SEOUL, South Korea — Nexen Tire Corp. posted a 52.2% increase in first quarter pre-tax operating earnings (EBITDA) to $48.5 million on 6% higher sales of $481.6 million.
Seoul-based Nexen, the world's No. 18 tire maker, linked the earnings improvement to "minimizing off-season impact," despite increases in the cost of raw materials and freight. Revenue growth was achieved through "stable sales volume" with average selling prices showing "settled earning capability," Nexen said.
The improvement in EBITDA raised the operating ratio four-plus points to 14.5%. Net earnings more than tripled to $29.4 million.
In terms of regional performance, the European Union contributed most to sales, with 36% of overall revenue coming from the bloc, ahead of North America, which accounts for 26% of global sales.
First quarter sales in the EU grew 8.5% to $172 million, the tire maker reported, based in large part on growing replacement market demand for larger rim-diameter and all-weather tires. Original equipment-related revenue was stable, Nexen said, through portfolio optimization and despite disruptions in the automotive supply-chain due to the Red Sea crisis.
Nexen said it expects its sales in the region to grow gradually as it ramps up production at its 5-year-old factory in Zatec, Czech Republic, where the full impact of a recent expansion — designed to double annual capacity to 11 million units — is expected to come on stream in early 2025.
First-quarter revenue in North America was up 8.5% over the 2023 period to $83.8 million, Nexen said, noting that the OE segment continued to supply "on the confirmed order volume," which helped offset the impact of temporary closures and production cuts by a major customer.
Delivery issues and bad weather in January impacted the replacement segment, though Nexen said it is keeping sales "stable." The firm also is continuing efforts to improve sales-mix after a temporary decline in the proportion of larger tire sales.
The company did not comment on progress toward choosing a site for its planned U.S. factory. The firm said a year ago it expected to have a site for a U.S. plant selected by the second half of 2023, but has yet to disclose any progress on this front.
At that time Brian Yoonseok Han, CEO of Nexen Tire America Inc., said the firm was evaluating sites in Southeastern U.S. states for the plant.
Sales in Korea were flat at $79.5 million, as the tire maker aims to "proactively respond" to growing market demand for electric-vehicle tires.
Other regions, including China and the Middle East, saw a 2.7% year-on-year growth in revenue, as demand
