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  5. Hankook Tire Co., Ltd. Business Report FY ended Dec. 2017

Hankook Tire Co., Ltd. Business Report FY ended Dec. 2017

Financial Overview (Consolidated)

(in millions of won)
FY ended Dec. 31, 2017 FY ended Dec. 31, 2016 Rate of
change (%)		 Remarks
Sales 6,812,857 6,621,762 2.8 -
Operating income 793,431 1,103,227 (28.1) 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 465,689 879,090 (47.0) -

Contracts

Audi
-The Company has begun supplying its Ventus S1 evo2 SUV tires as original fitment on the new Audi RS 5 Coupe. The Hankook Ventus S1 evo2 is now fitted in sizes 265/35 R19 98 Y XL (standard) and 275/30 R20 97Y XL (optional). (From a press release on September 7, 2017)

-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)

Citroen
-The Company began supplying Ventus Prime3 and Kinergy 4S tires as original equipment for the Citroen C3 Aircross crossover utility vehicle. The size of the Ventus Prime3 tires is 205/60 R16 92H while that of the Kinergy 4S tire are 195/60 R16 89H, 205/60 R16 92H and 215/50 R17 91H. (From a press release on January 23, 2018)

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)

Honda
-The Company is going to provide Kinergy GT tires to Honda Motor Co., Ltd. as original equipment (OE) tires for the Honda Accord of the 2018 year model. The size of the tires is 225/50R 17V. (From a press release on October 12, 2017)

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)

R&D Expenditure

(in millions of won)
FY ended Dec. 31, 2017 FY ended Dec. 31, 2016 FY ended Dec. 31, 2015
Amount 177,661 167,072 149,005
% of sales 2.6% 2.5% 2.3%

Capital Expenditure (FY ended Dec. 31, 2017)

 (in millions of won)
Planned amount of investment (*1) Amount invested (*2) Amount to be invested in the future
Korea New facilities and equipment 129,679 100,033 29,646
Maintenance and repair 170,439 114,193 56,246
China New facilities and equipment 17,392 13,695 3,697
Maintenance and repair 73,269 60,744 12,525
Hungary New facilities and equipment 49,722 5,499 44,223
Maintenance and repair 30,317 17,173 13,144
Indonesia New facilities and equipment 1,135 1,126 9
Maintenance and repair 6,248 18,162 -
USA New facilities and equipment 104,882 128,297 -
Maintenance and repair - - -
Total 583,083 458,922 -

*1: Planned amount of investment for January-December 2017
*2: Amount invested in January-December 2017