Up & Running: Kumho publishes first annual report since 2018
Kumho enjoyed sales growth in 2021 (Image: Kumho Tire)
For the first time since being acquired by China’s Doublestar four years ago, Kumho Tire has published an annual report. Under the title ‘Up and Running’, the South Korean tyre maker reports on the course of the 2021 business year, which the manufacturer closed with a turnover of KRW 2.6 trillion won (£1.65 billion), a year-on-year increase of 20 per cent.
Kumho also recorded a 56.3 per cent increase in sales within Europe during the period, with these amounting to KRW 479 billion (£303.15 million) for the year. The tyre maker reports that this “considerable sales growth” in Europe was possible thanks to price hikes as well as a gradual stabilisation in the distribution network, which is recovering from the aftermath of the prolonged COVID-19 pandemic as inventory sales picked up. In addition, increased orders of original equipment tyres from major vehicle manufacturers significantly buoyed Kumho’s sales over the past year.
Profitability requires rock-solid fundamentals
Despite these increased sales, Kumho Tire reported a net loss of KRW 71.9 billion (£45.50 million) in 2021. Jeong Il-taek, president and chief executive officer of Kumho Tire, shares that despite sales volume growth that was above the industry average, the company’s profitability was “chipped away” by external factors such as soaring freight rates and raw material costs as well as tariff issues. “We learned a critical, if bitter, lesson from this – profitability requires rock-solid fundamentals that can withstand macroeconomic headwinds,” he said.
Anticipating ongoing issues with freight costs and capacity as well as rising prices for raw materials, Jeong says Kumho Tire’s plan for 2022 is to leverage its capabilities and competencies to “prudently ride out these difficult times and grow into a company that our shareholders and employees can take pride in.” In order to overcome such challenges, Kumho’s management team needs to “reshuffle the organisation into a profit-based manufacturing and distribution system.” Jeong reports that Kumho Tire will “undertake efficiency-oriented process innovation to continue to detect and solve problems” so that it can “return to healthy profit levels in the immediate future.”
Kumho Tire had last published its own report in 2018. Click here to read the latest Kumho report.
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