SEOUL, South Korea — Hankook Tire & Technology Co. Ltd. reported double-digit declines in operating income and sales for the quarter ended March 31. The company attributes this to a sharp drop in demand caused by the worldwide economic slowdown due to the COVID-19 pandemic and lower consumer sentiment.
Operating income dropped 24.8% to $88.6 million on 12.6% lower sales of $1.2 billion, cutting the operating ratio nearly 1½ points to 7.3%. The falling demand was seen in both the original equipment and replacement markets, Hankook said.
The Seoul-based company also cited costs associated with having to adjust the operating status of its various plants worldwide. The company idled its plant in Dayton, Tenn., for three weeks in March and April, for example, and furloughed operations at its Racalmas, Hungary, factory for at least two weeks in late March/early April.
It did not comment on measures taken at plants in Korea or China.
On a positive note, Hankook said sales of larger rim-diameter tires, those 18 inches and larger, accounted for a larger percentage of its overall tire sales — 33.7% in 2020 versus 31% in 2019. Hankook pointed to the "stable" growth in demand for these higher-value-added products in North America, China and Korea for allowing it to consolidate its premium-brand image.
The company said it would seek to "further solidify" its standing as a premium brand by expanding sales of such tires in major markets, increasing its supply relationships with makers of premium cars and strengthening product competitiveness.
Specific initiatives cited by Hankook to accomplish its goals include building a more diversified product portfolio and expanding its global production and distribution networks.