Vietnam's major tire maker Danang Rubber to be supplier of EV maker VinFast

Danang Rubber JSC (DRC), a subsidiary of Vietnam’s state-owned chemical giant Vinachem, will develop a dedicated line of electric vehicle (EV) tires while rolling out products to support its new partnership with the country's leading EV manufacturer VinFast.

Vinachem has signed a cooperation agreement with VinFast, assigning its subsidiaries, including DRC, to execute the initiative.

DRC has initially met VinFast's technical and production requirements and is currently in the process of introducing tire products tailored for VinFast’s EV models, the company's leadership told its 2025 AGM on April 25.

The firm, based in the central city of Danang, plans to commercially launch its EV tire line in June 2025, they added.

According to the executives, DRC's radial tire plant is operating at approximately 85% of its capacity. Despite the Lunar New Year holiday, the company produced 207,000 tires in the first quarter of 2025. DRC aims to reach a full-year production of 800,000 tires and potentially maximize the plant’s operating capacity.

However, the company faces a significant challenge from potential U.S. reciprocal tariffs, which could lead to a 25% drop in revenue and a 30% reduction in output from its radial tire facility.

In response, DRC is shifting its focus to alternative export markets, including Europe, the Middle East, and Africa.

Currently, the U.S. and Brazil account for roughly 65-70% of DRC’s export revenue, Egypt approximately 10%, and other international markets the rest.

Q1 profit plunges despite higher revenue

According to its Q1/2025 financial report, DRC recorded net revenue of over VND1.2 trillion ($46.14 million), up more than 21% year-on-year.

However, the cost of goods sold surged by 29.2%, while financial expenses rose by over 65.3%, and interest expenses skyrocketed by 159.3%.

As a result, after-tax profit dropped sharply to just over VND9.4 billion ($361,469), a steep 80.76% decline compared to the same period last year.

During the AGM, shareholders voiced concerns over the company’s disappointing performance. One veteran investor remarked: “After more than a decade as a DRC shareholder, this is the worst quarterly result I’ve seen.”

The company leadership attributed the profit decline to multiple factors, including unfair competition and persistently high input costs.

While DRC offers a diverse product portfolio, high natural rubber prices - up 25-30% year-on-year - and intense market competition have prevented it from raising prices to maintain profit margins.

Outlook for 2025

DRC acknowledged that 2025 will be a challenging year but plans to focus on strengthening its DriveForce brand, increasing domestic sales, and prioritizing core product lines such as Bias tires, golf cart tires, and agricultural tires.

Meanwhile, its TBR (truck and bus radial) tire segment continues to struggle under volatile U.S. tariff conditions, prompting further diversification toward Europe, Africa, and the Middle East.

According to AGM resolutions, DRC targets $132.2 million in export revenue for 2025, up nearly 9%, and VND4.88 trillion ($187.66 million) in net revenue, up 4.4% year-on-year.

The company’s pre-tax profit goal, however, is expeced to hit VND285 billion ($10.96 million), a slight 1.3% decrease from 2024.

On the Ho Chi Minh Stock Exchange, DRC shares closed at VND18,800 ($0.72) per share.