[Edaily Reporter LEE YUNHWA ] NEXENTIRE(002350)saw its profitability deteriorate significantly in the third quarter of this year despite revenue growth, as it was unable to overcome cost pressures. While sales increased due to rising sales of high-value-added tires, particularly in the European market, operating profit fell by more than 60% year-over-year due to a combination of rising raw material prices, higher ocean freight rates, and exchange rate fluctuations.

NEXENTIRE announced on the 4th that it recorded third-quarter revenue of 814.8 billion won and operating profit of 18.1 billion won on a consolidated basis. Revenue increased by 4.4% compared to the same period last year, but operating profit decreased by 61.1%. Compared to the previous quarter, revenue fell by 8.6% and operating profit by 47.4%.

Net income also turned to a loss. The third-quarter net loss was 46.6 billion won, marking a shift from the 54.8 billion won net profit recorded in the same period last year. Profit (loss) from continuing operations before income tax expense also posted a loss of 78.9 billion won. Cumulative revenue for the first three quarters of this year totaled 2.5444 trillion won, an 8.0% increase year-over-year, but cumulative operating profit decreased by 17.9% to 106.6 billion won.

Revenue growth was driven by the European market and high-value-added products. By region, revenue in Europe reached 349.1 billion won, an 8.8% increase year-over-year, accounting for 43% of total revenue. North America followed with 21%, while South Korea and other regions each accounted for 18%. In essence, expanded sales centered on Europe underpinned overall revenue growth.

The product mix also continued to improve. The revenue share of high-inch tires (18 inches and larger) rose to 41.5%, up 3.4 percentage points from the same period last year. In particular, the share of high-inch products in Europe reached 32.2%, an increase of 7.3 percentage points from a year ago. In the U.S. as well, the company expanded the range of high-inch tire specifications supplied to major customers, allowing the related revenue share to return to the 50% range.

Sales of all-season and winter tires also showed growth. Cumulative sales from January through September this year increased by 31.3% year-over-year for all-season tires and by 11.7% for winter tires. The company bolstered its product portfolio diversification by launching the new winter tire “Wingard Sport 3” in the European market and expanding sales of the all-season “Enblue Four Season 2” in South Korea, the U.S., and other regions.

The company is also expanding its supply of original equipment (OE) tires to global automakers. It is supplying the Enfera Sport to Audi’s new midsize sedan, “The New Audi A6,” and has begun supplying OE tires to models such as the KIA CORPORATION Sorento and the HyundaiMotor Elantra and Tucson. Despite a slowdown in new vehicle demand within the automotive industry, the company is broadening its growth base by securing new suppliers, including premium brands.

However, unlike its revenue growth, restoring profitability remains a challenge. Due to external factors such as political instability in the Middle East, prices for raw materials like natural rubber and ocean freight rates rose, causing the cost of sales ratio for the third quarter to reach 74.0 percent—a 2.6 percentage point increase from the same period last year. The impact of exchange rates resulting from the strong Korean won also weighed on profits.

NEXENTIRE plans to continue its sales strategy focused on high-inch, all-weather, and winter tires, while expecting profitability to improve as costs and logistics expenses stabilize. The company also intends to improve its earnings structure by increasing the share of high-value-added products in key markets such as Europe and to strengthen its supply chain management system to comply with global environmental regulations, including the EU Deforestation Regulation (EUDR).