According to industry sources on May 11, the financial performance of South Korea's three major tire companies—Hankook Tire & Technology, Kumho Tire, and Nexen Tire—has improved across the board. Hankook Tire reported an operating profit of 437.5 billion won in its tire division, marking a 31.1% increase from the same period last year. Kumho Tire and Nexen Tire recorded operating profits of 147 billion won and 54.2 billion won, respectively, reflecting increases of 0.3% and 33.1% year-on-year.
The three tire companies have benefited from increased sales of electric, high-inch, and replacement tires, resulting in relatively stable performance. Analysts attribute this improvement to a strategy focused on expanding premium product sales amid a market shift towards SUVs and electric vehicles. In fact, for the first quarter, the sales share of high-inch tires (18 inches and above) was 49.1% for Hankook Tire, 45.1% for Kumho Tire, and 40% for Nexen Tire.
Despite the improved first-quarter results, trade risks for the tire companies are growing. The EU recently announced it would impose anti-dumping duties of up to 50% on passenger and light truck tires produced in China, effective June 16. Kumho Tire and Nexen Tire have been notified of anti-dumping duty rates of 29.9%. When combined with the existing EU import duty of 4.5%, the actual burden could reach as high as 34.4%. In contrast, Hankook Tire faces a relatively favorable anti-dumping duty rate of 3.4%, resulting in a total tariff of 7.9%. Kumho Tire and Nexen Tire plan to seek a reduction in their duty rates through an objection process before the tariffs take effect.
An industry insider noted, "The remaining companies, excluding Hankook Tire, have been assigned an average duty rate after a thorough investigation. We are exploring ways to mitigate tariff impacts, including increasing local production and filing objections."
Approximately 40% of the total sales for the three domestic tire companies come from the European market. Notably, about 50% of Kumho Tire's sales in Europe are produced locally in China, while Nexen Tire sources 20-30% of its European tires from China.
In addition to the anti-dumping duties, raw material prices for tires in China are also on the rise. According to data from the Chinese raw materials data firm Sunseizers, the price of styrene-butadiene rubber reached 16,041 yuan per ton as of May 10, a 22.2% increase from 13,125 yuan on March 9. As a result, the three domestic tire companies are looking to gradually increase their production volumes in both domestic and European markets while raising the export share of their domestic output.
Industry analysts predict that the combination of tariff burdens and rising costs could lead to greater variability in company performances in the second quarter. According to financial information provider FnGuide, Kumho Tire's consensus operating profit for the second quarter is projected at 145.6 billion won, a 16.9% decrease from 175.2 billion won in the same period last year. In contrast, Hankook Tire's operating profit is expected to rise to 549.3 billion won, a 58.5% increase year-on-year, while Nexen Tire's operating profit is forecasted to reach 48.3 billion won, reflecting an approximate 13% increase.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.