Guizhou Tyre increases investment in Vietnam factory

Chinese manufacturer Guizhou Tyre released its semi-annual report on 22 August, providing progress updates about the production facilities it is currently building at home and overseas. The company also reported revenue of RMB 4.44 billion (£482.6 million, US$611.2 million) for the first half of 2023 and profit of RMB 340 million (£37.0 million, $46.8 million).

Guizhou Tyre is expanding its site in Zhazuo, China with a project to add an annual capacity for 380,000 OTR tyres. The first phase of the project will result in a capacity of 200,000 tyres, and Guizhou Tyre says it has completed the installation of equipment. This equipment has partially been commissioned and the tyre maker has begun small-batch trial production.

Phase one work on the company’s Vietnam factory was completed last year and is currently operating with an annual production capacity of 1.2 million all-steel radial tyres. The second phase, which will result in an annual output of 950,000 all-steel radial tyres, is progressing with the installation and debugging of some equipment ahead of the start of trial production in the second half of the year. In the first six months of 2023, the Vietnam factory produced 464,300 tyres and realised a net profit of RMB 60 million (£6.5 million, $8.3 million).

Further investment in Vietnam plant

Guizhou Tyre has approved further investment in response to this profitability in Vietnam. On 18 August, the tyre maker’s Board of Directors increased investment in the Vietnamese factory by US$58.08 million on the grounds of “meeting the production and operation needs of the Vietnamese company, optimising its capital structure, and enhancing its comprehensive competitiveness.” After the capital increase, the registered capital of Guizhou Tyre’s Vietnam company reached $136 million.

This is the second capital increase in the Vietnam factory within the past 12 months, the first being $34.6 million. In other words, Guizhou Tyre has increased investment in its Vietnam factory by US$92.68 million.

Guizhou Tyre lists the benefits of capital increase in Vietnam factories as “improving the structure of assets and liabilities, enhancing capital strength, reducing interest expenses, improving profitability, speeding up project progress, and achieving sustainable and healthy development.”