QINGDAO, China — Qingdao Doublestar Group, the controlling shareholder in South Korea's Kumho Tire Co. Inc., suffered a 75% drop in fiscal 2018 net earnings on 6% lower sales, according to figures in the company's recently released annual report.
Net income fell to $4.23 million while revenue fell to $618 million. At the same time, the company's gross profit margin fell to 8.4% last year from 20% in 2017.
Tire sales volume jumped 14% to 9.5 million unit in 2018.
Doublestar linked the decline in profit partly to market headwinds such as trade conflicts and China's domestic slowdown. However, the closure of its outdated plant in Shiyan, Hubei Province, in late 2018, and new project investments also played a role, according to the annual report.
The company also reported a $67 million net loss less non-recurring items in 2018, according to its annual report released in April. The report did not disclose data on Kumho's results.
Doublestar also said in the report it intends to "explore the feasibility of an overseas plant in answer to China's Belt and Road Initiative," but it gave no further details.
The company had considered a factory in Kazakhstan in 2015 but later canceled the project.
Doublestar concluded its acquisition of a 45% ownership stake in Kumho last July, taking over the share owned Korea Development Bank (KDB) through a $607 million private placement.
In 2018, Doublestar inaugurated a tire plant and a machinery plant in Qingdao, and teamed up with Hyundai logistics affiliate Movex for a joint venture in intelligent logistics and industrial robotics.
The tire maker also joined forces in November with two Chinese machinery firms to set up a specialty rubber maker for military purposes.
The company also is pursuing a deal to acquire financially distressed Chinese tire maker Shandong Hengyu Technology Group, a diversified producer of passenger, truck/bus and industrial tires. Doublestar is exploring the deal through its Jilin Jixing Tire Co. Ltd. subsidiary.