While overseas tire giants are still worrying about sales, the Chinese tire industry has been driven by the auto industry and machinery industry and “has not come to Thailandâ€. The reporter learned yesterday that most of the large-scale tire companies in the first half of this year were prosperous in production and sales, and the operating rate of some companies was close to or even exceeded the historical best level. Under the dual effects of a sharp drop in raw material prices and a limited fall in the selling price of tires, the gross profit margin of the tire industry increased by 5% to 10%, reaching the highest level in history. Corresponding to this, a number of tire listed companies also saw a substantial increase in their net profit in the first half of the year.
A number of tire listed companies have issued advance notices. Yan Tire said yesterday that it expects its net profit for the half year of 2009 to increase by 100% to 150% year-on-year. Previously, Qingdao Double Star also said that its net profit in the first half of the year increased significantly.
The Deputy Secretary-General of the China Rubber Industry Association Tire Division, Tan Yukun, told the Shanghai Securities News yesterday. “By the auto industry and machinery industry, the rubber tire industry quickly emerged from the trough in the fourth quarter of 2008. Since the second quarter, the tire industry has entered. Accelerated recovery period. In the first half of the year, a considerable number of tire companies' capacity utilization rate reached 85% of the same period of last year; some companies even exceeded historical high levels and were fully loaded."
According to statistics, with the prosperous production and sales, the domestic tire industry's profit in the second quarter rose significantly. The performance in February and May is in stark contrast. In February this year, the total profit of the domestic tire industry was 14.39 million yuan, a sharp drop of 98% year-on-year; total profits in May reached 3.8 billion yuan, a year-on-year increase of 43%. Although current industry statistics have not yet been disclosed, a number of tire executives said that the company’s earnings growth in the second quarter was much higher than in the first quarter.
Chen Aihua, an analyst at Guosen Securities' petrochemical industry, pointed out that in the dual role of prices of natural rubber and other raw materials dropped by 50% and tires price cuts were limited, the gross profit margin of the tire industry increased by 5% to 10%, reaching the highest level in history.
The Aeolus shares, which were once the most affected by overseas markets, also saw a turnaround. Fengshen shares said that “most of the company’s products are in short supply, which is mainly due to the company’s timely change of strategy. Last year, the three major markets of export, support and maintenance were equally important, but the former two were affected by the financial crisis and began to pay more attention to the maintenance market this year. From the situation in the first half of the year, the company's recovery signs are obvious. It is understood that Fengshen's maintenance sales accounted for 40% of the total sales, and the matching market accounted for 40% of the total sales in the same period last year. In view of the higher gross profit margin in the maintenance market, many analysts have determined that the gross profit margin of Fengshen's shares will rise sharply from the first quarter.
According to Tan Yukun, “The tire industry will continue to grow steadily in the second half of this year. In the national RMB 4 trillion investment plan, the transformation of railways, highways, hydroelectric power grids, and post-disaster reconstruction in Wenchuan area will account for more than 50%. In addition, infrastructure projects such as highways will further boost demand for truck tires and passenger car tires."
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