Hankook is reporting a 67 percent increase in sales of its ultra-high performance tires. The company’s yearly global sales growth amounted to 27.5 percent, posting an 11.5 percent rise in the second quarter.
A 7.1 percent profit margin was recorded on sales of $1.09 billion during the accounting period, representing a 2.4 percent decline in annual profits because of increases in raw material costs and accelerated investments in advertising and promotions. The company launched its largest-ever worldwide television advertising campaign, airing in seven major markets.
Citing strong ongoing demand for Hankook’s “high-end tire technology,” income was boosted in part due to a weakened Korean won and an increase in tire prices, according to CEO Seung Hwa Suh.
“The tire industry is facing increased pressure from a 24.3 percent year-on-year raw material cost increase; the cost of natural rubber alone increased by 40.5 percent year-on-year. This is putting pressure on all tire makers to increase their prices with more than 50 percent of the cost of tire production based on raw material costs,” says Suh.
“The tire industry continues to be fiercely competitive, and rising oil prices are also affecting consumers’ purchasing intentions and decisions throughout the world,” he continues. “The industry is closing in on a significant crossroad where leading next-generation tire manufacturers, like Hankook Tire, with increasing reputations for quality and technology coupled with relatively more affordable prices, have an opportunity to continue to gain further market share.”
In spite of these challenging market conditions, he notes, sales remain strong throughout key regions and within the company’s key business units, and were not affected by price increases made in the second quarter.
“Thanks to a consistent focus on quality and fostering stronger ties with retail channels,” says Suh, UHP tires brought in $114.2 million. UHP tire exports from South Korea grew by 48.5 percent. Headquartered in Seoul, Hankook ships its tires to 185 nations.
The company’s European market saw a 30 percent rise in sales, while North America obtained a 15 percent increase.
Sales to other markets such as Latin America, Asia Pacific, Africa and the Middle East rose by 39 percent; Russia’s figures were up 139 percent.
“Sales continue to increase because more and more informed consumers place trust in the quality of and technology within our tires,” Suh says. “The focus on fuel-efficient tires that help consumers reduce both energy consumption and CO2 emissions is being spurred on by the rise in oil prices,” he explains, adding that “we will continue to focus and invest further in more environmentally-friendly tire technology.”
Its April launch of Kontrol Technology at Auto Beijing is described by Suh as “a program which will help customers understand the advanced technology in the company’s tires.”
For more information, visit www.hankooktire.com.
