Finland increases stake in Nokian Tyres, shares rebound

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Finland’s state investment arm Solidium said on Tuesday it had increased its stake in Nokian Tyres , sending the Finnish tire maker’s share up more than 15%.

Solidium’s holding in Nokian now amounts to 6.2% of its shares, up from 5% at the end of the year, Solidium’s chief executive Antti Makinen told Reuters.

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“The share price looked attractive to us,” Makinen said.

Nokian Tyres’ share hit a more than five-year low earlier this month due to the coronavirus outbreak, which has caused it to lay off staff temporarily and scrap its outlook.

Inderes equity analyst Joonas Korkiakoski said the increase in Solidium’s stake was a positive sign, given the organization’s high standard for investments and long-term focus.

“Taking these factors into account, Solidium’s increased holdings can be seen as a psychological, yet slightly positive driver,” Korkiakoski told Reuters.

“Although we consider Nokian Tyres’ fair value to be higher than current market value, we do not expect it to realize that in the short-term, taking extremely challenging market conditions and weaker-than-sustainable-level operating profitability into account,” he added.

On Monday, Nokian said was temporarily ceasing production and closing its three factories in Finland, Russia and the United States.

The company had barely ramped up production in the beginning of March at its new U.S. factory in Dayton, Tennessee, before having to shut it down on March 27 for a minimum of two weeks due to the virus.

At its Russian factory near St Petersburg, the production shutdown began on Monday, initially for a week, while the company said it planned to lay off all of its 1,630 employees in Finland temporarily.

Makinen said Solidium had also raised its stake in Finnish telecoms company Nokia to 4.2% from 3.85% at the end of the year.

In February, before the coronavirus outbreak hit Finland, Solidium sold some 11 million shares in Finnish insurer Sampo for roughly 460 million euros ($505 million), cutting its holding in the company to 8% from 10%.

Makinen said Solidium used some 300 million euros to pay off loans but has 130 million euros left for additional purchases.

“Let’s say we are looking at the market with interest, whether or not there is something out there for a cautious buyer,” Makinen said, refusing to elaborate on investment plans. ($1 = 0.9117 euros) (Reporting by Anne Kauranen; Editing by Mark Potter)