Hankook Tire Co., the world's seventh-largest tiremaker by sales, said Monday that its third quarter net profit fell 30.9 percent from a year earlier on increased costs and weak sales.
For the three months ending Sept. 30, net profit reached 118.9 billion won ($104.1 million), down from 171.9 billion won a year earlier, the company said in a statement.
The tiremaker said the decline in net profit could be blamed on weak sales in global markets and an increase in operating costs at the company's first US plant in the state of Tennessee.
Operating profit fell 15 percent to 184.6 billion won in the third quarter from 217.1 billion won a year ago. Sales dropped 3.8 percent to 1.75 trillion won from 1.82 trillion won during the cited period, it said.
Hankook Tire said lower original equipment tire demand from carmakers weighed on the third-quarter sales.
Supplying OE tires to car manufacturers does not generate much revenue for tiremakers, but securing big companies as clients helps improve their brand images and can lead to the raising of product prices down the line.
For tiremakers, it is more profitable to sell replacement equipment tires in after-sales markets.
Hankook Tire is a supplier of tires to several foreign carmakers, such as Audi, BMW, Mercedes-Benz and Porsche, as well as South Korean companies like Hyundai Motor Co. and its affiliate, Kia Motors Corp.
Last year, Hankook Tire sold 99 million tires produced at its eight plants -- two in South Korea, three in China, one in Hungary, one in Indonesia and one in the US
Shares in Hankook Tire fell 1.24 percent to 43,850 won on Monday. The broader Kospi shed 1.53 percent. (Yonhap)