Hankook Tire doubles operating profit, halves capex

Hankook Tire & Technology reports consolidated sales of KRW 2,340.0 billion (£1.4 billion, US$1.8 billion) and an operating profit of KRW 396.3 billion (£243.9 million, $302.1 million) for the third quarter of 2023. These results respectively represent year-on-year increases of 1.8 per cent and 106 per cent.

Passenger car and light truck (PCLT) tyres with 18-inch or larger rim diameters accounted for 43.4 per cent of total sales in this segment, a year-on-year growth of 2.3 percentage points. Among the major regions, China had the highest proportion of 18”+ sales, at 57.3 per cent, followed by Korea at 53.6 per cent, North America at 51.4 per cent and Europe at 34.3 per cent.

Reduced capex

In addition to announcing Q3 2023 results, Hankook Tire has revised its 2023 outlook, changing two of four key goals.

Global sales of original equipment Hankook tyres for electric vehicles are below original expectations due to lower vehicle production. Hankook Tire had earlier projected that EV tyres would account for approximately 20 per cent of its OE business for PCLT but has now revised this estimate, stating an expectation that EV tyres will be “over 15 per cent” of the total.

The company has also halved its planned capital expenditure from approximately KRW 1 trillion to around KRW 500 billion (£307.8 million, $381.2 million). This lower figure reflects a deferral of expansion, modernisation and maintenance work in its Tennessee, USA plant as well as a reduction in the amount Hankook intends to invest in modernising its Daejeon facility in South Korea.

Hankook Tire’s other two aims – growing sales by five per cent year-on-year in 2023 and increasing sales of tyres with 18-inch and larger rim diameters to 45 per cent of the PCLT total – remain unchanged.