Earnings of Nexen Tire Corp., one of South Korea’s three major tire makers, have significantly improved in the second quarter, boosted by brisk sales of high-performing premium tires and improved brand awareness in overseas markets.

The company on Wednesday announced in a regulatory filing that it registered 69.5 billion won ($61.9 million) in operating profit on a consolidated basis in the April-June period, up 24.9 percent from a year ago on sales of 493.2 billion won, a 5.6 percent increase over the same period.

The improvement in Nexen Tire’s operating income is largely attributed to increased sales of its ultra high performance (UHP) tires, premium-class tires that are generally priced up to 30 percent higher than ordinary tires because of their advanced performance and features such as larger wheel diameter. A rise in sales of UHP tires should generate higher margins.

In the second quarter of this year, Nexen Tire raked in 219.5 billion won from UHP tire sale, up 11.1 percent from 197.6 billion won in the previous year.

Nexen Tire, widely known as a budget tire producer, has been aggressively making forays into the UHP tire market. Although Nexen still ranks outside the global top 20 tire makers in terms of the overall tire market share, it is placed on the sixth in the global UHP tire market, with about a 5 percent share.

In the April-June period, UHP tires accounted for 44.3 percent of Nexen Tire’s total sales - the highest among Korea’s top three tire manufacturers. UHP tires made up less than 30 percent of Hankook Tire Co.’s total sales while about 23 percent of Kumho Tire Co.’s during the same period. In 2010, UHP tires represented 32 percent of Nexen Tire’s total sales but in six years, the share jumped by more than 10 percentage points.

Nexen Tire has also successfully enhanced its brand awareness and reputation in overseas markets, in particular, Europe and North America, after it has aggressively launched sports marketing campaigns. The Korean tire maker currently runs advertisements at major European football league matches including those of Premier League (England), Primera Liga (Spain), Bundesliga (Germany), and Serie A (Italy). Last year, Nexen Tire also signed an official partnership agreement with Manchester City, one of Premier League teams.

Thanks to its relentless sports marketing efforts, Nexen Tire saw a 35.3 percent on-year increase in its Europe sales in the second quarter of this year.

In the United States, Nexen Tire has been actively promoting its brand at Major League games. Since 2013, the company has signed partnership agreements with a number of Major League clubs including LA Dodgers, Detroit Tigers, and Texas Rangers. This year, it has expanded the partnership to include Pittsburg Pirates where Korean national Kang Jung-ho plays as an infielder.

An unnamed official from Nexen Tire said the company will aim to expand the supply of original equipment (OE) tires to global automakers in North America and Europe. This year, the company is expected to supply OE tires for the 2017 Chrysler Pacifica.

By Noh Won-myung

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