Hankook Tire Q4 net nearly halves on chip shortage, higher costs

Hankook Tire & Technology Co. said Friday its fourth-quarter net profit plunged 48 percent from a year earlier due mainly to global chip shortages and higher raw materials prices.

Net profit for the three months ended in December fell to 78.57 billion won (US$66 million) from 149.94 billion won a year ago, the company said in a statement.

“A combination of chip shortages, higher raw material and logistics costs weighed on the quarterly bottomline,” a company spokesman said.

Operating profit also plummeted 61 percent to 87.97 billion won in the December quarter from 227.45 billion won a year ago. Sales rose 7 percent to 1.89 trillion won from 1.77 trillion won in the same timeframe.

Reduced tire supplies to Hyundai Motor Co. and other carmakers drove down the quarterly operating profit as they suffered disrupted vehicle production due to semiconductor shortages.

“The operating result was also affected by 24 days of general strikes in the company’s two main plants in Daejeon and Geumsan during the fourth quarter,” he said.

For all of 2021, net income jumped 56 percent to 600.54 billion won from 385.20 billion won the previous year on increased sales of high-end tire products.

Full-year operating profit rose 2.2 percent to 641.85 billion won from 628.27 billion won during the cited period. Sales climbed 11 percent to 7.14 trillion won from 6.45 trillion won.

Hankook Tire, the world’s sixth-biggest tiremaker by sales, earns over 80 percent of its total revenue abroad. It has eight plants — two in South Korea, one in Hungary, one in the United States, three in China and one in Indonesia — whose combined capacity reaches 102 million tires per year.