Cheng Shin Rubber Industry Co (正新橡膠), the ninth-largest tire maker in the world, said yesterday that it plans to invest US$320 million to build a factory in Indonesia in a bid to tap into the Southeast Asian market.
The company forecast that the new factory would increase the firm’s annual revenue by US$320 million after it begins operations in the second half of 2015.
The new factory in Indonesia will make tires for cars and motorcycles.
Cheng Shin financial director Richard Lo (羅永勵) said the company plans to borrow US$240 million from banks and pay the remaining US$80 million with its own cash.
Last quarter, the company posted net profit of NT$4.73 billion (US$159.43 million), or earnings per share of NT$1.45, up 1.94 percent from NT$4.64 billion, or NT$1.43 per share, in the previous quarter, according to a company filing to the Taiwan Stock Exchange.
However, the filing also showed that Cheng Shin’s revenue last quarter declined 1.33 percent to NT$34.86 billion from NT$35.33 billion the previous quarter.
Lo said the profit increase was due to the company selling more high-margin tires for trucks last quarter and the fact that raw material prices had fallen from the previous three months.
Lo said he hopes the current quarter’s gross margin would be higher than last quarter’s 25 percent.