Hankook Tire Co., Ltd. Business Report FY ended Dec. 2016

Financial Overview (Consolidated)

(in millions of won)
FY ended Dec. 31, 2016 FY ended Dec. 31, 2015 Rate of
change (%)
Remarks
Sales 6,621,762 6,428,172 3.0 -
Operating income 1,103,227 884,990 24.7 Operating income rose year-over-year due growth in the percentage of sales of ultra high-performance tires in major markets like Europe and the U.S., as well as increased OE applications for luxury vehicles.
Net income 879,090 656,504 33.9 -

Contracts

Audi
-The Company will supply its Ventus S1 evo2 SUV tires as original equipment for the Audi Q7 and SQ7 SUVs. The tire size will be 285/35R22. (From a press release on December 2, 2016)

Daimler
-The Company will supply its Ventus S1 evo2 SUV tires as original equipment for the Mercedes-Benz GLC and GLC Coupe SUVs. These tires will be produced at Hankook Tire’s Hungary Plant. (From a press release on March 28, 2017)

-The Company announced that it will supply its AH15 and DH33+ tires as original equipment for the Mercedes-Benz Arocs heavy-duty trucks. (From a press release on May 31, 2016)


Toyota

-The Company announced that it will supply its Kinergy EX tires as original equipment for the Toyota Sienta MPVs. Hankook's tires will be fitted on the Sienta sold in ASEAN countries. (From a press release on September 27, 2016)

Ford
-The Company announced that it will supply its Enfren Eco tires as original equipment for Ford's C-MAX Energi plug-in hybrid vehicles. The tire size will be 215/55R17V. (From a press on September 6, 2017)

Nissan
-The Company announced that it will supply its Dynapro AT-M and Dynapro HT tires as original equipment for the Frontier pickup trucks sold by Nissan North America. (From a press release on May 4, 2016)

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


-The Company has opened a new winter tire test facility, called Technotrac, in Ivalo, Finland. The test facility covers approximately 211,200 square meters and has four tracks including flat tracks, which are used for testing braking, traction and lateral stability on snow or ice, as well as snow handling tracks for subjective tire evaluation. The Company aims to accelerate its efforts to increase its presence in the premium vehicle tire market by utilizing this new facility. (From a press release on February 28, 2017)

-In October 2016, the Company held a ceremony to celebrate the completion of Hankook Technodome research center in Daejeon, Korea. KRW 266.4 billion was invested in this center, which has a floor area of 96,328 square meters on 70,387 square meters of land. The center will serve as the Company's main development base for technologies related to electric vehicles and autonomous vehicles. (From a press release on October 18, 2016)

-The Company will set up a tire R&D center in Taean, Chungcheongnam-do. The center will have a land area of 1.52 million square meters, and will complete test roads by 2018 and an R&D center by 2020. (From a press release on February 19, 2016)

-The Company announced that it will construct a test center in Ivalo, Finland. The center is scheduled to open in December 2016. It will be operated jointly by Hankook Tire's main R&D center and Europe Technical Center in Hannover, Germany. (From a press release on December 17, 2015)

R&D Expenditure

(in millions of won)
FY ended Dec. 31, 2016 FY ended Dec. 31, 2015 FY ended Dec. 31, 2014
Amount 167,072 149,005 155,294
% of sales 2.5% 2.3% 2.3

Capital Expenditure (FY ended Dec. 31, 2016)

(in millions of won)
Planned amount of investment (*1) Amount invested (*2) Amount to be invested in the future
Korea New facilities and equipment 224,538 137,369 87,169
Maintenance and repair 171,914 130,274 41,640
China New facilities and equipment 35,851 16,820 19,031
Maintenance and repair 74,878 47,588 27,290
Hungary New facilities and equipment 3,927 7,498 (3,571)
Maintenance and repair 29,569 23,575 5,994
Indonesia New facilities and equipment 29,316 9,342 19,974
Maintenance and repair 6,042 6,775 (732)
USA New facilities and equipment 424,809 322,614 102,195
Maintenance and repair - - -
Total 1,000,844 701,855 298,990

*1: Planned amount of investment for January-December 2016
*2: Amount invested in January-December 2016