Recently, major tire companies released the first quarter 2015 financial report. The report shows that corporate revenues have declined.
Listed company revenues have declined
Domestic-funded tire companies: Fengshen Tire Co., Ltd.'s operating income was 1.566 billion yuan, a year-on-year decrease of 21.82%; profit was 54 million yuan, a decrease of 44.46%. The operating income of Shuangqin Group Co., Ltd. fell by 31.80% to 2.354 billion yuan, the profit dropped by 207.2%, and the loss was about 81 million yuan. Sailing Jinyu Group Co., Ltd. operating income fell 17.05% to 1.983 billion yuan, profits fell 66.88% to 32 million yuan. Guizhou Tyre Co., Ltd.'s operating income dropped by 28% to 1.067 billion yuan, and profits dropped by 19% to approximately 43 million yuan.
Foreign-funded tire companies in China:
According to foreign media reports, Goodyear Financial reported that revenue for the first quarter was US$4.02 billion, down from US$4.47 billion in the same period of last year; net profit was US$224 million and net loss was US$58 million. Its operating profit in Europe, the Middle East, and Africa in the first quarter fell by 34% to US$73 million. Earnings rose in some regions, including North American business operating profit growth of 27% to US$198 million, and Asia Pacific business operating profit growth of 3% to US$67 million. Latin America’s operating profit rose 26% to US$53 million.
Cooper Tire & Rubber Company's financial report said that revenue in the first quarter fell by 17% to US$663 million from US$779 million in the same period of the previous year, mainly due to the sales of Chinese joint ventures and the weakening of international business growth. The company’s earnings for the quarter fell from US$45.4 million in the same period last year to US$40.8 million, and 71 cents per share fell to 69 cents, lower than expected.
Hankook Tire's operating report showed that the company's global sales revenue in the first quarter was 1.48 trillion won (about 8.27 billion renminbi); operating profit fell 22% to 203.2 billion won, of which about 34% was from ultra-high performance tire segments.
Jiatong Tire Co., Ltd. reported that its operating income dropped 24.28% to 761 million yuan, profits fell 35.79% to 40 million yuan, and operating costs fell 197 million yuan to 583 million yuan.
The overall profit of the industry declined
In the first quarter, the overall revenue of the tire industry declined, continuation of the main reasons for 2014. The low raw material operation, the downward spiral of rubber product prices, and the US launch of the “double reverse†survey have caused tire product prices to continue to shift downward, and corporate profit growth has continued to fall.
According to statistics from member companies of the China Rubber Industry Association, in 2014, the tire industry suffered a loss of 10%, and its profit decreased by 4.4%. Among them, domestic-funded enterprises decreased by 9.7%, foreign-funded enterprises increased by 16.7%; sales revenue margin decreased by 0.21 percentage points; tires finished products The value of goods increased by 20.41%. According to the estimates of the China Rubber Association, the national tire production in 2014 increased by 6.24% to 562 million. Among them, there were 511 million radial tires, an increase of 7.35%, a radialization rate of 90%, and 112 million full-steel tires, an increase of 4.67%.
Challenges and opportunities coexist
Not long ago, at the “China Rubber Annual Conference 2015†organized by the China Rubber Industry Association in Guangzhou, Deng Yaxi, President of the China Rubber Industry Association, said that the “new normal†is the macro background of the economic operation of the industry in 2015. Under the “new normalâ€, new and old issues are intertwined. The favorable conditions and unfavorable factors coexist. The structural and cyclical contradictions affect each other. The industry development presents a series of important trend changes, facing both severe challenges and new opportunities.
Challenges: The decline in the demand for traditional products has been declining. The contradiction between overcapacity and homogenization and redundant construction has been prominent. The contradiction between the driving forces of factor weakening and weak innovation capacity has caused the industry to face the challenge of blocking both the supply of raw materials and the product market. Resources and environmental constraints have been further strengthened.
Opportunity: comprehensively deepen reforms to further stimulate market vitality; industrialization, informatization, urbanization, and agricultural modernization advance; “Three Belts and One Roadâ€, coordinated development of Beijing-Tianjin-Hebei, and Yangtze River Economic Belt are fully implemented and will activate both domestic and international Markets; State-owned enterprise reforms, price reforms, support for small and medium-sized enterprises, and optimization of mergers and acquisitions will be implemented to improve the market environment, enhance the competitiveness of enterprises, and add new impetus to the development of the industry.
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