Hankook Tire & Technology reported first-quarter operating profit fell 16.3% in its core tire business as rising raw material costs and higher ocean freight rates squeezed margins despite sales growth.
The South Korean tiremaker posted consolidated sales of 4.96 trillion won ($3.42 billion) and operating profit of 354.6 billion won ($244.1 million) for the quarter ending March 31. These results include Hanon Systems, a thermal management solutions provider acquired in January, which contributed 2.62 trillion won in sales but just 20.9 billion won in operating profit.
Stripping out the acquisition, Hankook’s tire segment saw sales rise 10.3% year-over-year to 2.35 trillion won while operating profit declined to 333.6 billion won.
The company has continued expanding its high-value product lineup, with 18-inch and larger tires now accounting for 47.1% of passenger car and light truck tire sales. China leads this premium segment at 64.7%, followed by Korea at 58.5%.
Hankook is betting heavily on electric vehicles, with EV-dedicated tires now representing 23% of original equipment sales for passenger cars and light trucks, up from 17% a year earlier. The company supplies tires to major EV manufacturers including Tesla, BYD, and Lucid.
Despite these growth areas, the tiremaker faces significant cost headwinds that could continue to pressure margins as global economic uncertainties persist.
