SEOUL, South Korea (June 17, 2005) — Despite a 6.3-percent increase in sales in the first quarter, Hankook Tire Co. Ltd. saw operating profit slide 2.4 percent on the negative effects of higher raw materials costs and foreign currency translation losses.
Seoul, South Korea-based Hankook's sales grew to $464.1 million during the quarter on the strength of 10.3-percent higher tire export revenue, the company reported. Operating profit slid to $66.7 million, but net earnings rose 4 percent to $55.3 million.
During the quarter, spending on raw materials rose, including a 31-percent jump in synthetic rubber costs and a 15-percent hike in steel cord prices.
The firm did not elaborate on its sales performance, other than to say sales of ultra-high-performance tires rose 59 percent in the period, accounting for $67.1 million in sales, or 14.5 percent of total sales.
Separately, Hankook Tire's China operations reported a 26.4-percent jump in operating earnings, to $18.4 million, on 16.1-percent higher sales of $117.7 million.
Hankook's first quarter performance is in line with the company's forecast for fiscal 2005, according to the tire maker's 2004 annual report.
Coming off record export sales in 2004, Hankook said it expects exports—especially those of ultra-high-performance tires—to spur sales growth of about 8 percent in 2005 as domestic sales growth slackens.
In 2004, Hankook reported a 32.2-pecent jump in operating profit to $195.7 million on the strength of high-margin ultra-high-performance sales, the rise in average selling prices and a stronger-than-expected Korean won/U.S. dollar exchange rate.
Sales jumped 20.2 percent last year to $2.1 billion, buoyed by 21-percent higher export sales, including 28.9-percent higher sales in North America and 66.5-percent growth by the firm's Chinese subsidiaries.