Cheng Shin and Kenda Both Hit Record Revenues in First 3 Qtrs.

Taipei, Nov.15, 2012 (CENS)--Taiwan's two major tire makers both achieved historical-high consolidated revenues in the first three quarters, with Cheng Shin Rubber Co.'s increasing 13% year on year (YoY) to NT$98.8 billion (US$3.29 billion), and Kenda Tires Co.'s growing 10% from a year earlier. Institutional investors predict both firms to also push profits to new three-year highs.

With about 10% YoY decline in natural-rubber price due to oversupply in 2012, 15% YoY price drop in synthetic-rubber due to price crash of “butadiene”, along with stable tire prices, Kenda's consolidated gross profit margin in the third quarter hit a new high in 2012 at 22.27%, with Cheng Shin's being 23.39%.

The two firms also witnessed remarkable profits in the third quarter, with Cheng Shin reporting net profits of NT$4.183 billion (US$139.43 billion), up 20% from the previous quarter and 96% year-on-year, with NT$1.48 (US$0.049) in EPS (earnings per share), and NT$3.88 (US$0.129) in EPS from Jan. to Sep.

Kenda saw net profits in the third quarter shoot up 230% YoY to NT$743 million (US$24.77 million), up 36% from a quarter earlier, with NT$1.01 (US$0.033) in EPS, and NT$$2.43 (US$0.081) in EPS in the first three quarters.

Despite low season in the fourth quarter, both firms saw growing revenues in October, with Cheng Shin's up 8.76% month on month (MoM) to NT$2.234 billion (US$74.47 million), Kenda's rising 8.8% MoM to NT$500 million (US$16.67 million). However, with less shipment days due to Oct. 1st holiday in China, both firms are predicted to see consolidated revenues drop in October.

With dropping synthetic-rubber price due to significant price decline of raw material butadiene, tire makers in the third quarter saw cost drop 5~10% from a quarter earlier. However, due to the coming low season, the two tire makers in the fourth quarter are expected to maintain similar gross profit margin to the previous quarter.