Hankook halves investment plan on business environment changes

Seoul – Hankook Tire has halved a group-wide investment plan announced in February, from KRW1 trillion (€700 million) to KRW500 billion due to “changes in business environment.”

In a stock exchange filing 1 Nov, the tire maker said the revision covered previously announced investments at its production facilities in South Korea and the US.

The capex adjustment, explained Hankook, was mainly due lower modernisation costs at its Daejeon plant – devastated by fire in March (ERJ report) – and deferral of expansion costs at its Clarksville, Tennessee site.

In a related stock exchange filing 31 Oct, the group said Hankook Tire America Corp. had initiated a KRW203-billion (€142 million) shares transaction to fund the Clarksville expansion.

The capital-increase, equivalent to $150 million, is to be facilitiated via the issuance of new shares for Hankook Tire America, in order to finance the project.

The US expansion is linked to a wider €1.6-billion investment programme (ERJ report), slated to be carried out at Clarksville between 2022 and 2026.

Separately, under its revised capex plan, Hankook said it was lowering its target for the share of its passenger car tire (PCR) production represented by electric vehicle tires, from 20% to 15%.

The tire maker, however, said its sales-growth target of 5% year-on-year remained unchanged, as did its goal of increasing proportion of 18” or larger tires to 45% of PCR output overall.