'Tire Industry's Strong Performance in First Half, Optimism for Good Results in Q3'

Continued Improvement in Replacement and New Car Tire Sales Due to Increased Vehicle Demand in Q3
Variables Include Container Shortage and Increased Shipping Costs

[Asia Economy Reporter Ki-min Lee] The tire industry, facing a triple burden of export shipment disruptions, raw material price increases, and the U.S. anti-dumping tax decision, achieved strong performance in the first half of this year, and it is expected to continue this trend into the third quarter.

According to the tire and securities industries on the 29th, the performance of the three domestic tire companies?Hankook Tire, Kumho Tire, and Nexen Tire?significantly increased compared to the first half of last year.

First, Hankook Tire recorded sales and operating profit of 3.4231 trillion KRW and 373 billion KRW in the first half of this year, up 22.2% and 111.9%, respectively. Kumho Tire posted sales of 1.2193 trillion KRW and operating profit of 11.8 billion KRW in the first half of this year. Sales increased by 27.5% compared to the same period last year, and it turned a 53.8 billion KRW loss in the first half of last year into a profit. Nexen Tire also achieved sales and operating profit of 999.3 billion KRW and 25.6 billion KRW, up 55.7% and 782%, respectively, compared to the same period last year.

This is analyzed to be due to a surge in vehicle demand compared to last year, which increased sales of new car (OE) tires and replacement (RE) tires. In particular, the increase in the proportion of high-inch tire sales by domestic tire companies due to the surge in demand from major countries also influenced the improvement in operating profit. For Hankook Tire, the sales proportion of tires 18 inches or larger in the European and Chinese markets increased by 6 percentage points and 8 percentage points, respectively. Kumho Tire also recorded a 41% sales proportion of high-profit products 18 inches or larger this year, up 7.6 percentage points compared to the same period last year. Additionally, favorable factors accumulated, such as a 71% surge in European sales and a 35% increase in North American sales.

Moreover, except for Nexen Tire, the final tariff rates related to U.S. anti-dumping duties for the other two companies were somewhat lowered, reducing the burden slightly. Hankook Tire’s tariff rate was adjusted down from 38.07% to 27.05%, and Kumho Tire’s from 27.8% to 21.7%.

Performance improvement is expected to continue in the second half of the year. Globally, demand for used cars is increasing, and global automakers are steadily launching new cars through the second half of this year, so demand for both RE tires and OE tires is rising. In particular, automakers are announcing a series of electric vehicle launches in the second half of this year, so sales of high-performance tires, which guarantee high profits, are also expected to increase.

However, some in the industry see that rather than the U.S. anti-dumping tariff rates or raw material price increases, the shortage of shipping space and rising shipping costs will be variables affecting profitability in the third quarter. Hankook Tire, the top domestic tire company, temporarily suspended production at its domestic factories three times last month due to the inability to secure export vessels. An industry official expressed concern, saying, "Although there was strong performance in the first half of this year, if the shipping issue is not resolved, profitability could be lower than initially expected."

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