South Korean tire makers performed poorly in the third quarter under the triple whammy of expensive raw materials, the shipping crisis and the shortage of chip supplies.

Kumho Tire Co. reported an operating loss of 54.5 billion won ($ 46 million) in the July-September period on Monday, compared with a profit of 43.9 billion won in the same period. a year ago, although sales rose 8.8% year on year to 648.7. billion won.

Kumho Tire said its revenue was suffering from the high price of raw materials and shipping costs. It also reflected 22 billion won of credits for the regular salary trial.

Nexen Tire Corp. reported a 77.6% year-on-year decline in third-quarter operating profit to 1.3 billion won. Sales increased 14.5 percent to 534.9 billion won during the same period.

Industry-leading Hankook Tire & Technology Co. also saw operating profit fall 19.5 percent year-on-year to 180.8 billion won in the third quarter.

The higher prices of raw materials like natural rubber for the weak have been widely blamed.

According to market research firm Trading Economics, the price of rubber futures on the Tokyo Commodity Exchange reached 213 yen per 1 kilogram on Monday, up 65% from the lowest in the U.S. last year of 129 yen.

The global shipping crisis has also affected overall profits.

Tires made in Asia, including Korea and Vietnam, are shipped to the United States and Europe via container ships.

Shanghai’s containerized freight index climbed to 2,870 in early January, from 1,022 on January 3 last year. As of November 12, the index had almost quadrupled to 4,554 in two years.

Shipping charges are typically 5% of cost of sale, but they have been doubled to almost 10%, an industry official said, adding that as of today, few tire manufacturers can earn money by selling.

Hankook Tire was forced to halt production last month because it couldn’t find a container ship.

The shortage of supply of automotive chips has also deteriorated the overall business environment.

Tire sales fell in line with the delay in the release of new vehicles.

According to AutoForecast Solutions, the global industry has lost 10.15 million vehicles this year due to a chip shortage.

Data from the Ministry of Land, Infrastructure and Transport showed 407,000 vehicles were registered in the third quarter of this year, down 14.8% from a year ago.

Tire manufacturers plan to respond to the deteriorating business environment by improving the cost of products. But they fear the chip supply shortage and shipping crisis will last until the first half of next year.

Lee Hang-koo, a senior researcher at the Korea Institute of Automotive Technology, said the price of raw materials may stabilize next year, but it would take longer to resolve the shipping and shipping issue. chip supply.

By Lee Sae-ha and Lee Eun-joo

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