Lu Hai Holding Corp (六暉), which makes valve stems for tires, said its net profit for the first half rose 21 percent to NT$149 million (US$4.76 million) from a year earlier, thanks to its focus on higher-margin products.
The world’s largest tire valve manufacturer has maintained its bargaining power when negotiating with global clients, Lu Hai general manager Simon Hsu (許廉凱) told an investors’ conference in Taipei yesterday.
“Instead of producing lower-gross margin valve stems, we would rather sacrifice some orders to keep our net profit,” Hsu said.
In the first six months of the year, the company reported consolidated sales of NT$1.28 billion, which were almost flat compared with the same period last year, company data showed.
However, gross margin in the first half climbed by 3.84 percentage points to 25.42 percent from a year earlier, boosting the company’s net profit.
Hsu said the company is optimistic about its performance in the second half of this year and expects business to be better than the first half, in part due to increasing global demand for tire-pressure monitoring systems (TPMS).
Revenue contribution from TPMS valve stems makes up less than 6 percent of the company’s total sales, but the company expects its sales ratio to gradually increase, Hsu said.
TPMS valve stems offer higher gross margins than the company’s other products, he said.
“In the second half of the year, we expect our average gross margin to remain at current levels, or about 25 percent. For TPMS valve stems, we hope to keep the gross margin at least at 40 percent,” Hsu said.
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