April 19, 2024

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[THE INVESTOR] Hankook Tire’s earnings in the fourth quarter last year have fallen significantly said Korea Investment and Securities on Jan. 19, lowering the target price to 72,000 won (US$67.29) from 90,000 won. 

Dragged down by the rising costs and heightening competition, its operating profit will come in at 181.8 billion won, missing market consensus by more than 12 percent, said analyst Kim Jin-woo.

The cost of initiating operations of its Tennessee plant continues to weigh it down, and an accident has set back the operations of its domestic plant for two weeks, according to the analyst. 

Rubber prices spiked in the fourth quarter in 2016 but have been weak in the fourth quarter last year, as the tire industry has been slow, explained Kim.

Hankook Tire is showing strength in China, Europe and other emerging markets, but the slow demand from the US, its most profitable market, is denting its overall profits. Its rivals’ aggressive marketing in domestic market is hurting it as well, pointed out the analyst. 

By Hwang You-mee (glamazon@heraldcorp.com)