South Korean tiremaker Nexen Tire reported record quarterly sales of 804.7 billion won ($579 million) for the second quarter, though operating profit remained largely unchanged at 42.6 billion won ($30.6 million) as cost pressures offset revenue gains.
The tire manufacturer achieved its second consecutive quarter of record revenue, driven primarily by expanded production capacity at its Czech Republic facility and regional sales strategies. However, the company’s margins tell a different story, with operating profit essentially flat from the previous quarter despite the 4.3% revenue increase from Q1’s 771.2 billion won.
Ocean freight costs provided some relief, but elevated raw material prices from late 2024 continued pressuring profitability. The company expects input costs to decline in the second half, potentially boosting margins.
Nexen secured key supply volumes in advance and expanded original equipment tire supply to 11 vehicle models in the first half, including Hyundai and Kia electric vehicles. The company’s European operations, bolstered by the Czech plant’s second phase, continued driving growth while U.S. sales recovered from a 2024 slowdown.
Despite management’s optimistic outlook, investors may question whether the company can translate its volume gains into meaningful profit improvements given persistent cost headwinds across the tire industry.
