When Hankook Tire Corp. kicks off the second quarter earnings season on July 20, it will set the tone for a “lackluster” set of results from the Hankook, Kumho and Nexen, according to Deutsche Bank.
In an investor’s note dated July 1, Deutsche Bank research analyst Sanjeev Rana said: “We expect tiremakers such as Hankook and Nexen to report in line or slightly below consensus results due to the burden of higher rubber prices.”
According to the report, while Hankook usually has a raw material inventory of up to four months, Nexen’s usual inventory level is only about two months, leading Rana to report that Deutsche Bank is revising its target prices. However, these reports have to be seen against the backdrop of huge profit jumps of 501% and 43% in the first quarter 2010 from Hankook and Nexen, respectively, and an 18% increase in sales from Kumho. (Tyres & Accessories)