Nexen Tire earnings fall 60% despite higher sales

Seoul – Nexen Tire has reported a 61.1% year-on-year decline in third-quarter operating profit, despite higher sales driven by strong European demand for winter and all-weather tires.

The South Korean tire maker posted operating profit of KRW18.1 billion (€12.4 million) for the three months ended 30 Sept, down from KRW46.5 billion a year earlier.

Revenue increased 4.4% to KRW814.8 billion from KRW780.7 billion, Nexen announced 4 Nov, marking its fourth consecutive quarter of sales exceeding KRW800 billion.

The company also swung to a net loss of KRW46.6 billion, compared with a profit of KRW54.8 billion in the prior-year quarter.

Nexen attributed the deterioration in profitability to “rising raw-material and freight costs,” alongside the appreciation of the Korean won.

"Despite the unfavourable external environment, we have maintained top-line growth thanks to the expansion of high-value-added products and our performance in Europe," said CEO John Bosco (Hyeon Suk) Kim.

European revenue increased 8.8% year-on-year to KRW349.1 billion, accounting for 43% of group sales.

The region benefited from increased OE sales to car makers, including Volkswagen and Stellantis, alongside "expanded sales" of winter and all-weather tires.

In North America, however, revenue declined 5.1% amid "soft market conditions."

The company continued to improve its product mix, with tires measuring 18 inches and above accounting for 41.5% of sales, up 3.4 percentage points year-on-year.

For the first nine months, all-weather tire revenue increased 31.3% year-on-year, while winter tire sales rose 11.7%.

Nexen said demand was supported by the launch of its Winguard Sport 3 winter tire in Europe and N'Blue 4Season 2 all-weather tire in other markets.

Looking ahead, the Korean tire maker expects its improved product mix to support earnings once raw-material and freight costs stabilise.

"We will continue to improve our product mix centred on all-weather, winter and high-inch tires, and respond proactively to global regulations to regain profitability," Kim said.

The company also outlined preparations for the EU Deforestation Regulation (EUDR), including supplier risk assessments, natural rubber traceability systems and efforts to secure EUDR-compliant material supplies.

As part of the move, Nexen said it has established a supply chain management system and reviewed compliance across products and marketing to address major environmental regulations, including EUDR and ECGT.