Linglong swings to loss as rising costs hit tire earnings

Zhaoyuan, China – Shandong Linglong Tire swung to a third-quarter net loss as higher raw-material costs outweighed growth in tire sales.

The Chinese manufacturer posted a net loss attributable to shareholders of CNY37.4 million (€5.1 million), compared with a profit of CNY313 million a year earlier.

Revenue increased 8.4% year-on-year to CNY6.88 billion, according to the company's financial report published 31 Oct.

Linglong attributed the quarterly earnings decline mainly to "rising raw-material prices", which led to a substantial increase in costs and reduced gross profit.

In a separate operating disclosure, the company reported a 3.8% increase in tire sales volumes during the quarter.

Tire sales revenue increased 8.3% year-on-year, while average selling prices rose 4.4%, reflecting changes in market and product mix.

However, the combined purchase cost of natural rubber, synthetic rubber, carbon black and steel cord increased 15.2% year-on-year.

For the first nine months, Linglong's net profit fell 94.5% to CNY64 million, despite an 8% increase in revenue to CNY19.62 billion.

The company linked the nine-month earnings decline largely to exchange-rate movements, which resulted in substantial foreign-exchange losses compared with gains in the same period last year.

It estimated that the currency movements increased financial expenses by approximately CNY1 billion year-on-year.