Hankook Tire & Technology posted an operating margin of more than 17% in its core tire business in the second quarter, as strong sales of high-inch and electric vehicle tires in Europe and China pushed tire division sales to an all-time quarterly record of more than 2.8 trillion won ($1.98 billion). Consolidated operating profit, including subsidiary Hanon Systems, rose 58% from a year earlier.
The company disclosed Tuesday that consolidated second-quarter sales reached 5.68 trillion won, up 5.8% from the same period last year. Operating profit came in at 559 billion won, a 58.1% increase over the same period. Compared with the previous quarter, sales grew 6.9% and operating profit rose 10.3%. The consolidated operating margin stood at 9.8%.
Profitability improvement in the tire division was particularly notable. Tire segment sales reached 2.81 trillion won, up 11.8% from a year earlier and the highest quarterly figure in the company's history. Operating profit grew 39.5% to 483.2 billion won, and the operating margin expanded 3.4 percentage points to 17.2%, from 13.8% in the second quarter of last year.
Growth in original equipment tire supply to automakers in Europe and China, combined with solid replacement tire sales, drove the strong results. In China, replacement tire demand for electric vehicles picked up notably as cars sold during the initial EV adoption wave began reaching their first tire-change cycle.
The share of higher-margin products also expanded. High-inch tires of 18 inches or larger accounted for 49.5% of passenger car and light truck tire sales in the second quarter, while EV-dedicated tires made up 31.8% of original equipment passenger car and light truck tire sales — approaching the company's full-year targets of 51% for high-inch tires and 33% for EV-dedicated tires.
Hankook Tire has been increasing its supply of original equipment tires to premium automakers to raise the share of high-value-added business. In the second quarter, it expanded OE tire supply to models including the Porsche 911 Carrera, the Audi Q7 and Q9, and the Infiniti All New QX65. More recently, it began supplying its EV-dedicated iON tire to BMW's flagship electric sedan, the i7.
Hanon Systems also contributed to the consolidated results. The thermal management unit posted second-quarter sales of 2.88 trillion won, up 0.6% year on year, while operating profit surged 61.2% to 103.7 billion won. Its operating margin was 3.6%, and net profit for the period returned to positive territory.
Hankook Tire plans to continue raising the share of high-value-added products, including its EV-dedicated iON brand, and to expand original equipment tire supply to global automakers. The company also intends to broaden its local supply base in North America and Europe by scaling up its factory in Tennessee and its plant in Hungary, positioning itself to meet rising OE tire demand.
kwater@heraldcorp.com
