That’s horrible! The results of Chinese tire companies in the first half of the year are released.

That’s horrible! Linglong, Aeolus, and Doublestar released their performance forecasts for the first half of the year today. Compared with last year, the profits of the three tire companies all declined sharply.

Three tire companies’ performance forecasts released

Linglong Tire’s net profit decreased by 86%

Linglong Tire’s net profit in the first half of 2022 was 110 million yuan, a decrease of 664 million yuan compared with the same period last year, a decrease of 86% year-on-year; it is expected to deduct non-net profit of 13 million yuan, a decrease of 6.68 yuan compared with the same period last year 100 million yuan, a year-on-year decrease of 98%. (Deducting non-net profit: net profit after deducting non-recurring profit and loss, excluding factors such as capital premium, and only looking at the level of operating profit. The same below)

Aeolus Tire’s net profit decreased by 56.34%-68.25%

Aeolus Tire’s net profit was 8 million yuan to 11 million yuan, a year-on-year decrease of 56.34% to 68.25%; non-net profit deducted from -12.2 million yuan to -15.2 million yuan, a decrease of 19.4882 million compared with the same period last year (statutory disclosure data) Yuan to 22.4882 million yuan, a year-on-year decrease of 267.39% to 308.56%.

Double Star Tire lost 260 million to 320 million yuan.

Double Star Tire’s net profit in the first half of the year was a loss of 260 million to 320 million yuan, compared with a loss of 21.69 million yuan in the same period last year; a loss of 290 million-350 million after deducting non-net profit, a loss of 247 million in the same period last year.

It should be noted here that only when the net profit has a loss or a rise or fall of more than 50% will trigger the performance forecast warning of the securities exchange. In the current environment, other tire companies that have not issued performance forecasts will be relatively better.

Bottoming out, tire companies gradually recover

In fact, everyone should have expected such a miserable performance. The repeated epidemics in the first half of the year, the continuous high level of raw materials, and the sluggish market demand, etc., not only tire companies, but every tire operator is suffering.

Raw material prices remain high

In the first half of the year, affected by global inflation and the conflict between Russia and Ukraine, the main raw materials of tire products have increased at different rates. The increase in the procurement costs of major raw materials such as rubber, carbon black, steel wire, and energy has directly led to a substantial increase in the product cost of tire manufacturers, and gross profit margins level drops.

The epidemic affects logistics isolation

In the first half of 2022, the domestic epidemic situation is severe. Nearly 30 provinces in China have new cases of the new crown epidemic. Major tire factories have also experienced production shutdowns and production reductions to varying degrees due to epidemic control. The operating rate of factories has declined, and manufacturing costs have risen.

At the same time, high-speed control in many places has been closed, logistics and transportation have been blocked, and some supply chains have been partially disconnected, which has also adversely affected the procurement of raw materials and product sales of tire companies.

The auto accessory market is severely impacted

In the first half of 2022, auto production and supply were adversely affected by chip shortages and repeated outbreaks in Shanghai, Beijing, and Liaoning, resulting in a decline in auto production.

According to data from the China Automobile Association, the production and sales of automobiles in the first half of the year were 12.117 million and 12.057 million respectively, down 3.7% and 6.6% year-on-year respectively, and the loss of automobile sales reached 1 million.

Among them, the performance of commercial vehicles is still sluggish. In the first half of the year, the production and sales of commercial vehicles were 1.683 million and 1.702 million, respectively, down 38.5% and 41.2% year-on-year.

Market demand is sluggish, tire sales are sluggish

According to the research of Che and Wheels, the replacement market needs to continue to be sluggish in the first half of the year. The epidemic is isolated and tire wear is reduced. The enthusiasm of car owners to replace tires is not high. A tire shop in Beijing basically had no business for epidemic prevention and control from April to May. Only 20 tires were sold. Related link: A Beijing tire shop owner complained: 618+ epidemic, only 20 tires were sold in June.

Tire companies gradually recover

The good news is that compared with the losses in the first quarter, Linglong Tire and Aeolus Tire have turned losses into profits in the first half of the year, which also shows that tire companies have come out of the lowest point and have begun to recover gradually.

The market has gradually come out of the downturn and pessimism, the pace of economic recovery is accelerating, and the demand for tires is gradually increasing.

Looking forward to the second half of the year, as the domestic epidemic is brought under control and the prices of bulk raw materials continue to fall, the profit situation of tire companies is expected to improve.