The tire maker has the capacity to manufacture 41 million units per year.
“The country's auto industry is still at its golden stage and the steady growth of auto production, especially regarding the competitiveness of domestic vehicle makers, will largely boost domestic tire makers' share in the OE market,” said the company's prospectus.
China's car parc is 125 cars per thousand inhabitants, well below the world average. The country's vehicle production and sales volume grew by 3.3 and 4.7 percent, respectively, last year against a nationwide economic slowdown.
Besides the upgrade of older facilities, the project — located in Linglong's existing site in Yantai, Shandong — also contains the divesting of 3 million unit annual capacity for bias tires and new facilities for the company's own developed ultra-low-profile, wet-skid resistant and low noise tires with 8 million unit annual capacity.
Construction is scheduled to be completed in two years and full operation is expected in another two. Annual sales of the project, when in full operation, is pegged at $724.8 million with $85.9 million profit.
Last year Linglong had a 19-percent drop in net profit to $102.9 million on a 15-percent decrease in revenue to $1.36 billion. That was due to “factors such as global economy and commodity prices” and a fire at the company's Thailand factory that caused damage to produced tires, according to the prospectus.
In the wake of the Thailand plant's start up in 2013, Linglong's sales to the U.S. picked up by 10 percent in 2015 to $171.9 million, compared to a downslide for most of its Chinese competitors on account of anti-dumping tariffs imposed by the U.S. Overseas sales took up 55 percent of the company's total sales last year and have remained stable over the past three years.
Linglong projects similar revenue and net profit in 2016 compared with 2015, and said it expects to have a total of 80 million unit annual capacity by the end of 2020.
This report appeared on the website of European Rubber Journal, a United Kingdom-based sister publication of Tire Business.