Driven by strong performance in the European market and increased sales of high-value-added tires, Nexen Tire recorded revenue in the 800 billion won range for the fourth consecutive quarter. However, rising raw material prices and ocean freight rates continued to pressure profitability.
Nexen Tire said Wednesday that it posted revenue of 814.8 billion won and an operating profit of 18.1 billion won in the third quarter of this year. Revenue increased by 4.4% compared to the same period last year, driven by the European market.
Third-quarter European sales reached 349.1 billion won, up 8.8% from the same period last year. Europe accounted for the largest share of total revenue at 43%. North America accounted for 21%, while Korea and other regions each accounted for 18%.
The sales share of high-value-added products also expanded. The revenue share of high-profile tires (18 inches or larger) rose to 41.5%, an increase of 3.4 percentage points from the same period last year and 2.7 percentage points from the previous quarter.
In particular, the high-profile tire share in the European market increased by 7.3 percentage points to 32.2% compared to the same period last year. Nexen Tire also expanded its supply of high-profile specifications to major customers in the United States, recovering its share to the 50% range.
Sales of all-weather and winter tires also increased. Cumulative revenue from January to September this year saw a 31.3% increase for all-weather tires and an 11.7% increase for winter tires compared to the same period last year.
This was due to the launch of the winter tire "WinGuard Sport 3" in Europe and the all-weather tire "N'Blue FourSeason 2" in Korea, the United States, and other regions.
Supply of original equipment (OE) tires for new vehicles to global automakers also expanded. Nexen Tire is supplying its "N'Fera Sport" tires to Audi's new mid-size sedan, the "New Audi A6," and has begun new supply contracts for the Hyundai Avante and Tucson, as well as the Kia Sorento.
Despite external growth, cost burdens increased. Due to rising raw material prices and ocean freight rates resulting from conflicts in the Middle East and other factors, the third-quarter cost of goods sold ratio reached 74.0%, an increase of 2.6 percentage points from the same period last year. The strong won also had a negative impact on profitability.
Nexen Tire expects that once raw material prices and ocean freight rates stabilize, improvements in its sales structure centered on high-value-added products will lead to a recovery in profitability.
The company is also strengthening its supply chain management system to respond to environmental regulations such as the European Union's (EU) Deforestation Regulation (EUDR) and directives related to eco-labeling and advertising (ECGT).
A Nexen Tire official stated, "It is significant that we have continued external growth centered on high-value-added product expansion and the European market despite an unfavorable external environment."
The official added, "We will improve our product mix centered on all-weather and winter tires as well as high-profile products, proactively respond to global regulations, and work to recover profitability."
in INDUSTRY
