Kumho Tire Co., Inc. Business Report FY ended Dec. 2015

Highlights in FY2015

Financial Overview (Consolidated)

(in millions of won)
FY2015
(ended
Dec. 2015)
FY2014
(ended
Dec. 2014)
Rate of
Change (%)
Remarks
Sales 3,040,406 3,437,868 (11.6) -
Operating income 135,962 358,398 (62.1) -
Net income (67,465) 131,608 - -

Contracts


-The Company announced that it has begun supplying its Ecsta V720 tires as original equipment for the 2016 model of Chrysler's Dodge Viper ACR sports car. The size of the front tires is 295/25ZR19, and the size of the rear tires is 355/30ZR19. (From a press release on July 20, 2015)

Business Partnership


-The Company announced that the company and Mercedes-Benz Korea have signed a strategic business agreement, under which the Company will supply four types of replacement tires to Mercedes-Benz Korea's official service centers. The four tires are Ecsta Le Sport, Ecsta PS91, Majesty Souls, and Crugen, and delivery will start on June 1. 2015. The Company is the first Korean tire supplier that has provided OE tires to Mercedes-Benz. Delivery of the OE tires began in 2007. (From a press release on May 21, 2015)


-The Yokohama Rubber Co. Ltd. of Japan and the Company are discussing collaboration on tire production in China. The plan is to manufacture Yokohama-brand tires at the Company's China plants. The two tire suppliers already have a technical alliance to collaborate on tire development, but this is the first time that they consider a production partnership. According to the public relations of Yokohama Rubber, they have not decided any details such as what kind of tires (passenger car tires, commercial vehicle tires, etc.) The Company will produce for Yokohama or when to begin production. (From an article in the Nikkan Jidosha Shimbun on May 20, 2015)

-The Company announced that the company and Yokohama Rubber are discussing an OEM arrangement under which Kumho Tire's factory in Nanjing, China will produce tires for Yokohama Rubber. According to the Company, the two companies are discussing details such as what kind of and how many tires the Company will produce for Yokohama, and when to begin production. It is possible that the Company will begin making Yokohama-brand tires by the end of 2015. The Company and Yokohama are R&D partners; they formed a strategic technical alliance in May 2014. (From a press release on May 17, 2015)

-The Yokohama Rubber Co., Ltd. announced that its Board of Directors resolved on February 14 to enter into a master technological alliance agreement with South Korea's Kumho Tire Co., Ltd. The master agreement defines the framework and purpose, and facilitates further discussions for the details of the alliance. The agreement is the result of discussions between the two companies following the signing of a Memorandum of Understanding in November 2013. Yokohama Rubber's president and representative director, Hikomitsu Noji, said that the two companies aim to increase their competitiveness in the global tire market by jointly conducting research and development on the tire-related technologies of the future, including environmental technology. (From an article in the Nikkan Jidosha Shimbun on February 15, 2014)

Production

-In June 2015, the Company started using the radio-frequency identification (RFID) system for its half-finished tires produced in Korea. RFID system is an integrated production and distribution management system. The company initially introduced this system for its complete truck and bus tires in 2013. The system was implemented also to its complete passenger vehicle tires in 2014. RFID system integrates information about the product locations, acceptance and delivery status, and stock status. Because requirements for semi-finished tire stock information are increasing from BMW and other foreign automakers, the company believes the adoption of the RFID system will make the company more competitive in the OE tire market. (From a press release on June 19, 2015)

R&D Structure

Facility Location Overview
Central R&D Center Yong-in,
Gyeonggi-do,
Korea
-Year established : 2013
-Main R&D center
Kumho Tire America Technical Center (K.A.T.C) Ohio
USA
-Year established : 1990
-Developing tires for the North American OEM market and the aftermarket
Kumho Tire Europe Technical Center (K.E.T.C) Birmingham
U.K
-Year established : 1997
-Developing high-performance tires for the European market
Kumho Tire China Technical Center (K.C.T.C) Tianjin
China
-Year established : 2006
-Developing high-performance tires for the Chinese and European markets

R&D Expenditure (Consolidated)

(in millions of won)
FY2015 FY2014 FY2013
Amount 89,702 98,580 87,133
% of sales 3.0% 2.9% 2.4%

Capital Expenditure

-During 2015, the Company invested a total of 274,535 million won.

Investment outside Korea


-The Company announced that it will transfer and integrate the operations of its two plants in Nanjing, China to a new plant it will construct in the Nanjing Pukou Economic Development Zone. The Company plans to invest USD 500 million in this project. The new plant, which will cover approximately 445, 000 square meters, is expected to be completed by June 2016. The relocation project is planned to be completed by the end of December 2016. The plant will produce tires for passenger vehicles, buses, and trucks. (From a press release on January 26, 2015)