Hankook hits $1 billion sales in N. America; pledges better supply

By Bruce Davis, ERJ staff (TB)

Puerto Vallarta, Mexico -- Hankook Tire America Corp. is pledging improved fill rates this year as it builds on record 2010 sales of $1 billion in the US and Canada, company executives told dealers attending the firm's annual dealer meeting in Puerto Villarta.

The North American sales record represents 21-percent growth over 2009 and is based on shipments of 12.6 million tyres, according to President Soo Il Lee.

The North American performance helped parent Hankook Tire Co. Ltd. increase sales globally 24 percent to a record $4.7 billion, which should be enough to propel the South Korean company to No. 7 among the world's largest tyre makers-moving ahead of Japan's Yokohama Tire Co. Ltd. for the first time.

The records were achieved as Hankook celebrates two anniversaries: 70 years as a tyre company and 30 years in the US

Hankook's global revenue was based on sales of 81 million tyres, a gain of 14 percent over 2009. The sales revenue gain included the effects of higher selling prices.

Mr. Lee said Hankook's sales improvement could have been even higher had the company been able to produce more tyres. As it was, the firm suffered product shortages in some sectors, a problem he pledged the company would address this year through expanded capacities at Hankook's five plants and finding the “best way to utilise our stock in the most effective way possible...”

Mr. Lee did not go into specifics about the company's plans other than to say Hankook's global capacity is scheduled to expand about 9 percent this year to 87 million units. A large portion of the increase will come at Hankook's plant in Hungary, which is in the midst of a $333 million three-year expansion.

Additionally, Hankook Tire has committed more than $1.3 billion to build plants in China and Indonesia in the coming three to four years, with roughly half of the Indonesian plant's capacity to be dedicated to the North American market. These projects will boost the firm's global capacity 15 percent to 100 million units.

At the same time, Mr. Lee said, “in the long run, we eventually will need a factory on the American continent as well,” referring to plans he's disclosed previously. The timing of such a move was not discussed.

Mr. Lee did challenge Hankook's sales staff and customers to communicate more effectively in order to improve supply forecasting.

On the selling front, Hankook will increase its marketing investment by more than 75 percent over 2010, although no figures were divulged.

Marketing in 2011 will include a continued and expanded presence in sports arenas, more spending on prime-time television, a continued presence in the key sports and lifestyle print media, more one-off consumer exposure events like the tyre-shaped billboard in Times Square, and improved point-of-sale merchandising, according to Bill Bainbridge, marketing manager.

Mr. Lee also cautioned dealers that there will continue to be “substantial price issues” in the industry based on skyrocketing manufacturing costs.

From Tire Business (A Crain publication)