Sales Up, Operating Profit Down in Hankook’s Q2

Hankook Tire has announced second quarter sales of 1117.2 billion won (£557.8 million), a year on year growth of 27.5 per cent, and 11.5 per cent quarter on quarter. Operating profit, at 79.0 billion won (£39.45 million), was 2.4 per cent down on the second quarter of 2007; likewise, recurring profit, at 89.8 billion won (£44.84 million) was also down 2.4 per cent. The quarter operating profit margin was 7.1 per cent.

Hankook reports sales revenue was boosted due in part to a weakened Korean won and an increase in tyre prices implemented in response to rising raw material costs – the company comments the tyre industry is facing increased pressure from a 24.3 per cent year on year increase in raw material costs, with natural rubber prices alone rising 40.5 per cent year on year. More than half of tyre production costs are now attributed to raw materials, adds the South Korean manufacturer.

In spite of these market conditions, Hankook Tire reports its year-on-year sales performance remains strong throughout key regions and within key business units, remaining unaffected by price increases made in the second quarter. The company attributes sales within the UHP business accounted of 116.5 billion won (£58.17 million) in part to a consistent focus on quality and fostering stronger ties with retail channels; this figure represents an increase of 67 per cent, with UHP exports rising 48.5 per cent. The European market saw sales increase by 30 per cent while North America also experienced an increase of 15 per cent. Strong sales gains have also been reported in emerging and new markets, with sales to the Latin America, Asia Pacific, Africa and the Middle East regions increasing 39 per cent, while sales to growing markets in Europe such as Russia grew by 139 per cent.

Mr. Seung Hwa Suh, global CEO of Hankook Tire, said, “The tyre industry continues to be fiercely competitive and rising oil prices are also affecting consumers’ purchasing intentions and decisions throughout the world. The industry is closing in on a significant cross-road where leading next-generation tyre manufacturers, like Hankook Tire, with increasing reputations for quality and technology coupled with relatively more affordable prices have an opportunity to continue to gain further market share.

“Sales continue to increase because more and more informed consumers place trust in the quality of and technology within our tyres, Mr. Suh continued. “The focus on fuel-efficient tyres that help consumers reduce both energy consumption and CO2 emissions is being spurred on by the rise in oil prices. Hankook Tire is already developing industry-leading innovation in this area what with the recognition of the Optimo 4S and the launch of the enfren, and we will continue to focus and invest further in more environmentally-friendly tyre technology.”