Hankook Tire – Double Digit Growth in 2008

Hankook Tire plans to sustain its double-digit growth during 2008 and continue to develop as a producer of quality high performance tyres. And the Korean manufacturer’s status in this segment will be further bolstered by the company’s recently announced KRW 10 billion (£5.4 million) wet proving ground for the integrated development, production and testing of UHP tyres. This facility is the first of its type in Korea.

In 2008, Hankook Tire will renew its strategic focus on driving retail sales through more intensive marketing activities across all of its major markets, leveraging its growing reputation for producing quality high-performance tyres. The Hankook Tire Masters Program for distributors in Europe will be expanded, and a new distributor education plan for high performance tyres, featuring an emphasis on Hankook Tire’s technological innovation and its benefits for customers, is in development.

The sustained double digit growth the company is aiming for will come through, the company states, four key strategic business drivers: the ongoing improvement of management and leadership processes and structures; increased production and distribution capabilities; consistent investment in technological innovation; and building the Hankook Tire brand by leveraging OE reputation and conducting smart marketing activities.

Commenting on the company’s vision for 2008, global CEO, Seung Hwa Suh, said, “ultimately, the strategy will allow Hankook Tire to increase the quality of customer service through greater product availability, increased on-time delivery, and the development of high performance products that are region-specific, OE model-specific, need-specific or combinations of these. This is what excellent customer service means for Hankook Tire and how the company will continue to develop into a leading global automotive force.”

The company’s 2007 plans to increase annual production capacity from 63 million to 67 million units are on schedule, thanks to the opening of Hankook Tire’s £340 million facility in Hungary during June as well as investments across other production facilities in China and Korea. In particular, Hankook Tire is investing KRW235.1 billion (£126 million) in its flagship facility in Geumsan, Korea – a plant that holds a key role in the production and export of its high-end UHP tyres. Plans are to increase UHP tyre production by 50 per cent or 5 million units annually by late 2009.

Hankook Tire will continue to increase production to meet the increasing demand for Hankook Tire products, and to meet and exceed industry growth of approximately 3.7 per cent. The company’s first half operating profit grew by 10 per cent, high within the industry, and the company recorded the second highest industry employee-to-sales ratio in 2006 (approximately £175,000). Hankook believes strong cash flow, low debt and high liquidity have set conditions for the company to work toward additional production facilities and further investment activities. New facilities, as well as spreading global risks, will help decrease logistics costs – the completion of the European factory in Hungary reduces delivery times from over one month to within five days to all locations throughout Europe.

The production of UHP tyres at the Geumsan factory will further benefit from the opening of the Geumsan Wet Proving Ground. This new state-of-the-art facility will allow for greater and more complete on-site testing capabilities, particularly for UHP tyres and innovative new products lines for export to all markets. This tighter integration between testing, development and production will reduce new product development timelines, allowing Hankook Tire to bring innovation to the market faster.

Hankook Tire continues to invest approximately 5 per cent of its revenues in technology. This consistent emphasis has seen the number employees dedicated to R&D grow to more than 6 per cent of total employees. Following global tyre manufacturing standards, the company balances approximately one-third of business in the OE sector and two-thirds in the aftermarket sector.

Hankook Tire says it will continue to build on its reputation for tuning technology and high performance tyres, and its new products in the pipeline are expected to benchmark strongly in terms of endurance and safety, and perform well in terms of handling and rolling resistance.