![A view of Hankook Tire & Technology's headquarters, Technoplex [Hankook Tire & Technology]](https://wimg.heraldcorp.com/news/cms/2026/07/21/news-p.v1.20260721.70701302c6f8416ba60e1afcdaf4533b_P1.jpg)
Hankook Tire & Technology has turned a corner on profitability. Having converted US and EU tariff barriers into a competitive advantage, the company is expected to accelerate the earnings growth that stalled last year, driven by rising sales of EV-dedicated and high-inch tires.
According to FnGuide, the average second-quarter tire segment earnings forecast for Hankook Tire compiled from major domestic brokerages over the past month projects sales of 2.77 trillion won ($1.87 billion) and operating profit of 446.7 billion won — up 10.3 percent and 28.9 percent, respectively, from the same period last year. The operating profit margin is expected to rise 2.3 percentage points to 16.1 percent, from 13.8 percent in the second quarter of last year.
In last year's second quarter, tire segment operating profit fell 17.5 percent year-on-year to 346.4 billion won, as gains from higher-value product sales were offset by rising raw material costs, freight charges and US tariff pressures. This year, however, profitability is recovering quickly, aided by price increases, an improved product mix and easing tariff headwinds.
Hankook Tire is expected to maintain the highest operating profit margin in the global tire industry this year. Its tire segment operating margin stood at 17.9 percent last year, well ahead of Pirelli at 16.0 percent, Michelin at 11.3 percent and Goodyear at 5.8 percent.
Hankook Tire has sustained a top-tier operating margin since the early 2000s, though profitability dipped temporarily in the second quarter of last year under the combined pressure of higher raw material costs, freight charges and US tariffs. In this year's second quarter, the margin is expected to recover to the 16 percent range, supported by price increases, a higher share of premium products and tariff mitigation measures.
Europe leads growth, high-inch tires push margins, price hikes add fuel
The earnings improvement reflects a convergence of factors: top-line growth centered on Europe, a higher share of premium products, price increases and favorable exchange rates. By region, second-quarter tire sales are expected to show a slight contraction in the domestic market, while Europe and China are each forecast to post double-digit growth, driving the overall improvement.
"Second-quarter European sales are projected to reach 1.29 trillion won, up about 23 percent year-on-year, leading overall top-line growth," said Lee Byeong-geun, an analyst at LS Securities. "Expanded sales in Europe, combined with the currency tailwind from a stronger dollar and euro, will improve both won-denominated revenue and profitability."
A shift in product mix has also contributed to the margin gains. Hankook Tire has consistently raised the share of tires 18 inches and above — products that carry higher unit prices and margins. By growing the premium segment rather than simply increasing volume, the company has built a structure in which profit growth outpaces revenue growth.
Price increases have further reduced cost pressure. Hankook Tire raised prices by about 3 percent in Europe and South Korea earlier this year, with additional increases of 2 to 3 percent expected in the second half across Europe, China, South Korea and North America. The company has secured sufficient pricing power to pass raw material cost increases on to customers.
![Hankook Tire & Technology's EV-dedicated all-season tire 'iON FlexClimate' [Hankook Tire & Technology]](https://wimg.heraldcorp.com/news/cms/2026/07/21/news-p.v1.20260713.0aa46031b47847588272b3a4aca837d9_P1.jpg)
Hankook Tire clears tariff hurdles — advancing in Europe, holding ground in the US
Tariffs, which weighed on profitability last year, are expected to become a springboard for growth from the second half of this year. The tariff barriers that impose a cost burden on rivals could instead give Hankook Tire an opportunity to sharpen its price competitiveness and broaden its sales base, analysts say.
The EU has imposed tariffs on Chinese-made tires, and Hankook Tire was assigned a rate of 4.3 percent — far below the 24 to 46 percent levied on competing brands. This allows the company to maintain price competitiveness on tires shipped from its Chinese factories to Europe while preserving room for further price increases. As the price gap with low-cost Chinese tires narrows, analysts say Hankook Tire is well positioned to expand its European market share.
Hankook Tire's share of European sales has risen from 28 percent in 2015 to 47 percent in the first quarter of this year, with its estimated market share in the region at 12 to 13 percent. The company is believed to hold the top market share position in Germany. Its recent move to begin supplying original-equipment tires to BYD's factory in Hungary is seen as another factor strengthening its foothold in Europe.
In the United States, an expansion of its Tennessee factory is expected to reduce tariff exposure. The scale-up, set for the second half of this year, will double passenger tire production capacity at the plant from 5.5 million to 11 million units annually and add capacity for 1 million truck and bus tires. Greater local production will allow the company to replace imports previously sourced from South Korea and Indonesia, reducing its exposure to import tariffs.
"As US local production expands, the tariff burden is expected to fall from the mid-1 percent range of consolidated sales to below 0.5 percent in the second half of this year, and further to below 0.3 percent by 2027," said Kim Jun-seong, an analyst at Meritz Securities. "The Tennessee factory expansion will allow the company to structurally reduce its tariff burden."
EV replacement demand picks up — the next growth engine
The EV replacement tire market is seen as a key medium- to long-term growth driver. Vehicles sold during the EV sales surge of 2020 to 2022 are now reaching their first tire replacement cycle.
Hankook Tire supplies original-equipment tires to global automakers including Tesla, BYD, Volkswagen and BMW through its EV-dedicated brand iON, and the share of EV original-equipment tire sales is forecast to grow from 27 percent this year to 33 percent next year.
The risk of conflict involving Iran, however, remains a concern. Rising international oil prices have increased raw material and freight costs since May, and the impact could weigh more heavily on third-quarter results than on the second quarter.
"While it is difficult to predict how the conflict will unfold, if oil prices stabilize by August or September, we should see a fundamental improvement in earnings from the fourth quarter onward," Kim said. "The current period of short-term macro volatility is, in our view, a buying opportunity."
kwater@heraldcorp.com
