Linglong’s problems in Serbia – Net loss almost triples in one year, investors asking when factory becomes profitable

The Linglong Tire factory in Serbia is operating with growing losses, the latest financial report of the Chinese tire giant showed.

In the first half of this year, the factory in Serbia, in which the company has invested significantly, generated revenue of 1.18 billion yuan (about EUR 153.4 million), which represents a growth of 148.1% compared to last year, Chinese media reported. However, the net loss amounted to 130 million yuan (EUR 16.6 million), surpassing the loss from the same period last year of 50 million yuan (EUR 6.4 million), which surprised many investors, according to Chinese business media Cailian Press. During the conference to present business results, several investors asked when the factory in Serbia would become profitable.

Sun Songtao, Secretary of the Board of Directors of Linglong Tire, said that as production capacity was gradually released and production and sales volume continued to grow, the Serbian factory would strive to achieve profitability as soon as possible.

Regarding the capacity utilization rate of the Serbian factory, Sun Songtao said that the production capacity of the Serbian factory was in a stage of continuous increase at that moment and that the overall capacity utilization rate was about 85%.

According to Linglong’s financial report, the gross sales margin in the second quarter was 16%, a decrease of 6.1 percentage points year-on-year, mainly due to the increase in raw material costs and the impact of tariffs. Specifically, the total procurement costs of four key raw materials: natural rubber, synthetic rubber, carbon black and steel cord, increased by 0.7% compared to the same period last year.

The company's CFO, Lv Xiaoyan, stated that the main factors behind the decline in gross margin in the first half of the year on an annual basis were changes in raw material costs, US tariff policy and product structure effects.

The company’s management emphasized that, thanks to continuous adjustments to the product structure, planned release of production capacities and a growing share of revenue from abroad, gross margin recovery was expected to continue, Cailian Press reported.

Linglong’s tire factory in Zrenjanin, which has been under construction since 2019 and in which a billion dollars was invested, officially began serial production in mid-September 2024.

Last year, the company also announced plans to invest an additional EUR 645 million in increasing production.

B. P.

Linglong International Europe d.o.o. Zrenjanin

Linglong Tire

Linglong Zrenjanin

Sun Songtao

Lv Xiaoyan

financial operations

financial report

profit

net loss