According to industry sources on May 11, the three major South Korean tire companies—Hankook Tire & Technology, Kumho Tire, and Nexen Tire—saw improvements in their financial performance for the first quarter. Hankook Tire's operating profit in its tire division reached 437.5 billion won, a 31.1% increase compared to the same period last year. Kumho Tire and Nexen Tire reported operating profits of 147 billion won and 54.2 billion won, respectively, marking increases of 0.3% and 33.1% year-on-year.
The three tire manufacturers achieved relatively stable results, bolstered by increased sales of electric, high-inch, and replacement tires. Analysts attribute this improvement to a strategy focused on expanding premium product sales amid a market shift toward SUVs and electric vehicles. In fact, for the first quarter, the sales proportion of high-inch tires (18 inches and above) was 49.1% for Hankook Tire, 45.1% for Kumho Tire, and 40% for Nexen Tire.
Despite the first-quarter gains, trade risks for the tire companies are escalating. The EU recently announced it would impose anti-dumping duties of up to 50% on passenger and light truck tires produced in China, effective June 16. Kumho Tire and Nexen Tire have been notified of anti-dumping duty rates of 29.9%. When combined with the existing EU import duty of 4.5%, the actual burden could reach as high as 34.4%. In contrast, Hankook Tire will face a relatively lower anti-dumping duty rate of 3.4%, resulting in a total tariff of 7.9%. Kumho Tire and Nexen Tire plan to seek a reduction in their duty rates through appeals before the tariffs take effect.
An industry insider noted, "The remaining companies, excluding Hankook Tire, have been subjected to an average duty rate. We are exploring ways to mitigate tariff impacts, including increasing local production and filing appeals."
Approximately 40% of the total sales for the three domestic tire companies come from the European market. Notably, about 50% of Kumho Tire's sales in Europe are produced locally in China, while Nexen Tire sources around 15% of its European tires from China.
In addition to the anti-dumping duties, raw material prices for tires in China are also on the rise. According to data from the Chinese raw materials data firm Sunsear, the price of styrene-butadiene rubber reached 16,041 yuan per ton as of May 10, up 22.2% from 13,125 yuan on March 9. As a result, the three domestic tire manufacturers are considering strategies to gradually increase their domestic and European production volumes while boosting the export share of their domestic output.
Industry analysts predict that the combination of tariff burdens and rising costs could lead to greater variability in corporate performance in the second quarter. According to financial information provider FnGuide, Kumho Tire's second-quarter operating profit consensus is projected at 145.6 billion won, a 16.9% decrease from 175.2 billion won in the same period last year. Conversely, Hankook Tire's operating profit is expected to rise to 549.3 billion won, a 58.5% increase year-on-year, while Nexen Tire's operating profit is projected to reach 48.3 billion won, an approximate 13% increase.
* This article has been translated by AI.
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