Karachi: Service Long March Tyres Limited (SLM) announced a significant increase in its earnings and outlined future growth strategies during its recent corporate briefing session. The company reported a 35% year-over-year rise in consolidated earnings, reaching Rs13.5 billion for the fiscal year 2026, driven by substantial revenue growth and improved gross margins.
According to JS Global, SLM's revenue surged by 44% to Rs71.7 billion, supported by a 3 percentage point recovery in gross margins to 25%. Domestically, SLM strengthened its market position, with its truck and bus radial (TBR) market share increasing to 62% from 42% in the previous fiscal year. The company aims to further boost its market share to 70-75%, despite challenges from Chinese imports and gaps in its product range. Plans to expand the dealer network by 5-10% in FY27 were also shared.
On the export front, SLM achieved Rs18.5 billion in revenue, with exports constituting 36% of its tyre volumes. The United States and Brazil remain crucial markets, while Egypt is expected to become the third-largest market, with targeted export sales of US$7-10 million over the next year. The company is also entering the European market, although competition from manufacturers in China, Vietnam, and Cambodia poses challenges to export margins.
SLM faces exposure to geopolitical developments and rising input costs, particularly in natural rubber and carbon black. With 95% of raw materials imported, the company has raised prices by 5% and plans further adjustments within the next 30-60 days to offset costs. The ability to maintain margins will hinge on customer acceptance of these price increases, alongside exchange-rate fluctuations and international competition.
Looking ahead, SLM's Rs22.56 billion passenger car radial (PCR) tyre project is poised to be a major growth driver. The facility is expected to be operational by January 2028, with a production capacity ramping up to 3 million tyres by FY30. The project will be financed through long-term loans, IPO proceeds, and internal cash, benefiting from subsidized long-term financing rates. Timely execution and production ramp-up are essential milestones.
In addition, SLM is enhancing its renewable energy capacity with a 7.5MW wind project slated for commissioning in December 2026. Renewables accounted for 23% of electricity consumption in FY26, with plans to increase this to 40% post-commissioning. A biomass boiler is also planned for June 2027 to eliminate reliance on gas for steam generation.