Thu, Apr 18, 2019 - Page 11 News List

Cheng Shin seeking ways to offset China cooldown

MORE TIRES:The firm would boost daily production at its India factory to 20,000 units to fulfill orders and increase daily production at its Indonesia plant to 10,000 units

By Kwan Shin-han  /  Staff Reporter

Cheng Shin Rubber Industry Co (正新橡膠), which sells its products under the Maxxis brand, on Tuesday said that it would maximize production at its plants in India and Indonesia as it seeks a new growth engine to make up for the cooling Chinese market.

Cheng Shin plans to increase daily production at its Indian factory to 20,000 units after receiving orders from Yamaha Motor Corp and Honda Motor Co for motorcycle tires, vice president Richard Lo (羅永勵) told investors.

The factory makes tires for Honda and India’s Hero MotoCorp.

Cheng Shin’s expects the factory to break even next year, Lo said.

The company also plans to expand daily production at its Indonesian factory to 10,000 units, as it seeks to become an original equipment supplier for Honda and Yamaha, targeting the ASEAN market.

Both factories focus on manufacturing inner tubes and cover tires for motorcycles, the company said.

Cheng Shin last year saw its net profit plunge 36.48 percent to NT$3.52 billion (US$114.1 million), from NT$5.54 billion in 2017, due to higher raw material costs, increased operating costs and volatile foreign-exchange rates. Earnings per share fell to NT$1.09 from NT$1.71 in 2017.

Prices of chemical and carbon materials used in the production of tires last year rose by 3 percent annually, Lo said.

Revenue fell 2.75 percent to NT$109.22 billion from NT$112.31 billion in 2017, while gross margin fell to 22.27 percent from 22.86 percent, the company said in a financial statement.

“China’s auto market slowed down in the past few years, so our goal is to focus on after-sales services. However, it is not easy, because the Chinese market is more competitive than South and Southeast Asia,” Lo said.

Cheng Shin in December last year transformed factories in Tianjin, China, into a warehouse and an after-sales center to cope with stricter environmental laws in China.

The Changhua County-based company operates 11 production plants in Asia: six in China, and the rest in Vietnam, Indonesia, India and Thailand.

Its daily production capacity last year was about 1.33 million pieces — inner tubes accounted for 40.57 percent, motorcycle tire covers made up 18.40 percent and tire covers for bicycles amounted to 17.95 percent of total production, company data showed.

The company also produces tire covers for automobiles and trucks.

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