Cheng Shin Rubber Industry Co (正新橡膠) posted net profit for the first half of NT$8.02 billion (US$254.99 million), or NT$2.48 per share, a 23.12 percent increase from the same period last year, which it ascribed to inventory adjustments and healthy sales of high-margin products.
“The company’s inventory adjustments based on raw material prices reduced production costs in the second quarter,” Cheng Shin assistant vice president Richard Lo (羅永勵) told an investors’ conference on Tuesday.
“In addition, the company’s new run-flat tires, which enable vehicles to continue working even when punctured, sold well in the first half,” Lo said, adding that this type of tire enjoys a higher gross margin than other products.
Consequently, gross margin for the first half increased 3 percentage points from the same period last year to 33 percent, company data showed.
Cheng Shin, the world’s ninth-largest tire maker, supplies a wide range of products under its CST brand, including tires and tubes for bicycles, motorcycles, all-terrain vehicles, automobiles, trucks, forklifts, agricultural and garden equipment, according to information posted on its Web site.
The company said that it has made efforts to develop more high-value tires, including run-flat tires, all-season tires and automobile tires.
Cheng Shin said that it is optimistic about business outlook for the rest of the year, supported by recovering demand in the Chinese market.
Revenue contribution from China makes up 56 percent of total sales, while sales in the Asia-Pacific region and the US account for 14 and 12 percent respectively, company data showed.
While prices of radial tires for trucks and buses declined in the first half due to an economic slowdown in China, the situation is expected to improve in the second half, the company said.
Lo said the company is building two plants in India and Indonesia, which are to supply the Southeast Asian market.
The plants will begin producing in first half of next year, with each plant producing up to 20,000 motorcycle tires and from 6,000 to 10,000 radial tires for passenger cars per day, he added.
Headquartered in Changhua County, Cheng Shin operates 10 plants in Taiwan, China, Vietnam and Thailand.
Cheng Shin shares yesterday declined 2.17 percent to close at NT$67.5 in Taipei trading. Since the beginning of the year, shares have advanced 26.64 percent, outperforming the broader market’s 9.35 percent rise.
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