Dropping of US duties set to lift Xinyi's earnings

PUBLISHED : Tuesday, 14 August, 2007, 12:00am
UPDATED : Tuesday, 14 August, 2007, 12:00am

Xinyi Glass Holdings, the mainland's largest automotive glass exporter by sales, said the cancellation of anti-dumping duties by the US government could boost the company's profitability this year.

Net income in the first half of the year surged 114 per cent to HK$300 million while turnover gained 74.5 per cent to HK$1.2 billion on strong demand for automotive and float glass products.

The US dropped anti-dumping duties earlier this year to comply with the World Trade Organisation's free trade regulations. Xinyi has been paying since 2002 an anti-dumping duty of 3.71 per cent.

Xinyi's exports to North America and Europe account for 60 per cent of turnover while the domestic market makes up 40 per cent.

Executive director Wesley Lee said the company wanted to enlarge its market share in the mainland by 50 per cent to take advantage of the rapidly growing economy.

Gross profit margins in the first half increased 3.9 percentage points to 40.2 per cent while net profit margin rose 4.4 percentage points to 24.5 per cent. Margins were boosted following streamlining to cut operational costs.

Xinyi expanded its float glass production lines earlier this year, with turnover of the product - the raw material of automotive glass - surging 34.54 times to HK$180.1 million.

The company plans to increase production capacity for both lines this year.

Chairman Gerry Tung said earlier that about 12 per cent of the world's vehicle glass was manufactured in the mainland, making the country the fourth-biggest producer. The mainland exported 9.11 million sheets last year, with 33 per cent from Xinyi, company data showed.

Analyst Grace Mak at Merrill Lynch said the firm had earmarked HK$2.5 billion in capital spending up to 2009 to raise capacity.

Shares of the company closed 2.59 per cent lower at HK$8.28 yesterday. The stock has surged 295.9 per cent in the past 12 months.