1. Nexen’s Q2 Performance: A Tale of Two Metrics

Nexen Tire reported consolidated revenue of KRW 1.77 trillion and operating profit of KRW 99.1 billion for Q2 2025. While revenue increased year-over-year, operating profit declined. Preliminary figures for Q2 show revenue at KRW 904.7 billion, operating profit at KRW 50.2 billion, and net profit at KRW 23.6 billion.

2. Decoding the Profit Decline: The Cost Conundrum

The primary culprit behind the declining operating profit, despite revenue growth, is rising costs. Increases in selling, general, and administrative expenses (SG&A), along with financial expenses, are key factors. The importance of cost management, particularly related to overseas operations and financial instruments, is highlighted. Externally, factors like a weaker Korean Won impacting import costs and rising interest rates contributing to higher financial expenses played a role.

3. Nexen’s Future Growth Engines: VC Investments and Shareholder Value

Nexen is exploring ventures into VC/startup investments, seeking new avenues for future growth. The company is also focusing on enhancing shareholder value through share buybacks. These efforts are expected to contribute positively to long-term corporate value.

4. Investor Action Plan: Careful Monitoring and Analysis

  • Short-term: Monitor cost management improvements and strategies to address fluctuations in exchange rates and raw material prices.
  • Long-term: Focus on the successful integration of new business ventures and Nexen’s ability to secure future technological competitiveness, particularly in eco-friendly tires.

Nexen’s future stock performance hinges on the interplay of these factors. Continuous monitoring and thorough analysis are crucial for informed investment decisions.