SEOUL, South Korea—Hankook Tire & Technology Co. Ltd.'s Board of Directors has authorized a plan to buy back up to $43 million of the company's stock and boost the stock dividend in an effort to enhance shareholder value.
The buyback initiative is part of strategy that includes "diverse measures to protect shareholder rights and enhance their value," the company said.
Among specific actions the board authorized are:
- a 22 percent increase in the Hankook Tire dividend payment, to about 47 cents per share;
- the sale of "idle properties," including the site for Busan Yeongdo Island logistics center, and use the funds secured "to secure new growth engines"; and
- expansion of investment in the development of tires for new vehicles and other goods and in strengthening their supply capacity.
The Hankook board stressed that the company, with a AA credit rating, has a stable cash flow that allows it to direct most of the firm's investments into facility investment. In addition the company is able to repay loans through internally generated cash flow.
Looking ahead, Hankook said it plans to integrate into its organizational culture the "pursuit toward a sustainable growth made possible through expansion of the win-win management system with business partners and establishment of a Jeongdo (meaning right path) management committee."
From an operational point of view, the company said it plans to strengthen its primary competitiveness by innovating business processes across all areas, including product development, supply-chain management, marketing and sales.
In particular, it will expand investment toward developing tires for new vehicles and other goods and strengthening the supply capacity, as well undertake initiatives toward securing additional distribution channels both domestically and globally (especially in the U.S. and Europe) in order to achieve sales growth and improve market share and profits.
In terms of the current fiscal year, Hankook Vice Chairman Hyun Shick Cho said:
"Although a short-term revenue loss will be inevitable as Europe and the U.S. as well as the global automobile industry is facing a difficult situation due to shutdown of factories and distribution channels caused by the spread of COVID-19, reduction of demand, etc., we will be fully prepared in advance to turn the situation around immediately after the end of the outbreak.
"We will continue to innovate within our existing business area and look for new investment or M&A opportunities based on our superior financial structure to strengthen both our primary and future competitiveness. This will in turn further increase shareholder value."
Hankook has as yet not reported any changes to its manufacturing operations due to the COVID-19 pandemic.