High rubber prices circling tire business performance have changed face

The holiday stringing season since the end of last year has just entered the end. The capital market has ushered in the intensive period disclosed in the annual report. The car plates that the company earned last year are constantly refreshing the new record of profit growth. Shanghai Automotive (600104) It is expected that its net profit growth in 2010 will reach 100%, Huayu Automotive (600741) will increase its net profit by more than 60%, and Fuyao Glass (600660) will increase its net profit by more than 57%.

In stark contrast to their peers’ impressive performance, the 2010 performance of tire-listed companies has changed in the wake of the sharp rise in rubber prices.

Net profit fell by an average of 50%

黔 Tire A (000589) The previously announced performance announcement announced that its net profit in 2010 was RMB 110,862 million – RMB 180,192.25 million, a year-on-year decrease of 50%-70%; S Giti (600182) published annual report It shows that although the company's operating income in 2010 increased by 36.44% year-on-year, net profit fell by 63.81%; Fengshen shares (600469) expected the company's net profit in 2010 to be 3010.5535 million yuan, a decrease of about 50% year-on-year.

The tireless decline in the profits of many tire companies with strong sales in both production and sales is the rise in rubber prices since June 2010. At that time, the Shanghai Stock Exchange's 1105 primary contract for natural rubber began to rise unilaterally from the 20,000 yuan/ton mark. By October last year, it broke through 30,000 yuan/ton. On January 19, the rubber price exceeded 40,000 yuan in one fell swoop. At the highest point, it rose to 4,350 yuan. Although as of February 18th, Shanghai natural rubber prices closed at RMB 41800/t, down 2.8% month-on-month, but they still hovered above the high of RMB 40,000/ton.

Since the cost of rubber accounts for approximately 50% of the total production cost of tires, for tire manufacturers, rubber prices are one of the most sensitive aspects of tire manufacturers and directly determine the profitability of the company. According to statistics from the China Rubber Industry Association, profits of China's tire companies fell by 22% year-on-year from January to November 2010, with a loss of 26%, and the industry's total loss was nearly 50%.

What worries companies more than performance changes is that the winter of the industry is far from over. Some analysts pointed out that from the current situation, the days of tire companies in 2011 may still be difficult. Because external easing policies have caused global liquidity to continue to spread, overseas rubber prices may continue to rise. China has become the world's largest importer of natural rubber, and its foreign dependence on rubber has reached 70%. In addition, rubber prices in the domestic market are also fully linked with the international market, so the cost pressure on tire companies this year may be even greater.

Since the trend of rising costs cannot be reversed in the short term, how will tire companies survive this cold winter?

It is difficult to reduce the use of tariffs to deposit plastic rubber at the China Rubber Industry Association recently held a tire economic operation analysis conference, including Aeolus tires, tires, tires, including a number of participating companies, said to solve the current tire industry difficulties and stabilize The price of natural rubber, the state should put the State Reserve rubber as soon as possible, while eliminating the import tariffs of natural rubber as soon as possible.

Although the rubber industry's voices continue to be heard, analysts at Huarong Securities said that although the country's throwing away of stored rubber can prevent domestic rubber prices from rising too quickly in the short term, the state's rubber reserves are limited. , And throw the reserve to bid, so the domestic rubber prices are difficult to get real suppression. Moreover, at present, China's import tariff on natural rubber is 2,000 yuan/ton. Even if the country abolishes import tariffs on natural rubber, tire companies are still facing significant cost pressures based on current international rubber prices.

Tire refurbishment or bottlenecks are difficult to raise prices Since the official shelters are hard to come by, companies can only rely on their own efforts.

The most direct way to cope with rising costs is simply to increase product prices. Although the current tire manufacturers have begun to brewing a new round of price increases, but according to the introduction of the participating tire companies, based on the previous tire price expectations, dealers have increased inventory in the early period, the tire manufacturer's cost pressures downstream distribution It is difficult to communicate with businesses. And in the automotive industry chain, the ability of tire companies to price games is not strong.

According to informed sources, along with the Ministry of Industry and Information Technology in late January, the Ministry of Industry and Information Technology issued the "Guidelines for the Comprehensive Utilization of Waste Tires", which requires the construction and standardization of used tire recycling systems to support the development of the tire retreading industry. At present, many companies are quietly developing their tire retreading business.

At present, China's tire renovation rate of less than 5%, and more layout in the refurbishment of truck tires and giant tires, car tire renovation is almost a blank, while the proportion of developed tires in the renovation of 45%. Since the use rate of retreaded tires can reach 70%-75% of new tires, and tire retreading can not only help companies effectively hedge cost pressures, it is very likely to become a new road and corner for the tire manufacturers.