Nexen Tire Revenue Stays in 800-Billion-Won Range for Fourth Straight Quarter; Operating Profit Down 61%

Cost pressures rise amid war in the Middle East
Stronger won also weighs on profitability

Nexen Tire reported higher revenue year over year in the third quarter of this year, but a sharp decline in operating profit.

Nexen Tire Roadian GTX. Nexen Tire

Nexen Tire said on November 4 that it posted revenue of 814.8 billion won and operating profit of 18.1 billion won in the third quarter of this year. The figures represented an increase of 4.37% and a decrease of 61.12%, respectively.

Despite an unfavorable business environment marked by slowing market demand and rising raw material prices, revenue increased, keeping the company in the 800-billion-won range for a fourth consecutive quarter.

Growth in third-quarter revenue was driven by increased sales of high-value-added products and strong performance in Europe. Revenue in Europe rose 8.8% year over year to 349.1 billion won, accounting for the largest share of total revenue at 43%. North America followed at 21%, Korea at 18%, and other regions at 18%.

The product mix also continued to improve, with a focus on high-value-added products such as high-inch, all-weather, and winter tires. Tires measuring 18 inches or more accounted for 41.5% of revenue, up 3.4 percentage points year over year and 2.7 percentage points from the previous quarter, extending the upward trend. In particular, the share of high-inch tires in Europe rose sharply to 32.2%, up 7.3 percentage points year over year. In the United States, the company expanded the range of high-inch sizes supplied to major customers, bringing the share of high-inch tires back into the 50% range.

All-weather and winter tires also continued to grow, supported by the impact of new products in each region. From January through September this year, cumulative sales increased 31.3% year over year for all-weather tires and 11.7% for winter tires. This growth followed the launch of the WINGUARD Sport 3 winter tire in Europe and the N'BLUE 4Season 2 all-weather tire in Korea, the United States, and other markets.

Supplies of original equipment (OE) tires for new vehicles also remained active. Although growth in the OE market slowed amid weak global demand for new vehicles, and exchange-rate fluctuations and changes in the trade environment in major countries continued, Nexen Tire secured new supply deals with global automakers, including premium brands. The company is supplying its N'FERA Sport tires for Audi's new mid-size luxury sedan, the new Audi A6, and has begun supplying OE tires for Kia's Sorento and Hyundai Motor's Avante and Tucson, all of which recently introduced new models.

Profitability was affected by cost pressures. Rising raw material prices and ocean freight rates, influenced by external factors including the war in the Middle East, pushed the cost-of-sales ratio up 2.6 percentage points year over year to 74.0%. The stronger won also weighed on profitability. Nexen Tire expects that once costs such as raw materials and ocean freight stabilize, the benefits of its improved product mix will drive profit maximization.

In its earnings announcement, Nexen Tire also shared its strategy for responding to global environmental regulations. To address major rules, including the EU Deforestation Regulation (EUDR) and guidelines on environmental claims and advertising (ECGT), the company is establishing a supply chain management system and reviewing compliance across its products and marketing. It plans to reduce risks ahead of the regulations' implementation and establish a sustainable management system that meets global standards.

A Nexen Tire representative said, "It is significant that we continued to grow our business, particularly in Europe, and expand sales of high-value-added products despite the unfavorable external environment. We will work to restore profitability by improving our product mix, focusing on all-weather and winter tires and high-inch products, and proactively responding to global regulations."

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