SEOUL, South Korea (Jan. 29, 2007) — Hankook Tire Co. Inc. is forecasting 23-percent growth in global sales this year, to $3.6 billion, as its Chinese subsidiaries ramp up operations and its new Hungarian tire plant comes on stream later this year.
Sales of $3.6 billion could propel the Seoul-based tire maker past Japan's Yokohama Rubber Co. Ltd. as the world's seventh largest tire maker, based on Yokohama's 2006 sales and forecasts.
The double-digit jump in sales would come largely from the growth of its operations in China—which could exceed $1 billion in sales alone—and initial contributions from the firm's new factory in Hungary, where production could be on stream by mid-year.
Hankook also forecast an operating profit of $340 million (9.4 percent of sales) and net income of $209 million (5.8 percent of sales) but did not provide comparable 2006 data for its global operations.
Hankoook officials said “uncertainity looms over the supply and price of raw materials such as natural rubber in the year ahead,” but that the tire maker will overcome that environment with active marketing, expanding sales of OE tires to premium auto makers and innovating management.
In 2006, Hankook reported 10.4-percent sales growth to $2.17 billion for its domestic operations in South Korea. Operating profit for the domestic activities fell 18.9 percent to $182.7 million (or 8.4 percent of sales), and net income fell 16.3 percent to $174.6 million.
Hankook blamed the earnings decline on higher raw materials costs, saying the prices it paid for natural rubber, carbon black and synthetic rubber were up last year by 52, 27 and 6 percent, respectively.
Hankook is forecasting 13.8-percent better sales this year for its domestic unit, with operating earnings improving by as much as 65 percent over the lowered 2006 performance.