SEOUL, South Korea—Heavy investments by new parent Heung Ah Corp. in struggling Woosung Tire Corp. are starting to pay off for the South Korean tire maker. Woosung's debt-to-equity ratio has been slashed to below 100 percent, and the company reported profits of $3.6 million in the first six months of 1999—the first net earnings in nearly a decade, company officials said.
Woosung's reviving fortunes may be aided further if Heung Ah, the world's largest inner tube maker, can forge a technical assistance agreement with a foreign company.
Heung Ah is not looking for capital participation, but hinted at the possibility of signing an original equipment agreement should a strategic alliance be formed, a financial spokesperson said.
Two capital infusions by Heung Ah since the May takeover were conducive to Woosung being released from court control, and its stock prices have the potential of rising 50 to 100 percent, analysts said.
Woosung derives about 80 percent of its sales from exports. It has about a 10-percent share of the South Korean domestic market. Kumho Tire Co. Ltd. and Hankook Tire Co. Ltd. dominate that market with 40-percent shares each.
Besides inner tubes, Heung Ah makes and exports golf balls, recycled tires and solid tires for forklifts and heavy-duty equipment. Its sales revenues totaled $100 million last year with net profits of $11 million.
Heung Ah owns a 60.7-percent share of Woosung, with a U.S. investment company holding a 20.2-percent share.