The Moroccan factory is the next variable worth tracking.

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Author | Bai Mao Editor | Xiao Bai

Revenue is still inching forward, but profits have hit the brakes. For SENTURY (002984.SZ), the core changes from 2025 to the first quarter of 2026 are costs, tariffs, exchange rates, and the ramp-up of the new factory, all of which are squeezing the profit statement.

Latest performance: slight revenue increase, profit under pressure

In the first quarter of 2026, the company achieved operating revenue of 2.08 billion yuan, a year-on-year increase of 1.3%; net profit attributable to the parent company was 210 million yuan, a year-on-year decrease of 42.0%; net profit attributable to the parent company after deducting non-recurring gains and losses was 200 million yuan, a year-on-year decrease of 44.4%.

This set of data indicates that the company's sales scale can still be stabilized for the time being, but the profitability of its main business is clearly under pressure.

However, the first quarter was not without positive changes. The company mentioned in its performance briefing that due to the EU's "double-reverse" investigation into Chinese tires, there were previously short-term order delays from EU customers. With the implementation of relevant trade protection policies in the second quarter, the order situation has significantly improved, and demand for orders from overseas factories is strong.

At the same time, the company has already implemented comprehensive price increases in the second quarter after considering product costs, terminal demand, and brand positioning.

(Performance Presentation Announcement)

Why is profit declining: Rising costs, price pressure

From the cost breakdown, in 2025, the raw material cost of the tire business is 4.96 billion yuan, a year-on-year increase of 18.9%; direct labor is 270 million yuan, a year-on-year increase of 33.6%; fuel and power is 450 million yuan, a year-on-year increase of 30.4%; manufacturing expenses and others are 880 million yuan, a year-on-year increase of 25.4%.

(2025 Annual Report)

The sales volume increased by only 0.2%, and the rise in costs is clearly outpacing sales growth.

(2025 Annual Report)

The company stated in the performance presentation that in 2025, it faces significant increases in raw material prices, intensified competition in the tire industry, and heightened uncertainty in international trade policies; overseas factory product pricing is under short-term pressure, but order demand continues to exceed supply.

In other words, cost pressures have already entered the financial statements, but price transmission has not yet fully synchronized.

In the first quarter of 2026, expenses continued to disrupt profits. Selling expenses were 50 million yuan, a year-on-year increase of 122.4%, mainly due to increased leasing and marketing expenses; financial expenses were 60 million yuan, compared to -30 million yuan in the same period last year, mainly due to increased exchange losses caused by currency fluctuations.

For a company with over 90% of its revenue from exports and overseas income, exchange rates are not a minor variable.

Overseas remains the fundamental market, Morocco is the biggest variable

In 2025, Sentury's export and overseas income reached 7.86 billion yuan, a year-on-year increase of 3.4%, accounting for 91.3% of operating income, with overseas still being the absolute main battlefield.

The company covers overseas markets in the Americas, Europe, Asia-Pacific, and Africa, with products sold in over 150 countries and regions. In 2024, the company's three brands, "Sentury," "Landsail," and "Delinte," together held 4.5% and 3% market shares in the high-end high-performance tire market in the U.S. for speed ratings H and V, ranking first among Chinese tire brands In 2025, the company's tire products are expected to have a market share of approximately 6% in the U.S. replacement market and about 3% in the European replacement market.

(2025 Annual Report)

Domestic revenue is 720 million yuan, a year-on-year decrease of 19.4%, accounting for 8.4%.

(2025 Annual Report)

SENTURY's global layout has transitioned from "single-point support from the Thailand factory" to a "collaborative phase among China, Thailand, and Morocco." In 2025, the Thailand subsidiary achieved operating revenue of 5.11 billion yuan and a net profit of 770 million yuan; the Morocco subsidiary achieved operating revenue of 580 million yuan and a net profit of -50 million yuan, still in the ramp-up phase.

(Performance Presentation Announcement)

The Morocco factory is the most noteworthy variable to track moving forward. The company stated in the performance communication meeting that the Morocco factory has turned profitable in the first quarter of 2026, is currently ramping up production in an orderly manner, and the operating rate is gradually increasing, with orders exceeding supply. It is expected to reach design capacity operational capability by the end of 2026.

(Performance Explanation Meeting Announcement)

If this statement can be consistently fulfilled, the Morocco factory will gradually transform from a profit drag in 2025 to a core observation point for production and sales recovery.

At the same time, the company is also addressing market concerns regarding inventory and impairment.

In 2025, the company produced 32.953 million tires, a year-on-year increase of 2.3%; sales volume was 31.466 million tires, a year-on-year increase of 0.2%; inventory was 5.990 million tires, a year-on-year increase of 33.0%.

By the end of the first quarter of 2026, the company's inventory further increased to 2.71 billion yuan. The company explained that the increase in inventory in the first quarter was mainly due to raw material stocking; the increase in inventory at the end of 2025 was mainly related to the ramp-up operation of the Morocco factory, increased spending on raw material stocking, and reasonable stocking of finished products at the Morocco factory

What needs to be tracked here is whether the increase in inventory is a safety stock during the ramp-up of production capacity or whether it will later translate into turnover pressure.

The management believes that there is currently no obvious inventory backlog expansion, nor is there a substantial basis for impairment of unsold goods; for accounts receivable with a high proportion of overseas sales, over 95% of the company's accounts are aged within one year, and high coverage is achieved through credit insurance.

By the end of 2025, the company's debt-to-asset ratio is approximately 25.0%, and the interest coverage ratio is 12.5, indicating that the financial structure remains robust.

Therefore, the core contradiction for SENTURY is not complicated.

In the short term, raw materials, exchange rates, costs, and order rhythms are suppressing profit performance; in the medium term, whether the Morocco factory can continue to ramp up smoothly, whether the price increases in the second quarter can gradually be passed on, and whether inventory can return to a healthier level after the recovery of overseas orders will determine the strength of the company's performance recovery in this round.

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