[Edaily Marketin KIM YEON-SEO Reporter]Korea Ratings Corporation has assigned a new credit rating of “A2+” to KUMHOTIRECO.,INC’s commercial paper (CP). The agency determined that the company has secured a stable business foundation based on a diversified customer base and domestic and international production facilities, and is maintaining excellent profitability through the expansion of high-value-added tire sales. While financial burdens may increase due to future large-scale plant investments, the agency forecast that the company will be able to control the extent of the increase in debt burdens given its robust cash generation capacity.

On the 10th, Korea Ratings announced that it had newly assigned an “A2+” credit rating to KUMHOTIRECO.,INC’s commercial paper (CP). Korea Ratings assessed that KUMHOTIRECO.,INC has secured excellent business stability in the tire market.

KUMHOTIRECO.,INC ranks second in South Korea and among the top 15 globally in terms of revenue, and has secured global automakers as customers for original equipment (OE) tires. The company is also expanding its sales base in major replacement tire (RE) markets, such as the United States and Europe.

The tire industry is considered to have high barriers to entry, as it requires significant capital and time for facility investments, brand building, and distribution network expansion. Han Shin Rating positively assessed that KUMHOTIRECO.,INC is maintaining its market position through its domestic and international production bases and continuous technological development.

Financial performance continues to improve. KUMHOTIRECO.,INC’s revenue increased from 2.6 trillion won in 2021 to 4.7 trillion won last year. Revenue for the first half of this year also rose to 2.5 trillion won, up from 2.4 trillion won in the same period last year.

Analysts attribute this profitability to increased sales volume driven by the expansion of distribution channels in North America and Europe, as well as a growing share of high-value-added products such as high-inch tires (18 inches and larger) and tires for electric vehicles. The strength of the U.S. dollar and the euro also had a positive impact on performance.

The operating profit margin stood at 13.2% in the first half of this year, following 13.0% in 2024 and 12.2% in 2025.

However, analysts forecast that in the second half of this year, rising costs of raw materials and transportation, as well as tariff policies in North America and the European Union (EU), will weigh on earnings. They explained that profitability is likely to decline somewhat in the short term as prices for key raw materials—such as natural and synthetic rubber—and ocean freight rates continue to rise.

Han Shin Rating expects the company to maintain strong profit-generating capabilities in the medium term, driven by an increased share of high-value-added tires and the expansion of production bases.

The company’s financial structure is also improving. Although KUMHOTIRECO.,INC’s net debt increased from 2021 to 2022 due to capacity expansions at its domestic and Vietnamese subsidiaries, working capital pressures stemming from rising raw material prices, and litigation-related cash outflows, the company has been reducing its debt since 2023 as operating cash flow has improved.

Net debt decreased by approximately 1 trillion won, from 2.2 trillion won at the end of 2022 to 1.2 trillion won as of the end of June this year. Han Shin Rating assesses that the company has reduced its financial burden by absorbing investment costs through its own cash generation.

Future large-scale investment plans are cited as a variable affecting the company’s financial structure. KUMHOTIRECO.,INC plans to invest approximately 1.5 trillion won by 2028 for the construction of a new plant in Hampyeong, the relocation of the Gwangju plant, and the construction of a new plant in Poland.

While Han Shin Rating anticipates that debt burdens will increase somewhat during the execution of these investments, it forecasts that the company will be able to meet its funding needs based on its robust operating cash flow generation. Accordingly, it judged that the increase in debt burden can be controlled to a certain extent.

Lee Ju-ho, a senior analyst at Hanshin Rating, stated, “We will examine regional tire sales volumes and unit prices, the proportion of high-value-added tires, U.S. and EU tariff policies, trends in raw material prices and ocean freight rates, and whether the company can maintain its operating cash flow generation capacity as a result.” He added, “We also plan to monitor the level of control over funding requirements and financial burdens resulting from the construction of the Hampyeong and European plants and the relocation of the Gwangju plant.”