Hankook Targets 2007 Sales of US$3.6B

The CEO of Hankook Tire, Choong Hwan Cho, has announced the company’s global sales target for 2007 is $US3.6 billion, a significant increase on last year’s realised US$2,5 billion. Hankook are also targeting an operating profit of US$340 million and a recurring profit of US$282 million.

This global sales target is based upon production from the company’s plants in Korea (Daejon, Geumsan), China (Jiaxing, Jiangsu) plants and in part from the new facility in Hungary (Dunaujvaros) that will commence production mid-year. Furthermore it is anticipated that the operations based in Korea will experience a 13.8 per cent increase in sales compared with last year, and the company’s target for operating profit is up 65.1 per cent and their target for recurring profit has also increased by 40.8 per cent.

During 2006 sales from Hankook’s Korean operations grew by approximately 10.36 per cent over the previous year to US$2.2 billion, while operating profit decreased 18.9 per cent to US$183 million. According to available preliminary figures, recurring profit also decreased, down 14.25 per cent to US$237 million, and net profit down 16.3 per cent to US$175 million.

This decrease in operating profit has been attributed to surges in raw material costs. In 2006, the average purchase price of natural rubber reached US$1,930 per ton, 52 per cent higher than a year earlier. The price of carbon black and synthetic rubber increased 27 per cent and per cent respectively.

The company’s executive vice president Cho Hyun Shick stated, “Uncertainty looms over the supply and price of raw materials such as natural rubber in the year ahead. However, we will overcome the challenging business environment by penetrating overseas markets with active marketing, expanding sales of OE tyres to premium automakers, and innovating management.” He also noted the importance of promoting Hankook as a premium tyremaker, commenting that during 2006, when the company raised tyre prices “There was less resistance to the price hikes as a result of enhanced brand awareness.”

Hankook’s new 92,000 square metre Hungarian tyre factory is currently under construction and will be ready to begin producing tyres by the middle of the year. The facility will be entirely completed by 2008.