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Nexen Tire Consolidates European Operations into Czech Hub

In a strategic move, Nexen Tire merges its European subsidiaries to enhance efficiency and bolster its market presence in the region
South Korea
n 002350.KO Mid and Small Cap 2000
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Nexen Tire is taking a significant step to streamline its European operations by consolidating its bases in the Czech Republic, Germany, and Italy into a unified Czech entity. This consolidation is part of the company’s broader strategy to enhance operational efficiency and strengthen its market foothold in Europe, particularly after facing operational challenges in the United States and the Czech Republic last year.

The decision, endorsed by a board resolution, involves the transition of the German and Italian subsidiaries’ operations to the Czech Republic, with the former entities now in the process of liquidation. This move is expected to unify Nexen Tire’s European market operations, leveraging the recently expanded Czech manufacturing facility, which saw an investment of 1.2 trillion won (US$895.19 million).

Industry analysts suggest that the consolidation is a tactical response to revitalize sluggish sales in the region and capitalize on the Czech factory’s expanded capabilities. The strategic alignment with the Czech plant’s expansion signifies Nexen Tire’s commitment to optimizing its European market strategy and addressing the operational deficits encountered in its Czech and U.S. subsidiaries.

Despite a profitable year overall, with a net gain of 103.1 billion won, the company’s Czech and U.S. branches experienced financial downturns, with the U.S. subsidiary shifting from a profit to a 15.3 billion won loss and the Czech counterpart also registering losses.

Optimism remains for Nexen Tire’s rebound in the Czech Republic and the United States, fueled by the Czech plant’s full-scale operations and potential tariff adjustments in the U.S., which could alleviate the financial strains from previous anti-dumping tariffs.

Looking ahead, Nexen Tire is focused on enlarging its global footprint, particularly in North America, with plans to invest US$1.3 billion in a new factory situated in one of the southeastern states, aiming for a launch between 2028 and 2029. This expansion aligns with the company’s goal to augment sales in international markets and ensure sustained growth.

In the previous fiscal year, the Czech subsidiary emerged as the top performer among Nexen Tire’s overseas branches, recording sales of 799.7 billion won, closely followed by the U.S. subsidiary’s 774.6 billion won. Together, these subsidiaries represent a significant portion of Nexen Tire’s global sales, highlighting the critical role of international operations in the company’s overall business strategy.

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