SEOUL, South Korea (Aug. 1, 2008) — Hankook Tire Co. Inc.'s earnings dipped slightly in the second quarter because of rising raw material costs and higher advertising/promotion expenses, the firm said, despite record sales.
Hankook posted a 2.4-percent drop in second quarter operating earnings, to $75.9 million. Sales revenue rose 27.5 percent to $1.07 billion on the strength of higher sales of high-performance tires, higher selling prices and a weakened Korean won, Hankook said.
For the first half, operating income was unchanged at $146.9 million, while sales were up 6.9 percent to $1.93 billion.
The tire industry is facing increased pressure from year-on-year raw material cost increases of nearly 25 percent, Hankook said. This is putting pressure on all tire makers to increase their prices with more than half of the cost of production based on raw material costs.
Hankook said sales of high-performance tires grew 67 percent during the quarter, accounting for more than 10 percent of the firm's sales. European market sales grew 30 percent while North American sales increased 15 percent.
Sales to other export markets increased 39 percent, while sales to growing markets in Europe such as Russia more than doubled.
In addition to performance tires, Hankook is counting on its development of more fuel-efficient tires to help drive growth, according to CEO Seung Hwa Suh.