Tong Yang Industry Co (東陽實業), one of the world’s largest aftermarket automotive component suppliers, yesterday posted an 8.8 percent annual decrease in net profit for the first half of this year due to slowing demand from US customers and higher material costs.
Pre-tax profit in the first half of the year fell to NT$1.36 billion (US$44.48 million) from NT$1.48 billion in the same period last year, the company said in a filing.
From January through last month, cumulative revenue totaled NT$12.05 billion, edging up 0.75 percent from NT$11.96 billion in the first half of last year.
“Some customers from Europe and the US were more hesitant to place orders for aftermarket car parts last quarter, as they have yet to finish inventory digestion,” a Tong Yang official said by telephone.
Despite the annual decline in its bottom line, Tong Yang said that it remains optimistic about its business outlook for the coming quarters, backed by growing original equipment manufacturing (OEM) activity in China.
The Tainan-based company is to supply lightweight plastic components used in new electric cars made by benchmark Chinese brands including Guangzhou Automobile Group (廣汽集團), Dongfeng Motor Corp (東風汽車) and Changan Automobile (長安汽車), it said.
Tong Yang said it aims to further increase its presence in China’s new-energy vehicle market by expanding capacity through an alliance with one of its major clients, Changchun Faway Automobile Components Co (一汽富維).
New plants in Qingdao in China’s Shandong Province and Tianjin in Hebei Province began trial production last quarter, each with an annual design capacity to produce components for 300,000 cars, the company said.
The firm said it expects the two new facilities to run at full capacity by the end of the year at the earliest.
The escalating US-China trade war is not expected to have any significant impact on Tong Yang’s business, as the company has a diversified customer base with more than 2,300 foreign customers, company president Yung Hsiang (吳永祥) said in a statement.
Yuanta Securities Investment Consulting Co (元大投顧) shared the company’s outlook, saying that potential US tariffs and possible retaliatory tariffs from other governments could harm global demand for cars, but the impact on local auto parts supply chains should be limited.
Taiwanese suppliers’ customer bases are mostly diversified and many have followed their clients’ localization strategies to reduce risks, Yuanta said in a client note last month.
Tong Yang shares yesterday fell 0.78 percent to close at NT$44.35 on the main board after the earnings announcement, underperforming the broader market’s 0.43 percent decrease.
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