules.
Last month, talk of tyre testing irregularities came to the fore following Nokian’s admissions of “mistakes” in this area. In the April edition of Tyres & Accessories we follow up on this story in some detail with a survey of leading manufacturers’ responses to the issue of the day and an exclusive interview with Nokian president and CEO Ari Lehtoranta. While the detailed views of the world’s leading tyre makers are many and varied, they are all unified in their denials of any underhand behaviour relating to magazine and association tyre testing (see “Top tyre manufacturers deny involvement in tyre test manipulation” for the full story). And yet Nokian’s Lehtoranta has clearly pointed the finger at the broader industry on a number of occasions in the past – and apparently is continuing to do so.
As well as admitting that its “practices concerning tyre tests have not always…been in line with the sustainable approach of Nokian Tyres” and that it has made “mistakes”, Nokian has now explicitly implicated other tyre manufacturers in tyre test rigging.
Yesterday was “my worst day ever” Nokian CEO Ari Lehtoranta tweeted on 27 February 2016. The reason? The last Friday in February (the 26th) saw Finnish news reports suggesting Nokian had cheated in tyre tests for a decade translated and distributed around the world. This was followed by an official statement in which Nokian apologised for tyre test “mistakes” and began to outline what it was doing about it, while also reassuring customers and consumers that its products have always been safe.
While Nokian Tyres was unable to maintain its turnover and operating profit in 2014, the company achieved a sizable increase in net profit. The Finnish company’s turnover declined 2.1 per cent to €1.36 billion. Operating profit declined 4.1 per cent to €296 million, however net profit rose 15.5 per cent to €240.7 million.
Nokian Tyres shares that it has signed the United Nations’ Global Compact initiative and as of 23 December 2015 been registered as a supporting member. The tyre maker joins more than 8,000 companies around the world, along with around 4,000 other participants, in what is said to be the world’s largest corporate social responsibility initiative. Nokian says that signing the initiative “further strengthens” its commitment to profitable business and responsible methods.
At Nokian Tyres’ Capital Markets Day for investors and analysts in Helsinki, Finland, president and CEO Ari Lehtoranta expressed confidence that the company has started its “journey back to profitable growth.” Focusing on Nokian’s strategy and financial targets, the manufacturer also made no changes to its previous guidance for 2015; the company’s results have shown contraction throughout the year.
Ari Lehtoranta has commented on Nokian Tyres’ proposed new factory ahead of the company’s Capital Markets Day, which takes place today in Helsinki. The president and chief executive officer says a decision regarding the factory and its location will be made by the fourth quarter of 2016.
The statutory negotiations regarding Nokian Tyres’ passenger car tyre factory in Finland ended today, and the tyre maker reports that 122 people will lose their jobs. Adjustments will also be made to production capacity.
It is hard to believe that little more than two years have passed since Nokian Tyres predicted the market for premium tyres in Russia would grow by an average of ten per cent each year, and even harder to grasp that as recently as 2012 the Russian and CIS markets accounted for 35 per cent of the tyre maker’s total net sales.