Nexen Tire Reports 19.5% Drop in Q2 Operating Profit... Impact of Middle East Conflict

Sales of 891.3 Billion Won, Operating Profit of 34.3 Billion Won

On July 29, Nexen Tire announced at a corporate briefing that its second-quarter sales reached 891.3 billion won and operating profit came to 34.3 billion won. While sales rose by 10.8% compared to the same period last year, operating profit declined by 19.5% over the same period.

Second-quarter performance was driven by strong sales in key markets such as Europe. The company achieved notable results by expanding its supply of Original Equipment (OE) tires to a wider range of vehicle models and diversifying sales channels within the Replacement Equipment (RE) market. In particular, high value-added products, namely tires of 18 inches and above, accounted for 38.8% of total sales—a 3.6 percentage point increase year-on-year—further strengthening the company’s profit structure.

By region, growth in the European market was especially remarkable. Second-quarter sales in Europe reached 407.2 billion won, surpassing the quarterly 400 billion won mark for the first time. This growth was supported by the expansion of OE supply for local plants in Europe and market diversification into countries such as the UK and Türkiye. Additionally, enhancement of local logistics and distribution capabilities was achieved through the expansion of finished goods warehouses at European plants.

In the Korean market, strong sales continued, particularly in electric vehicles (EVs) and SUVs. Backed by a broad domestic EV OE portfolio ranging from the IONIQ 6 and EV3 to the EV9, both OE sales and the proportion of high-inch tires increased together. In the replacement market, rental sales steadily grew, contributing to a better product mix. Furthermore, the company strengthened its competitiveness in the global electrification market by initiating new OE supply to BYD in China, among other initiatives.

On the profitability front, cost pressures arose from several factors: rising raw material prices and increased maritime freight rates due to the Middle East conflict, as well as one-off costs from the difference between the preliminary and final U.S. anti-dumping duties.

In response, Nexen Tire has further reinforced its proactive strategy to address global trade issues and changing market conditions. To prepare for the European Commission’s move to impose anti-dumping duties on Chinese tires, the company preemptively reorganized its global production bases. As a result, the proportion of European sales sourced from the Chinese plant was sharply reduced from 15% last year to about 4% this year, minimizing risk.

Additionally, to strengthen competitiveness in the global electrification market, the company expanded OE supply not only to new electrified models, such as BYD and Hyundai Staria EV, but also to core models of premium brands. Particularly, by leveraging its proprietary R&D capabilities, such as tire performance prediction using artificial intelligence (AI), Nexen Tire is rapidly increasing supply volumes to premium automakers. In the North American market, the company plans to accelerate distribution structure improvement by expanding major retail channels such as Walmart and ramping up high-inch tire supply.

A Nexen Tire representative commented, "Despite the increased cost burden due to external variables, we continued to achieve top-line growth driven by robust sales in major markets," adding, "We aim to deliver visible improvements in performance based on the stable operation of the second-phase expansion at our European plant and achievements in North American distribution restructuring."

This content was produced with the assistance of AI translation services.