South Korea’s Kumho Tire Co. whose buyout by a smaller Chinese rival is being challenged by employees and former owner reported its first loss in the first quarter in nearly two years as its traditional clients turned away on concerns about the company’s outlook.

The Korea’s second largest tire maker in a regulatory filing on Monday said it posted an operating loss of 28.2 billion won ($25.2 million) on a consolidated basis for the first quarter ended March 31. Its earnings shrank by 43.3 billion won from the same period last year and dipped into negative territory for the first time since the third quarter in 2015.

Its sales contracted 4.6 percent on year to 669.3 billion won. The operating margin came at -4.21 percent, down 6.41 percentage points from a year earlier.

At 1:10 p.m. Tuesday, shares of Kumho Tire were down 2.4 percent at 8,060 won.

A company official said overseas sales have dropped 10.9 percent on year in the first quarter despite 8.3 percent gain in domestic sales. Overseas sales made up 65 percent of Kumho’ revenue.

The tire manufacturer has reportedly been struggling to maintain its clients questioning its sales to a Chinese maker that is smaller in scale.

Kumho Tire’s creditors led by state-run Korea Development Bank (KDB) in March signed an agreement with Doublestar Tyre to sell a majority stake plus management right in the Korean tire maker for 955 billion won. Kumho Tire is ranked 14th in the global tire market, and Qingdao-based Doublestar Tyre 34th.

The sales have hit a snag as its former owner Park Sam-koo, chairman of Kumho Asiana Group with the right to buy back the tire company he yielded in 2009 amid liquidity problems if he can match the price of a preferred bidder, refused to hand over the trademarks and brands of Kumho to the new owner.

Doublestar has up to five months to decide if it wants to go on with the acquisition without the Kumho brand and trademark value.

By Park Chang-young

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]