Nexen folds German and Italian tyre subsidiaries into Czech operation

Nexen Tire is consolidating its three European entities (that is Czech Republic manufacturing and sales operation as well as its German sales and marketing led business plus its Italian mainly sales and marketing subsidiary) into a single Czech corporation. Business Korea reports that this initiative aims to “streamline business operations by centralizing dispersed bases within Europe”. Tyrepress.com’s sister titles in Germany and Italy (reifenpresse.de and pneusnews.it) have sought clarification and comment from the respective Nexen subsidiaries.

Citing industry sources, Business Korea stated that, on 20 March, Nexen Tire’s German and Italian subsidiaries have transferred their operations to the Czech Republic following a board resolution, adding that “the German and Italian subsidiaries are currently undergoing liquidation procedures”.

Business Korea speculates that the integration is driven by the recently-completed expansion of Nexen’s Czech tyre factory. Nexen invested 1.2 trillion won (US$895.19 million) in establishing and expanding its Czech factory, completing the expansion last year. Citing industry sources, Business Korea also suggested that the German and Italian operations hadn’t been achieving strong enough sales performance:

“The merger of the underperforming German and Italian subsidiaries with the Czech corporation appears to be aligned with the expansion of the Czech factory to address sluggish local sales.”

Meanwhile, despite recording overall net profit of 103.1 billion won last year, Nexen Tire’s subsidiaries in the Czech Republic and the United States reported deficits.

Specifically, Nexen Tire’s U.S. subsidiary recorded a net loss of 15.3 billion won last year, turning from a net profit of 22.1 billion won in 2022. Meanwhile, the Czech subsidiary saw its net profit decline from 13.2 billion won in 2022 to a net loss of 13.4 billion won last year, according to Business Korea.

However, of Nexen Tire’s overseas subsidiaries, the Czech subsidiary recorded the highest sales volume last year at 799.7 billion won. Following closely, the U.S. subsidiary reported sales of 774.6 billion won. The combined sales of these two subsidiaries amount to 1.57 trillion won, accounting for 58.3 per cent of the total sales of 2.7 trillion won last year.

Meanwhile, Nexen plans to invest US$1.3 billion to build a North American factory in one of eight southeastern states of the United States. The target operational timeline for the factory is set for 2028 to 2029.