Retreading Plant & Chinese Sales Key to Greater Goodway Earnings

Goodway Integrated Industries views its recent venture into China and the purchase of a plant in the Malaysian city of Shah Alam as key to greater future earnings, reports Malaysia’s The Star newspaper. The company, which was caught off-guard by a sharp increase in rubber prices during the first quarter, expects improved performance in the coming months following a review of its selling prices.

“We are able to pass down some of the price increases to our customers, which should help improve our profits for the rest of the year,” group CEO Tai Boon Wee said after the group’s June 24 AGM.

Goodway derived 70 per cent of its RM209 million 2007 turnover from rubber compound products, the remainder from the sales of retreaded tyres. The company’s compound has a 30,000-tonne-a-year capacity, the largest in Malaysia. While ever growing raw material prices had dented Goodway’s profits, Tai noted that demand for retreaded tyres had gone up in recent months as transportation companies and heavy machine operators in the mining sector had switched to the cheaper alternative. “The price of a retreaded tyre for commercial truck and bus can be 30 per cent to 40 per cent cheaper than new tyres,” Tai said.

Late last year, to keep pace with recent rising demand, Goodway acquired a retreading plant in Shah Alam. While the plant is currently producing 3,000 to 4,000 retreaded tyres a month, Tai said that Goodway plans to increase the facility’s capacity to about 30,000 units per month.

Goodway has also started selling its SuperCool tread liners to retreaders in China. Tai said income from China would rise following a partnership deal made with a large transportation company in Guangdong province.