Analysts Expect ‘Lacklustre’ 2Q from Korean Tyremakers

7th July 2010 | 0 Comments
 

When Hankook Tire kicks off the second quarter earnings season for auto/auto part makers on 20 July, it will set the tone for a “lacklustre” set of results from the Hankook, Kumho and Nexen, according to Deutsche Bank. In an investor’s note dated 1 July 2010, Deutsche Bank research analyst Sanjeev Rana: “We expect tyre makers such as Hankook and Nexen Tire 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 moths, 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 per cent and 43 per cent in the first quarter 2010 from Hankook and Nexen respectively. And an 18 per cent increase in sales from Kumho.

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