Hankook Tire_Business Report FY2007

Business Highlights

Financial Overview ( in millions of won )
- FY2007 FY2006 Rate of
change
Remarks
Sales 2,253,044 2,063,766 9.2% Sales increased due to the enhanced brand image of its products which resulted from greater sales of premium products and the Company's vigorous marketing activities.
Operating
income
274,047 174,535 57.0%
Net
income
162,305 170,173 (4.6%)

New Subsidiaries

-Europe


The Company announced an establishment of European corporation. The new company, which is 100% capitalized by it's local subsidiary Hankook Tire Europe Holdings B.V., will mainly handle tire logistics and export in the region. (From a press release by the company on May 23, 2007)

The Company announced that Hankook Tire Europe Holdings B.V. has established Hankook Tire Budapest KFT in Hungary. Owned 100 percent by Hankook Tire Europe Holdings B.V., the new company will handle tire sales and public relations. (From a press release on Jun. 12, 2007)

Recent Development in its Overseas business

-Hungary


The Company started supplying tires to the European market from its new plant in Hungary. With this move, it will be able to shorten the time needed for shipping its tires to the market from over 30 days to less than 5 days. Commercial operations at the new plant were launched on Jun. 26 at an annual production capacity of 3,300 tires. The daily production volume will be expanded to 150,000 units next year, which will be doubled to 30,000 by 2010. The tires made at the Hungary facility are Optimo K715 for use in small passenger vehicles and Optimo K415 for medium and large vehicles. The Company plans to supply also ultra high-performance (UHP) tires and truck tires from the new plant. (From a press release on Aug. 13, 2007)

Business plans for FY2008

The Company announced its FY2008 business plans for the Group's tire division. The tire division aims at generating sales of 3,877.8 billion won on a consolidated basis, an increase of 19.6 percent compared with FY2007's result, and an operating profit of 348.5 billion won, up 32.2 percent year-on-year. In response to rising demand for the company's proprietary ultra high-performance (UHP) tires, the Group will expand its Hungarian facility, which is making these products, and in addition invest in the automated production lines at its plant in Geumsan, Korea. The annual production volume at the Hungarian facility is expected to reach 4 million tires in 2008 and 5 million tires in 2009. (From a press release on Feb. 11, 2008)

R&D

R&D Structure

Facility Location
Main R&D Center Daejeon,
Korea
Akron Technical Center Ohio,
USA
China Technical Center
(CTC)
Jiaxing,
Zheziang Province
China
Europe Technical Center
(ETC)
Hannover,
Germany
Japan Technical Liaison office
(JTC)
Osaka,
Japan

R&D Expenditure ( in millions of won )
- FY2007 FY2006 FY2005
Amount 83,243 74,284 72,082
% of sales 3.7% 3.6% 3.6%

Recent R&D achievements (FY2007)
Projects Term Results
 Projects
Research on the design of dies used in rubber extrusion molding lines. The aim of this project is to improve the quality of extruded rubber used in tires. Feb. 2006
-
Jan. 2007
Studied measures to improve extrusion molding processes by using the CFD analysis method; and predicted profiles of the extruded rubber parts

Analysis on the flow of rubber in the mold and on the vulcanizing temperature in the green tire vulcanizing process.
Mar. 2006
-
Feb. 2007
Analyzed the flow of rubber in the mold
Research on creating organic polymer surface modified silica compounds, and carrying out applied studies on turning them into nano-rubber composite materials. Mar. 2006
-
Feb. 2007
Conducted activities on developing nano-compound silica, which is expected to improve the solid-state properties and other qualities of rubber
Analysis on the reasons why creep groan occurs and the best solution to prevent it Apr. 2006
-
Mar. 2007

Conducted studies on noise inducing materials and developed non-ferrous friction materials that have optimal compounding ratios.
Research on tire design to improve durability Sep. 2006
-
Aug. 2007
Analyzed the mechanisms of accidents stemming from problems in the treads of truck and bus tires
Research on improving the NVH performance of tires Sep. 2006
-
Aug. 2007
Conducted studies on tire surfaces, namely on contact properties and noise when tires surfaces meet ; and research on the structural characteristics of tires in order to develop tires that are lower in noise.
R&D center
Development of self-supporting, run-flat tires Oct. 2004
-
Jun. 2007
Developed run-flat tires and accumulated knowledge on their basic technology
Work on the PLM project Jan. 2005
-
Dec. 2007
Developed and introduced the PLM system at the center

Investment Activities

Capital Expenditure

-The Company iinvested a total of 183,563 million won in FY2007, focusing on expanding its production capacity.

-The planned amount of investment in 2008 is 403,540 million won, which includes 249,273 million won to be spent for installing additional production facilities. 

Domestic Investment

-The Company announced that it plans to invest a total of 235.1 billion won by Dec. 2009 in order to expand production capacity at its Geumsan facility. When this project is completed, the plant's annual production capacity will be increased by 5 million units. (From a press release by the company on Feb. 26, 2007)