SEOUL, South Korea — Hankook Tire & Technology Ltd. reported a 22.7% drop in operating income for the fiscal year ended Dec. 31 on 1.5% higher sales.
Hankook cited the "intensified global tire market competition" due to slowing demand from the global automotive market and uncertainty stemming from trade disputes for the earnings decline.
In order to reverse the negative earnings trend, Hankook said it plans to focus on enhancing its premium image by increasing sales of larger diameter tires in major markets, supplying OE tires for premium cars, and strengthening competitiveness in its product lines.
More specifically, the company said it plans to focus on enhancing competitiveness by building a "stable growth structure" through securing new distribution channels and strengthening synergies between the original equipment and replacement sectors and "optimizing" distribution strategies by region.
For the year, operating earnings fell to $464.7 million on sales of $5.9 billion, or an operating ratio of 7.9%, down more than two full points from 2018.
Hankook said sales of larger rim-diameter (over 17 inches) tires — driven by strengthened SUV tire competitiveness in the OE sector — increased 3.1% over 2018 and now account for 55.4% of global revenue.
Specially, Hankook pointed to new OE supply deals with German car makers Audi A.G. and Porsche A.G. for their Q8/SQ8 and Cayenne models, respectively.
In the fourth quarter, operating profits fell 19.9% to $99.5 million on 2.7% lower sales of $1.44 billion.