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Hankook Tire 2006 profit falls on materials, won

Hankook Tire Co., South Korea's biggest tiremaker, posted a 22% fall in full-year profit on higher materials costs and a stronger South Korean won.

Net income in 2006 was 166.8 billion South Korean won ($178 million), compared with 213.8 billion won a year earlier, the Seoul-based company said in an e-mailed statement. Sales rose 2.9% to 2.08 trillion won, it said in a regulatory filing. Hankook Tire Co.'s full-year profit fell after rubber and oil prices reached record highs. A stronger won also cut the repatriated value of the tiremaker's overseas earnings.

The company expects to boost net income 36% this year to 226.9 billion won, helped by exports and higher sales to premium automakers, including the Chinese operations of Volkswagen AG's Audi AG unit, it said. Sales will probably rise 9.1% to 2.27 trillion won, it added. Shares of the company fell 2.5% to 13,900 won at 2:43 p.m. in Seoul. They have gained 3% over the past 12 months. Michelin & Cie, the world's largest tiremaker, owns 6.2% of the company.

Hankook Tire paid 52% more for natural rubber, its main raw material, last year, it said. The price of synthetic rubber also rose 6%, it added. The company's 2006 operating profit, or sales minus the cost of goods sold and administrative expenses, fell 24% to 174.5 billion won. It plans to pay a dividend of 250 won a share. The Korean currency averaged 954.79 won to the dollar in 2006, 7.8% stronger than a year earlier, according to Bloomberg data. (Bloomberg)