Fri, Jun 16, 2017 - Page 10 News List

Tire maker Kenda launches new plant as part of plans to improve efficiency

By Kuo Chia-erh  /  Staff reporter, in Changhua

Cheng Shin chairman Robert Lo, right, smiles at a shareholders’ meeting in Changhua yesterday.

Photo: CNA

Tire manufacturer Kenda Rubber Industrial Co (建大輪胎) yesterday launched its new plant in Yunlin County’s Douliou City (斗六) as part of its efforts to improve operating efficiency.

The new facility, which cost nearly NT$200 million (US$6.61 million), is to serve as its logistic center in the nation and a production site to jig fixtures for tires, the company said.

Kenda supplies tires for cars, motorcycles and bicycles, with revenue breakdown by product last year being about 38 percent for sedans, 28 percent for motorcycles, 22 percent for bicycles and 12 percent for other types of tires, according to data compiled by First Capital Management Inc (第一金證券投顧).

The Yuanlin Township (員林), Changhua County-based company reported NT$12.5 billion in cumulative sales in the first five months of the year, slipping 0.61 percent from the previous year, company data showed.

Kenda, which raised prices in April, said higher product prices made its customers hesitant to place orders, adding pressure to its top-line growth.

However, Kenda vice chairman Jimmy Yang (楊啟仁) voiced optimism about the company’s business outlook, saying that revenue is likely to grow in the second half, following surging demand for bike-sharing services in China.

“The demand for our bike tires has been increasing since the second half of last year, thanks to China’s recent bike-sharing boom,” Yang told reporters in Yuanlin on Wednesday.

Kenda counts Ofo Inc (共享單車) and Mobike Technology Co Ltd (摩拜科技) — the top two bike-sharing service providers in China — among its major clients, Yang said.

Ofo is expected to purchase 10 million bikes for its bike-sharing business this year, while Mobike is to add nearly 7 million bikes, Kenda said.

As a result, Kenda has set a sales target of 5.4 million tires this year, which translates into a 10 percent increase from the previous year, the company said.

Driven by significant demand, Kenda’s daily output of bike tires has grown from several thousand to 50,000.

The company produces most of its bike tires in Kunshan and Tianjin in China.

To expand its market presence in Southeast Asia, Kenda is constructing a new plant in Vietnam to manufacture car tires, which is expected to start pilot production in the fourth quarter.

Kenda shareholders yesterday approved a proposal to pay cash dividends of NT$2 per share, based on last year’s net profit of NT$3.09 billion, or NT$3.54 per share.

Last year, the tire maker saw its earnings fall 10.8 percent from the previous year, while sales dropped 5.4 percent annually to NT$29.5 billion, primarily due to slowing customer demand and the sharp appreciation of the New Taiwan dollar in the fourth quarter.

In related news, Cheng Shin Rubber Industry Co (正新橡膠), another top player in Taiwan’s tire manufacturing industry, yesterday approved a plan to pay cash dividends of NT$3 per share, based on last year’s earnings of NT$13.25 billion, or earnings of NT$4.09 per share.

Cheng Shin, which sells its products under the Maxxis brand, said it expects annual sales to reach NT$200 billion in 10 years, compared with last year’s NT$117.4 billion, backed by capacity expansions at its new plants in Indonesia and India.

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