The exterior of Technoplex, the headquarters of Hankook & Company Group [Hankook & Company Group]
The exterior of Technoplex, the headquarters of Hankook & Company Group [Hankook & Company Group]

Hankook & Company grew its operating profit by more than 30 percent year-on-year in the second quarter despite a slight decline in sales. Stronger earnings at core affiliate Hankook Tire & Technology boosted equity-method gains, even as the group's own battery business struggled under US tariffs and rising costs.

The company disclosed Wednesday that it posted consolidated sales of 339.6 billion won ($240 million) and operating profit of 100.2 billion won in the second quarter of this year. Sales fell 1.2 percent from the same period last year, while operating profit rose 35.6 percent. The operating profit margin widened 8 percentage points to 29.5 percent from 21.5 percent in the second quarter of last year.

Results did ease compared with the previous quarter, however. In the first quarter of this year, Hankook & Company recorded sales of 378.4 billion won and operating profit of 121.7 billion won. Second-quarter operating profit was down 17.7 percent from the prior quarter.

Hankook Tire drove the improvement in second-quarter profitability. Higher sales volumes, a shift toward higher-value products and favorable exchange rates combined to increase the equity-method gains recognized by Hankook & Company.

Hankook Tire posted consolidated sales of 5.68 trillion won and operating profit of 559 billion won in the second quarter, up 5.8 percent and 58.1 percent, respectively, from a year earlier. Looking at the tire business alone, quarterly sales reached a record 2.81 trillion won and the operating profit margin climbed to 17.2 percent.

By contrast, the automotive battery business that Hankook & Company operates directly had a difficult quarter. US tariff policy and geopolitical uncertainty, on top of rising raw material prices, pushed both sales and operating profit for the Korea Battery unit below year-earlier levels.

The company offset some of the margin pressure by expanding sales of AGM batteries, which carry higher added value than standard products. AGM batteries offer superior charge-discharge performance and durability compared with conventional lead-acid batteries, and are primarily used in vehicles with extensive electronic equipment or systems such as idle-stop-go (ISG) devices.

Hankook & Company currently supplies Korea Battery products to roughly 450 customers across about 100 countries. The company plans to continue raising the share of premium products such as AGM batteries in its sales mix while tailoring its sales strategy to demand conditions in each market.

At the group level, the business portfolio is expanding from tires and batteries into automotive thermal management. Hankook Tire's tire division crossed the 10 trillion won mark in annual sales for the first time last year, and the effect of the Hanon Systems acquisition has also begun to show up in earnings. Hankook & Company Group is broadening its automotive parts portfolio around tires, batteries and thermal management systems.

Hanon Systems likewise posted second-quarter consolidated sales of 2.88 trillion won and operating profit of 103.7 billion won, a sharp increase from 64.3 billion won in the same period last year. The unit also returned to a net profit for the period in the first half.

"Even amid persistent global trade headwinds and cost pressures, we have secured a stable earnings base by focusing on premium products and leveraging the competitiveness of our core affiliates," a Hankook & Company official said. "We will continue to respond flexibly to market changes and work to strengthen the group's business competitiveness and corporate value."


kwater@heraldcorp.com