Xingda profits fall on modest sales increase

ERJ staff report (DS)

Hong Kong - Gross profits at Chinese steelcord maker Xingda International Holdings fell by 20 percent, despite a small increase in sales for the 12 months to December 2011.

The company said in a detailed report that sales increased by 2.2 percent to RMB 5551 million (euro 665 million), but gross profit fell to RMB 1298 million from RMB 1636 million in 2010. According to data from CRIA, Xingda figures are slightly higher than equivalent numbers from Bekaert, but otherwise similar.

During the year, strong domestic replacement demand for passenger car tyres and fast-growing export sales led to a moderate increase of 3.1 percent in the Group's total sales volume to 455,600 tonnes. Sales volume of radial tyre cords rose by 3.0 percent to 383,400 tonnes, accounting for 84.1 percent of total sales volume (2010: 84.2 percent), whereas the sales volume of bead wires slightly declined by 2.1 percent to 68,300 tonnes, accounting for 15.0 percent of total sales volume of the Group (2010: 15.8 percent). The company launched a new product outside the tyre industry - sawing wire - which recorded a sales volume of 3,900 tonnes, accounting for 0.9 percent of the Group's total sales volume.

Sales volume of the Group's radial tyre cords for trucks declined by 7.5 percent to 255,300 tonnes due to the softened economic growth in China. However, due to the growing overseas market for passenger cars, sales volume of radial tyre cords for passenger cars rose 33.2 percent to 128,100 tonnes during the year under review. The sales volumes of radial tyre cords for trucks and passenger cars contributed 66.6 percent and 33.4 percent respectively of the Group's total sales volume of radial tyre cords (2010: 74.2 percent and 25.8 percent).

During the year, the Group cautiously implemented the production expansion plan of its No. 9 factory in Jiangsu and the new factory in Shandong so as to maintain a high utilisation rate. At the end of 2011, the Group's production capacity for radial tyre cords, bead wires and sawing wire were 500,000 tonnes, 100,000 tonnes and 12,000 tonnes respectively. Xingda's overall utilisation rate in 2011 decreased by 8 percentage points to 77 percent.

Mr. Liu Jinlan, Chairman of Xingda, said, "China's ongoing urbanisation and guidance by the 'Twelfth Five-Year Plan' would continue to stimulate the development of infrastructure within the country, thereby alleviating the negative impact brought by the ensuing financial turmoil. Besides, market demand should be further reinforced by the Chinese Government's target to achieve a radialisation rate exceeding 95 percent for truck tyres. Foreseeing a steady yet increasingly competitive radial tyre cord industry in China, the Group will leverage its competitive advantages, distinguished reputation and solid financial position, with an aim to maintain its leading position in China while enhance its brand reputation in the overseas market. Xingda will stand firm amidst the competitive industry environment, and advance steadily towards its goal to become the world's largest radial tyre cord manufacturer."

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Press release from Xingda