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Date 31/07/2007 Hits67,462

Category Corporate

Hankook Tire Second Quarter Results Show Strong Profitability Despite Increased Cost of Sales

Hankook Tire Second Quarter Results Show Strong Profitability Despite Increased Cost of Sales

 
- Sales show 11.4% year-on-year and 3.5% quarter-on-quarter, despite 9.8% increase in cost of sales
- Regional sales growth remains strong, with 23% increase in China, 11% in Europe and 13% in North America (RE Tires Only)

SEOUL, KOREA 30th JULY - Hankook Tire (www.hankooktire.com), one of the fastest growing tire manufacturers in the world*, today exceeded market expectations by announcing global sales of KRW 872 billion (US$ 938.9 million) in the second quarter of 2007, a year-on-year increase of 11.4%.

Although the cost of goods sold increased by 9.8%, reflecting increased costs for raw materials and higher labor costs, this was offset by higher prices and increased sales in both the RE (Replacement Equipment) and OE (Original Equipment) sectors of the business. 

Regional growth remained strong, especially in China where sales increased by 23% (1.78 billion yuan),enabling Hankook Tire to maintain its position as the number one tire manufacturer in China.  Exports for RE tires to Europe increased by 11% and North American exports grew 13%.  The increases reflected greater downstream diversification of the customer base in both markets as well as a 19% increase in OE sales.

Chief Strategy and Financial Officer Hyun Bum Cho said, “Our increased profitability is benefiting from a strategic focus on driving retail sales with more intensive marketing activities.  Hankook Tire’s reputation for providing high quality, high performance tires continues to grow both within the OE market, where we are partnering with some of the world’s leading automakers, and also within the retail market.”

The increase in cost of sales was driven by a 4.5% increase in raw material costs, including an increase in price of natural rubber from US$1,733 per ton in April 2007 to US$1,967 per ton in June 2007, a total increase of US$234 per ton within the quarter. 

Consolidated operating profits increased by 9.9% year-on-year to KRW81 billion (US$87.2 million). Sales, general and administrative expenses increased by 23.4% reflecting continued facility investment including the development of Hankook Tire’s first European factory in Hungary, which began production in June.

Mr. Cho continued, “Hankook Tire remains on track to meet our targets this year.  Our expanding global presence, especially in China and Europe, provides us with a strong base for expanding both sales and the reputation of the brand.  Investment in R&D remains a key driver of long term competitive advantage, but it is our ability to effectively manage increased costs through internal efficiencies and solid pricing strategies that enables to maintain profitability in the short to mid term.”

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* According to Modern Tire Dealer (Jan. 2007), Hankook Tire’s 20% growth rate was the joint highest of all top eleven global tire manufactures

2007 Consolidated Profit (KRW)

 


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