Xingda profits down despite higher sales

Xingda profits down despite higher salesGROSS profits at Chinese steel cord maker Xingda International Holdings fell by 20%, despite a small increase in sales for the 12 months to December 2011.

The company said that sales increased by 2.2% to RMB5,551 million, but gross profit fell to RMB1,298 million from RMB1,636 million in 2010.

During the year, strong domestic replacement demand for passenger car tyres and fast-growing export sales led to a moderate increase of 3.1% in the group’s total sales volume to 455,600 tonnes. Sales volume of radial tyre cords rose by 3% to 383,400 tonnes, accounting for 84.1% of total sales volume (2010: 84.2%), whereas the sales volume of bead wires slightly declined by 2.1% to 68,300 tonnes, accounting for 15% of total sales volume of the group (2010: 15.8%). 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% of the group’s total sales volume.

Sales volume of the group’s radial tyre cords for trucks declined by 7.5% 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% to 128,100 tonnes during the year under review. The sales volumes of radial tyre cords for trucks and passenger cars contributed 66.6% and 33.4% respectively of the group’s total sales volume.

During the year, the group implemented the production expansion plan of its ninth factory in Jiangsu and the new factory in Shandong 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%.(PRA)