Car production decline drags down Hankook sales, earnings

SEOUL, South Korea—Hankook Tire & Technology Co. Ltd. suffered drops in operating income and sales for the quarter ended Sept. 30, dragged down in part by the global decline in car production.

Pre-tax operating profit for the company's third quarter fell 13.8 percent to $283 million on 3 percent lower sales of $1.58 billion, yielding an operating ratio of 17.9 percent, down two points from the 2020 period.

Hankook linked the decline to a slowdown in the global production of cars "in the midst of key parts shortage, including semiconductors." Challenges, it said, were further escalated by the global supply chain crisis and increased raw materials costs.

However, Hankook said it delivered "a meaningful quarter," showing further recovery from the previous quarter.

Over the three-month period, sales of larger rim-diameter tires (18 inches and up) accounted for 36.4 percent of passenger car tires sold, up 2.4 percentage points year-on-year.

In particular, Hankook said large-rim tires performed stronger than last year in key markets such as South Korea, China, Europe and North America.

For the nine months ended Sept. 30, Hankook reported a 19.2-percent rise in EBITDA to $859.5 million on 12.1 percent higher sales of $4.53 billion. The operating margin rose slightly to 19 percent.

Hankook's business in North America was a mixed bag—sales down 3.3 percent in the quarter to $425 million but up 16 percent through nine months to $1.21 billion.

Hankook is targeting sales of $6 billion for the fiscal year—up 8.5 percent over 2020 as well as 1.7 percent ahead of 2019—driven by increased larger-rim tire sales in major markets, expanding OE partnerships with premium car makers as well as securing "leadership" in the electric vehicle tire sector.