Tire-maker Cheng Shin Sees Jan.-Sept. Profits Exceed that in 2011

Taipei, Oct.31, 2012 (CENS)--Major Taiwan-based tire-maker Cheng Shin Rubber Ind. Co. saw net earnings in the first three quarters exceed NT$10 billion (US$333.33 million), with NT$3.88 (US$0.13) in EPS (earnings per share), better than the full-year performance in 2011. An institutional investor predicts that, with remarkable price decline of synthetic rubber and natural rubber, the firm's EPS in 2012 is likely to challenge NT$5.5 (US$0.18), a three-year high.

Cheng Shin reported NT$18.911 billion (US$630.37 million) of revenues in the third quarter, down 11% from the previous quarter and 0.6% from a year earlier. However, benefiting from overseas business, the firm saw net profits up 17.26% quarter on quarter to NT$4.1 billion (US$136.67 million), with NT$1.48 (US$0.05) in EPS, higher than NT$1.23 (US$0.04) in 2011.

As prices of natural and synthetic rubber repeatedly hit new lows in the third quarter, along with recovering tire market and releases of new products in the second quarter, Cheng Shin's profits this year continue to grow remarkably.

Looking to the fourth quarter, a market source noted that due to raw-material providers deciding to cut production to maintain stable prices, tire makers are likely to suffer profit decline from growing manufacturing cost, coupled with the fourth quarter being the traditional low season.

Cheng Shin's new plants in Chongqing (Sichuan Province), Xiamen (Fujian Province), Touliu (Yunlin County, Taiwan), and Zhangzhou (Fujian Province) will gradually raise production capacity in response to market demand, ensuring revenue growth in the fourth quarter. The firm's net profits this year is likely to challenge NT$15 billion (US$500 million) and retain NT$5.5 (US$0.18) in EPS.

An institutional investor stated that with low raw material cost due to nine-year high output of natural rubber, the largest two tire makers Cheng Shin and Kenda Tires Co. will benefit from such trend in operations in 2013.