Nexen Tire earnings fall 32% on impact of US tariffs

Seoul - Nexen Tire has reported a year-on-year decline in second quarter earnings, due mainly to the impact of 25% US tariffs on auto parts, in place since early May.

Operating profit (earnings) fell to KRW42.6 billion (€26.8 million) for the three months to 30 June, down 32.2% compared to the same period last year, the Korean tire maker reported 30 July.

Sales for the period grew 5.4% year-on-year to KRW805 billion, marking a record high quarterly revenue and reflecting “strong growth trajectory.”

Nexen linked the strong sales primarily to increased production capacity following the ramp-up of phase 2 of its European plant in the Czech Republic in addition to “region-specific sales strategies.”

“Despite continued uncertainties in the global automotive sector, Nexen secured key supply volumes in advance, resulting in balanced growth across both OE and replacement (RE) segments,” it said.

In the US, sales strengthened further in the second quarter, building on the recovery that began in the first quarter after a temporary slowdown in the second half of 2024.

Nexen said the growth was supported by the expansion of “newly secured” retail distribution channels.

In Europe, which accounts for 42% of overall sales, Nexen said it had a solid growth in OE supply, with sales to key European OEMs such as Stellantis Group, Volkswagen Group, and BMW.

The replacement market was ‘stable’ despite growing market uncertainty

However, Nexen noted that tire exports which were originally bound for the US have been redirected to Europe due to tariff pressures, leading to "market disruption from an inflow of low-priced products."

Meanwhile, in the Asia-Pacific region, Australia and Japan achieved record sales volumes, driven by “continued investment in distribution network development.”

On earnings development, Nexen said the cost impact from newly imposed tariffs was partially offset by stabilised ocean freight rates and favourable long-term contracts.

In addition, elevated raw material prices “continued to exert pressure on margins,” but Nexen expects a positive impact on profitability in the second half as costs of key raw materials are trending downward.

In response to recent US tariff policy changes, Nexen said it will implement gradual price adjustments in the US market.

To mitigate profitability risks, the company said it will focus on expanding its “high-margin product portfolio” and reallocating global supply volumes strategically.

Nexen will continue to monitor trade developments and deploy flexible responses as bilateral negotiations evolve.