[Click eStock] "Kumho Tire, Continued Cost Reduction Effects"

[Asia Economy Reporter Hyungsoo Park] KB Securities forecasted on the 5th that Kumho Tire will continue its operating profit surplus trend through cost reduction measures such as controlling cost of goods sold and selling and administrative expenses.

Researcher Byunghwa Lee of KB Securities stated, "The reason operating profit turned positive last year was due to the reduction of cost of goods sold and selling and administrative expenses," adding, "Intensive restructuring, favorable exchange rates, and procurement cost reduction through joint raw material purchasing with Double Star were effective activities for improving profitability."

He continued, "This year, an increase in the operating rate of the Chinese factories is also expected," analyzing that "the average operating rate of the three Chinese factories is around 60%, which is lower compared to 70% in Korea and 90% in Vietnam."

Furthermore, he emphasized, "The Chinese factories are accelerating normalization by achieving an annual cost reduction effect of 50 billion KRW through joint raw material purchasing with Double Star, establishing a stable dealer network, and unveiling four new China-specific products."

However, the researcher noted, "There is a possibility of a decrease in OE tire orders due to sluggish demand in the finished car market," and "the downturn in the Chinese automobile market also acts as a burden factor."

This content was produced with the assistance of AI translation services.