Prinx Chengshan reports improved half-year earnings on flat sales

Rongcheng, China – Prinx Chengshan (Cayman) Holding Ltd., the financial holding company for Chinese tire maker Prinx Chengshan (Shandong) Tire Co. Ltd., reported improved pre-tax and net income for the six months ended June 30 on 1% lower sales.

The company reported pre-tax income of $44.5 million (€37 million) and net earnings of $37.8 million on sales of $406.3 million.

The Rongcheng-based company said it overcame the impact of the "severe stagnation" of global economic activities caused by the Covid-19 pandemic in part by shifting its international sales efforts to markets in Africa, Latin America and other areas less impacted by the pandemic.

Overall, business with customers outside of China fell slightly, but the share of the company's revenue generated internationally held steady at 30%, the firm's figures show.

In North America, Prinx Chengshan "achieved phased results in the construction of sales channels, laying a solid foundation" for sales of truck tires from the company's factory in Rayong, Thailand, where commercial-scale production commenced during the second quarter and is ramping up toward full capacity by year-end.

At the same time, the company's revenue from private-label off-take sales fell nearly 49% due to the pandemic and a lower volume of business with Cooper Tire & Rubber Co. This channel now represents just 4.4% of the firm's sales.

Looking ahead to the second half of 2020, the company did not make a specific sales forecast, but said "more uncertainties will emerge in the external environment due to China-US trade frictions and the pandemic."

It listed a number of headwinds it's facing going forwards, such as: a shrinking market scale; intensifying competition; faster changes in customer demands; and increasing consolidation/concentration among its customers, both domestically and internationally.

Founded in 1976 and listed on the main board of the Hong Kong Stock Exchange, Prinx Chengshan is considered the No. 34 tire maker worldwide with 2019 sales of $776 million. It sells under the Austone, Chengshang, Fortune and Prinx brands.