[Click eStock] "Kumho Tire, Forecasts Record High Operating Profit This Year"

KB Securities forecasted on the 18th that Kumho Tire will record its highest-ever operating profit this year.

Kim Hyun-gyeom, a researcher at KB Securities, stated in a report on the same day, “Kumho Tire is expected to achieve sales of 4.05 trillion KRW and an operating profit of 382 billion KRW this year, representing increases of 13.8% and 1554% respectively compared to the same period last year,” adding, “Through price hikes and stabilization of raw material and logistics costs, it is expected to set a new record for the highest operating profit.”

He also predicted that various positive factors will continue next year. Researcher Kim analyzed, “The Vietnam plant’s capacity expansion will be completed from 6 million units last year to 12.5 million units by the end of this year,” and “The Vietnam plant mainly exports to the Americas, allowing avoidance of anti-dumping tariffs, and with low labor costs, profitability improvement can be expected.”

Furthermore, he explained that mid- to long-term profit growth is anticipated due to the decline in logistics costs. He said, “The world’s largest shipping company, Swiss MSC, and the second-largest, Danish Maersk’s shipping alliance ‘2M’ will dissolve as of January 2025, and the ‘Ocean Alliance’ contract will end in 2027, signaling major upheavals in the shipping industry,” adding, “Currently, global shipping companies are aggressively expanding their fleets using record profits from the COVID-19 period. A chicken game is likely to occur in the future, and logistics costs are expected to stabilize for a considerable period.”

The profitability is expected to strengthen with the increased proportion of high-inch (18 inches or more) tires. He explained, “The proportion of high-inch tires is estimated to have increased from 36.4% in Q1 to 39.0% in Q4,” and “In the short term, the expansion of SUVs and, in the mid- to long term, the growth of the electric vehicle brand ‘Inob’ are expected to expand the proportion to around 50% by 2025, leading to an increase in the average selling price (ASP).”

Finally, he analyzed that the asset value of the Gwangju plant will also be highlighted with the full-scale development of the Gwangju Songjeong Station area. He added, “The PF consortium related to the relocation of Kumho Tire’s Gwangju plant is being reorganized. With the expansion construction of the Gwangju Songjeong Station building near the Gwangju plant starting at the end of this year, discussions on the development of the station area are becoming active. Attention should be paid to the possibility of asset value appreciation due to the renewed push for plant relocation.”

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