Hankook grows operating profit, withstands pandemic year

Hankook celebrates 80th anniversary in 2021

Hankook is celebrating 80 years in business in 2021. The tyre manufacturer is now firmly within the global top tier, with a strategy to consolidate its position further by increasing sales of larger, UHP tyres in major regions, supplying original equipment tyres for premium cars, and developing its electric vehicle market. In 2020, Hankook tyres performed well in independent tyre tests and expanded its original equipment business with premium car-makers. These included Porsche’s first high-performance electric sports car, Taycan, and Audi’s top models RS6, RS7 as well as Audi RS Q8. Overall, Hankook announced in its full year report for 2020 that it is targeting global sales of 7 trillion South Korean won (£4.6 billion) in 2021.

Hankook was able to withstand tough 2020 conditions, with global markets affected by the pandemic, earning an operating profit of 628 billion won (£412 million). This represented a significant increase on the 544 billion won (£357 million) operating profit Hankook recorded in 2019. It did this in spite of sales falling by 6.2 per cent. Europe performed slightly better than the total, with sales down 3.3 per cent. At the same time, the operating profit made a significant rate of 15.5 percent.

The company says it achieved these figures through sales of passenger car tyres with rim diameters of 18” or higher, which accounted for around 35 per cent of its total segment sales. This segment was 3 per cent higher compared to 2019. It adds that it has continued to grow replacement tyre sales in profitable regions, like Europe and North America. Raw material costs stabilised, also contributed to higher operating profit.

Hankook says its 2020 financial performance was “particularly noteworthy” in the context of the global pandemic. During the first half of 2020, when economic activity took a global hit, Hankook posted an operating surplus. In the second half of 2020, it saw signs of a quick recovery as sales increased in some of the major regions. Sales of replacement tyres rose compared to the same period last year in regions such as Europe and North America during the fourth quarter. In China, sales of both original and replacement tyres increased as sales of high-inch tyres improved 12 per cent year-on-year, amounting to around 40 per cent of total sales.