Kumho stocks fell due to a fire at a plant in Gwangju

Kumho Tire, South Korea's second-largest tire maker, saw its shares fall 8% after a major fire halted production at its plant in Gwangju on Saturday, May 17, threatening supplies to clients from auto brands, reports Reuters.

On May 19, the media reported that 90-95% of the fire had been extinguished, but the flames had destroyed much of the plant's western section, and a Kumho representative stated that the company may have to lower its 2025 revenue forecast by 10%, to 5 trillion won ($3.6 billion). He also added that the company had been trying to relocate production from the outdated Gwangju site for some time and had not yet decided whether to rebuild it.

The Gwangju plant has a capacity of up to 12 million tires per year, accounting for nearly 20% of Kumho's total production capacity, with clients including Volkswagen, Hyundai, Mercedes-Benz, and others.

To compensate for the reduced production, Kumho intends to increase capacity at its other plants, but the company's ability to do so may be limited, as its facilities in Korea and abroad are already operating at full capacity, the company notes.

"We are currently investigating the circumstances of the emergency and the extent of the damage, and our company, including management, is working to minimize losses by quickly addressing the aftermath of the fire," Kumho emphasizes.

In Gwangju, the company produces tires for passenger and commercial vehicles, as well as aircraft. Kumho has a total of eight plants in four countries, and in 2025, the company planned to increase its production capacity to 65 million tires per year, while in 2023, it produced 62.4 million tires.

The fire was finally extinguished on Tuesday, May 20, after three days. According to the Yonhap agency, the main blaze was brought under control on Sunday, but firefighters had to make efforts to extinguish the remaining flames, which were fueled by the burning of various flammable materials.

In total, three people were injured in the fire, including two firefighters and a Kumho employee who suffered a bone fracture during evacuation.

In the Gwangsan district of Gwangju, where the plant is located, 1,236 reports were received from residents, including 603 complaints of headaches, nausea, and other symptoms.

The fire is believed to have started due to sparks from an industrial electric furnace at the plant, Yonhap reports.

Photo: Yonhap