How much of the Czech Nexen plant's return to a net profit of CZK 631m came from tyres?

A swing in net profit far larger than the business behind it

Nexen Tire Europe s.r.o., the European tyre-making arm of South Korea's Nexen Tire with a factory at Bitozeves in north-west Bohemia, lost CZK 782m in 2024. In 2025 it made a net profit of CZK 631m. The figures are for the Czech company alone, under Czech accounting standards, in CZK, for calendar years. An s.r.o. is the Czech limited liability company, the usual form for a foreign group's local subsidiary.

On its face, that is a complete turnaround. Net profit improved by CZK 1.4bn in a single year, and the net margin moved from -5.0% to 3.7%. The trouble is the size of the operating improvement underneath it. Operating profit, what the factory earns from making and selling tyres before financing and tax, rose from CZK 502m to CZK 821m, an increase of CZK 319m. The net result moved far more than the business that is supposed to produce it.

So the question is not whether 2025 was better than 2024. It was. The question is how much of the better year came from the plant and how much came from lines that have little to do with tyres.

The plant did improve, but interest still takes nearly all of it

Start with what the factory earned. Revenue rose 8.7% to CZK 17.0bn, and operating profit rose 63.6%, about 7.32× as fast. That is the familiar pattern of a heavy industrial plant. Presses, curing lines, buildings and a trained workforce cost much the same whether the lines run full or not, so extra volume falls largely to profit. Depreciation alone, the annual cost of wearing out the machines, came to CZK 1.4bn, much the same as the year before. The operating margin widened from 3.2% to 4.8%.

That improvement is real, but it is small next to the debt. The company carried financial debt of CZK 12.5bn at the end of 2025, about 5.62× its EBITDA (operating profit with depreciation added back, a rough measure of the cash the operations generate). Interest expense for the year was CZK 749m. Operating profit covered it only 1.1×. In plain terms, after paying its lenders, the factory had almost nothing left from its own operations.

Which means the net profit of CZK 631m cannot come mainly from the plant. Something else below the operating line must have worked in the company's favour in 2025, or worked heavily against it in 2024. For an exporter that buys and sells in euros and borrows from its group, the usual candidates are exchange rate gains or losses on loans and receivables, the revaluation of financial items, and tax effects, including deferred tax. The company's accounts do not break the financial result down by cause; the split of financial income and expense in the notes, and above all the line for foreign exchange differences, is the figure that would settle it.

The balance sheet fits the same picture. Equity rose by CZK 631m, exactly the year's profit, so nothing went out to the owner. The equity ratio, the share of assets financed by the owner rather than lenders, improved from 21.7% to 24.9%. Cash, meanwhile, fell by CZK 60.8m to CZK 681m. A year that ends with less cash in hand, despite a net profit of CZK 631m, is another hint that part of the profit is an accounting gain rather than money received.

Why this matters more than the headline result

A net result that swings on financial items can swing back. If the 2024 loss came from currency moves on large group loans, and the 2025 profit came from those moves reversing, then neither year says much about the factory. Both say something about the koruna, the euro and the size of the debt. The operating line, a modest step up to CZK 821m, is the one that describes the business.

That distinction is not academic. Owners use the net result to decide on dividends. Banks and group treasuries use it to set terms. Managers use it for bonuses. A sign change from loss to profit invites everyone to treat the new level as the base. Here, the base that repeats is an operating profit that barely covers interest.

What to check in your own company

If your own result recently turned from a loss to a profit, or the other way round, take a sheet of paper and draw a line under operating profit. Write the change in operating profit on one side. On the other, write the change in everything below it: interest, exchange differences, revaluations, one-off gains, tax. If the second number is larger than the first, your turnaround happened in the finance department, not on the shop floor.

Then do the quick sums. Divide operating profit by interest expense; anything close to one leaves no room for a weak quarter. And if you hold loans or receivables in a foreign currency, ask your finance team how much of this year's result came from exchange differences, and what the same balances would do if the rate moved back. Do this before the new result goes into a budget, a bonus scheme or a meeting with the bank.

Nexen Tire Europe had a better year, and the plant itself earned a little more of it. Most of the swing in its net profit, though, sits below the operating line, where its lenders take almost everything the factory makes. I would watch the operating profit and the interest bill, and give the net result a year to prove it is not just the exchange rate.