Raw Material Cost Increases Erode Profits: Sailun Tire Q3 Earnings Decline Nearly 50%(Nov 2)

Raw Material Cost Increases Erode Profits: Sailun Tire Q3 Earnings Decline Nearly 50%

Raw materials for tire production including natural rubber, synthetic rubber, and carbon black saw prices "collectively rise" in the third quarter of 2026, pressuring downstream tire companies' earnings. As a result, Sailun Tire, a leading industry player, faced significant cost pressure.

Sailun Tire's third-quarter results show that the company achieved revenue of 30.885 billion yuan in the first three quarters of 2026, up 11.96% year-on-year; net profit attributable to shareholders was 2.712 billion yuan, down 5.6% year-on-year; and non-GAAP net profit was 2.595 billion yuan, down 8.1%. In the third quarter alone, revenue was 10.858 billion yuan, up 8.6% year-on-year, while net profit was 552 million yuan, down 46.9% year-on-year; non-GAAP net profit was 537 million yuan, down 46.1%.

Despite revenue growth, net profit shrank significantly, with raw material cost increases being the primary factor. Sailun Tire stated that in the third quarter of 2026, the comprehensive procurement price of four major raw materials including natural rubber, synthetic rubber, carbon black, and steel cord rose 19.35% year-on-year and 3.44% quarter-on-quarter.

Industry experts note that tire industry costs are highly dependent on rubber and carbon black, with raw materials typically accounting for over half or even 70% of costs, and upstream price increases significantly suppressing gross margins. Notably, Sailun Tire's average product price in the third quarter declined slightly, with self-produced and self-sold tire product average prices down 4.93% year-on-year and 0.81% quarter-on-quarter due to product mix changes.

Other listed tire companies face similar challenges. Zhongce Rubber reported third-quarter revenue of 12.604 billion yuan, up 6.57% year-on-year, but net profit of 413 million yuan, down 65.29%. Linglong Tire reported first three-quarter revenue of 19.618 billion yuan, up 8.02%, but net profit of only 64.0464 million yuan, down 94.51%, with a third-quarter net loss of 37.3946 million yuan.

Since September, over 80 companies have issued more than 100 price increase notices, covering all-steel, semi-steel, and engineering tires, with mainstream increases of 2%-5% and some specifications reaching 6%. This marks the fourth round of price increases in the tire industry this year. However, even with price increases implemented in October, tire price hikes cannot fully cover raw material cost increases.

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