Operating Income of Xingda International in 2015 Falling by 15.3%

Influenced by weakness of overall economy and continuous deepening of industrial competition, the realized operating income of Xingda International Holdings Limited in 2015 was 4.737 Billion Yuan, with a year-on-year decline of 15.3%. This company actively adjusted its global sales strategy, and the demand for bus radial tires in the international market was relatively good, thus the overall sales of steel cord only declined by 2.0%.

In 2015, the sales of this company was 580,800 tons, in which that of steel cord was 501,100 tons, with a year- on-year decrease of 2.5%; and that of bead wire was 79,700 tons, with an increase of 1.3%. Given that slowdown in China’s economic growth resulted in decline in demand for new and replacement tires of truck, this company initiatively adjusted its global market layout and vigorously developed overseas bus market, the sales of steel cord for bus radial tire in the whole year rose up by 10.4% to 197,000 tons while that of steel cord for truck radial tire declined by 9.3% to 304,000 tons. In the total sales of steel cord for radial tire, the sales of the products for truck and for bus accounted for respectively 60.7% and 39.3% while 65.2% and 34.8% in 2014. Meanwhile, the ratio of domestic market and international market was also adjusted from 80.6:19.4 in 2014 to 76.9:23.1. To respond to the industrial competition, this company continued to adopt a relatively low average sale price strategy, thus the gross profit of the products had a year- on-year decrease of 33.2% to 850 Million Yuan and the gross profit rate narrowed by 4.9% to 17.9%.

Since the first-stage project with a capacity of 50,000 tons of Shandong Xingda Steel Cord Co., Ltd. was put into operation in the second quarter of 2015, which enabled the steel cord capacity of Xingda International by the end of 2015 to reach 610,000 tons; however, the annual capacity of bead wire and other steel wires was 112,000 tons, and it was roughly calculated that the capacity utilization rate declined by 10% to 80%.

This company thought that the competition in steel cord industry would last in the future and the small and medium- sized enterprises with backward productive force would go into liquidation due to failure to endure, therefore the decrease in price of steel cord would narrow and the resource allocation and profit space of the industry would be improved more reasonably to facilitate Xingda to further increase its market share.