Tyres and tubes firms see buoyant performance in H1
Tyres and tubes firms see buoyant performance in H1
Tyres and tubes businesses eyed impressive results in the year to date, leveraging export market rebound and markedly improved accrued profit.
Accordingly, southern major player Danang Rubber JSC (DRC) counted $56.8 million in second quarter’s net revenue, up 18 per cent on-year.
Despite surging expenses, particularly sales expenses, the company’s pre-tax profit in Q2 still rose 1.5-fold on-year reaching $4.05 million.
In the first six months of this year, the company’s pre-tax profit approximated $6.5 million, equal to 54.6 per cent of full-year projection.
Le Hoang Khanh Nhat, DRC’s CEO, attributed the company’s upbeat performance to accelerated sales policy and advantages coming from the surging VND-USD exchange rate in the past year.
With a spike in the revenue, for the first time from 2017 the company’s accrued profit ratio resumed to 20 per cent.
Notably, despite a double-digit growth in the revenue, the input material cost during the period shed 4 per cent on-year.
Often holding around 60 per cent in companies’ production cost structure, fluctuations in input material price cast a major impact on the total cost structure of tyres and tubes businesses.
High accrued profit ratio is deemed a positive feature in Q2’s performance of these producers.
Accordingly, despite a fall of 8 per cent in revenue compared to one year ago, Southern Rubber JSC (Casumina) still witnessed a healthy quarter.
With its accrued profit ratio shooting more than 9 per cent one year ago to 15.76 per cent in Q2, setting a record from 2020, Casumina eyed 59 per cent jump on-year in its pre-tax profit reaching $1.1 million.
Generally in H1, the company raked in $1.7 million in pre-tax profit, more than double one year ago, fulfilling over half of full-year projection.
Nguyen Van Hien, deputy CEO of Casumina, revealed that the company had focused on pushing up sales through presenting more suitable policies to distributors.
“Another factor driving up costs is the transportation fare to export orders. For the tyres and tubes sector, domestic and export markets present specific challenges,” Hien said.
Other challenges relate to still slow rebound of purchasing power and increasingly stiff competition from foreign-invested enterprieses’ similar items.
Meanwhile, Star Rubber JSC (SRC) witnessed 22 per cent jump in its Q2’s revenue. The company’s accrued profit ratio also improved significantly compared to one year ago. SRC counted more than $658,300 in net operating profit during the period, nearly double on-year.
During the period, SRC, however, counted $6.6 million income from a land transfer deal, driving up its pre-tax profit in H1 to a staggering $7.6 million, more than 10-fold compared to a year ago.
Figures by the General Statistics Office show that in H1, export of rubber products rose 13.7 per cent on-year to surpass $586 million,
Vo Hoang An, general secretary of the Vietnam Rubber Association, said tyres were the leading export item in the group of deep-processed rubber products (including tubes, pillow, shoe soles, gloves, and elastic thread), going to 140 countries and territories around the world, the largest being the US market.
According to the Vietnam Automobile Tyre Industry Report for 2024-2033 by ResearchAndMarkets, among the top 10 tyre exporters in Vietnam, there are only two local producers: Casumina and Danang Rubber JSC.
However, globally renowned manufacturers such as Bridgestone, Michelin, Yokohama, and Kumho have established operations across Vietnam.
