Kumho Tire Records Profit For The First Time Since 2016

Kumho Records Profit For The First Time Since 2016

Kumho Tire is finally picking up speed with normalizing operations after experiencing a three-year losing streak. According to earning reports released just recently, the tire manufacturer recorded an operating profit amounting to $68.86 million over the last year.

This is the first time its recording profits since 2016. The CEO, Jeon Dae-jin, had earlier pledged to normalize Kumho Tire’s operations after the company received an investment from China’s own DoubleStar Tire.

In the second quarter of 2019, the company recorded a profit of $22.4 million. This was thanks to the structural reforms, improvements in labor relations, and cost-saving efforts that the company put in place since 2018. The turnaround was attributed to domestic replacement tire sales which had recorded solid numbers.

According to data from the Korea Tire Manufacturers Association, Kumho Tire recorded 6.52 million tire sales in 2018 in the domestic market. This made it the leading tire maker locally followed by HankookTire and Nexen Tire. The company remains the leader of the pack in the domestic market.

The two leading tires that recorded the highest sales were the Crugen HP71 for SUVs and the Majesty9 SOLUS TA91 for sedans. The latter drew the best customer response for its quietness and improved ride comfort.

In addition to replacement tires, the tire manufacturer has been getting into contracts for OE Kumho tires, especially those equipped on vehicles in factories. The company currently supplies tires for Audi and Kia’s Seltos SUV.

Despite the breakthrough, Kumho Tire is still faced with a mired share price which has been greatly affected by the COVID-19 outbreak and its effects on the industry. Executives bought back some of the shares in February to boost the share price. They also returned 20-30 percent of their salaries in March fearing that the COVID-19 outbreak might affect profitability.

According to an official, Kumho Tire’s goal this year is to stabilize its brand value, enhance sales, and regain market trust. This will help improve sales and market readiness. Despite there being an expected economic shutdown globally, the company is confident that it can overcome this too.

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