Hankook Tire & Technology Co., Ltd. (KRX:161390) reported FY2025 revenue of ₩21,202.3bn. The year before it reported ₩9,411.9bn. Revenue more than doubled.

Operating income went from ₩1,762.3bn to ₩1,841.1bn. That is a rise of 4.5%.

So the company added ₩11.8tn of revenue and ₩79bn of operating profit. Net income actually fell, from ₩1,131.1bn to ₩971.6bn. Consolidated operating margin dropped from 18.7% to 8.7%, and the shares now trade at roughly half of stated book value.

Understanding this company means understanding that one transaction.

What Arrived In January 2025

Hankook took control of Hanon Systems and began consolidating it from the first quarter of 2025. Hanon makes thermal management systems for cars, meaning compressors, heat exchangers and the cooling loops that electric vehicles need for their batteries. It is a large auto parts supplier, not a tire maker.

Hanon reported FY2025 revenue of ₩10,883.7bn, up 8.9%, and operating profit of ₩271.8bn, up 184.5%. That is a 2.5% operating margin.

You can see the arrival in the quarterly series. Fourth-quarter 2024 revenue was ₩2,531.5bn with ₩473.3bn of operating income, an 18.7% margin. First-quarter 2025 revenue was ₩4,963.7bn with ₩354.6bn of operating income, a 7.1% margin. Nothing happened to the tire business in three months. A different company simply joined it.

Back the numbers out and the tire operation looks roughly like ₩10.3tn of revenue and about ₩1.57tn of operating profit in FY2025, a margin near 15%. That is approximate. Consolidation eliminations and the exact reporting perimeter will move it. But it says the tire business is still a high-margin business, and it also says the tire margin came down from 18.7%.

The Debt Came With The Revenue

Total liabilities were ₩4,654.9bn at the end of FY2024. At the end of FY2025 they were ₩12,445.2bn.

Finance costs followed. FY2024 charged ₩144.2bn. FY2025 charged ₩539.1bn, nearly four times as much. Pretax income fell despite the higher operating income, and that is why net income went backwards in a year when revenue doubled.

Intangible assets went from ₩250.3bn to ₩3,736.1bn. Most of that is purchase accounting on Hanon. It is also, from here, a standing impairment risk. Auto parts suppliers get written down when volumes disappoint, and this one carries a 2.5% margin with no cushion.

The balance sheet is not stretched, exactly. Total equity was ₩15,652.4bn at June 30 against ₩13,260.8bn of liabilities. But a large part of that equity belongs to Hanon's minority shareholders rather than to holders of Hankook stock, since Hankook does not own all of it. Any book value comparison has to allow for that.

With that caveat stated: the market capitalisation was ₩8.2 trillion at Thursday's close. Stated equity is roughly twice that.

Tennessee Was A Tariff Decision Before The Tariff Existed

Now the other half of the story, and the reason a US investor should care.

Hankook is finishing a $1.6bn expansion of its plant in Clarksville, Tennessee. The project adds about 1,200 jobs and roughly doubles US-made output, from 5.5m tires in 2024 toward 12m as the phases come up. It also brings the company's first US production of truck and bus radial tires, the large tires fleets buy, with a target near 1m units by the end of 2026.

The company has said the truck tire decision was driven by the prospect of US tariffs on Korean imports. Those tariffs are no longer a prospect. Korean goods entering the United States now face a 15% duty.

That timing is the single most useful fact about this company for an American reader. A tire built in Clarksville does not pay an import duty. A tire shipped from Daejeon does. Hankook's competitors from China have spent years being tariffed out of the US market; Hankook has been building the answer since 2022.

It has not been free. Purchases of property and equipment were ₩2,107.7bn in FY2025 against ₩1,033.1bn in FY2024. Operating cash flow was ₩1,608.0bn. So the company outspent its operating cash last year, and the first half of 2026 added another ₩789.5bn of plant spending.

Margins Are Already Recovering

The first half of 2026 produced ₩10,996.4bn of revenue and ₩1,066.1bn of operating income, a 9.7% margin. The first half of 2025 produced ₩10,333.3bn and ₩708.3bn, a 6.9% margin.

Revenue grew 6.4%. Operating income grew 50.5%.

That is what the restructuring of Hanon looks like if it works. Management said it would rebuild the unit's profit structure rather than chase its volume, and the numbers so far are consistent with that. Second-quarter operating income was ₩559.1bn, the best quarter since the deal closed.

The shares closed at ₩66,500 on September 3. The 52-week low was ₩38,100.

Where This Could Go Wrong

The obvious risk is that Hanon's 2.5% margin is not a fixable problem but a structural one. Thermal management is a components business selling to automakers who negotiate prices annually and do not lose those negotiations. If electric vehicle volumes slow, Hanon's growth case slows with them, and Hankook has bought ₩10.9tn of low-margin revenue at the wrong moment.

The debt makes that worse rather than better. ₩539.1bn of annual finance cost is a fixed charge against a variable margin.

Tennessee carries its own risk. Doubling capacity into a market assumes demand shows up. US replacement tire demand tracks miles driven and new vehicle sales, and a plant running below capacity is expensive in a way that an idle import order is not. Clarksville also faces the same US labour costs its domestic competitors do, which is precisely the advantage Hankook used to enjoy by importing.

And there is a governance overhang that English-language coverage keeps returning to. Control of the wider Hankook group has been contested within the founding family for years. That dispute does not change a single line of the income statement, but it does affect how much a minority investor should trust capital allocation decisions of this size.

What Would Settle It

Watch Hanon's quarterly operating margin. It was 2.5% for FY2025. If it moves toward 5% over the next few quarters, the acquisition starts to look like a cheap purchase of scale. If it stalls near 2%, Hankook has permanently traded a high-margin identity for a mid-margin one, and the shares are priced accordingly.

Second, watch the Clarksville ramp. The company has said it is targeting 12m tires and about 1m truck tires by the end of 2026. Those are checkable numbers, and they decide how much of the 15% tariff Hankook simply steps around.

Third, watch capital spending against operating cash flow. FY2025 was negative on that comparison. A second and third year of the same would start to constrain everything else.