Tue, May 16, 2017 - Page 11 News List

Tire makers report heavy foreign exchange losses

Staff writer, with CNA

Major tire suppliers have seen their profits more than halved by foreign exchange losses in the first quarter due to a stronger New Taiwan dollar.

Cheng Shin Rubber Industry Co (正新), which sells its products under the Maxxis brand, yesterday said that it booked more than NT$500 million (US$16.6 million) in foreign exchange losses in the quarter, when the NT dollar appreciated about 6 percent against the US dollar.

Kenda Rubber Industrial Co (建大), the nation’s second-largest tire manufacturer, said its losses topped NT$200 million in the first quarter.

As a result, Cheng Shin posted net profit of NT$1.92 billion for the period, down 52.33 percent from the first quarter of last year, with earnings per share (EPS) of NT$0.59.

Kenda said net profit fell 68 percent year-on-year to NT$204 million, with EPS of NT$0.23.

The two companies’ bottom lines were also squeezed by rising rubber prices, leading to a more than 6 percentage point drop in gross margin in the quarter, with Cheng Shin’s gross margin standing at 25.66 percent and Kenda’s at 21.34 percent, they said.

Many electronics firms have reported heavy foreign exchange losses in the first quarter that badly hurt their profitability, sparking calls for the central bank to contain the strength of the NT dollar.

Quanta Computer Inc (廣達) reported losses of NT$649 million, Acer Inc (宏碁) suffered NT$522 million in losses and Taiwan Semiconductor Manufacturing Co (台積電) said it incurred about NT$6 billion in losses.

The Financial Supervisory Commission said in a report last month that the nation’s life insurance sector suffered a combined NT$65.8 billion in foreign exchange losses in the quarter because of the large amount of overseas assets they own.

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