To Turn a Profit, International Composites Chooses to Tighten Employees' Belts First

Source: Yuan Media Exchange

Author | Li Jin

In response to Brazil’s anti-dumping investigation, fiberglass giant International Composite Materials has chosen to increase its investments.

Recently, International Composite Materials announced a transfer of external guarantee quotas, reallocating the guarantee limits of its Hong Kong company and Zhuhai Zhubo subsidiary—totaling 300 million yuan—to CPIC Brasil Fibras de Vidro Ltda. (hereafter “Brazil Company”).

After this adjustment, the guarantee limit for the Brazil Company increased from 410 million yuan to 710 million yuan.

Screenshot from company announcement

International Composite Materials is expanding its investment scale in the Brazilian market. According to the announcement, the Brazil Company has used about 392 million yuan of its guarantee quota, an increase of over 90 million yuan compared to the end of June 2025, causing its debt ratio to rise from 60.82% at the end of 2024 to 63.11% in the latest period.

With little remaining external guarantee quota, International Composite Materials chose to reallocate the guarantee limits of its other subsidiaries to the Brazil Company.

This seemingly simple move is actually a reverse operation—done during a period of anti-dumping investigation.

In August 2025, Brazil launched an anti-dumping investigation against Chinese fiberglass, covering July 2023 to June 2024, later extended to July 2019 to June 2024, including International Composite Materials as a subject.

Screenshot from Ministry of Commerce announcement

However, such reverse operations are common.

As early as early 2024, during a capacity regulation period in the fiberglass industry, International Composite Materials suddenly increased leverage sharply, boosting guarantee limits for its subsidiaries from 330 million yuan to 2.69 billion yuan—more than eight times—resulting in a huge loss for the company that year.

Nevertheless, the company turned profitable again in the first three quarters of 2025. Its earnings forecast for 2025 estimates net profit attributable to the parent of 260 million to 350 million yuan, compared to a loss of 354 million yuan in the same period last year.

Besides the surge in AI computing power driving product prices up, another key factor for the company’s profitability is: salary cuts.

To turn losses into profits, the fiberglass giant chose to “suffer a bit” with its employees first.

Investing in Brazil’s financial management

In its subsidiaries’ loan guarantees, the purpose is always listed as operational needs.

In 2024, International Composite Materials planned to apply for comprehensive credit lines for three wholly owned subsidiaries, including the Brazil Company, with a guarantee limit not exceeding 2.688 billion yuan or equivalent foreign currency. The reason: to meet the subsidiaries’ business development and operational needs, and to improve loan and financing efficiency.

International Composite Materials’ external guarantee quota in 2024 | Screenshot from company announcement

That year, actual guarantee amounts for overseas subsidiaries were about 235 million yuan for the Brazil Company and about 130 million yuan for Bahrain, accounting for 92.8% and 20.7% of their respective credit limits.

In reality, since 2023, the fiberglass industry has entered a capacity regulation phase, with companies like International Composite Materials, China Jushi, and Taishan Fiberglass gradually shutting down production lines.

Data compiled by Guan Yan Tianxia shows that from 2023 to November 2025, seven major fiberglass groups—including Jushi Group, Taishan Fiberglass, and International Composite Materials—shut down a total of 15 large fiberglass kiln lines, with a total capacity of 1.011 million tons. Among them, International Composite Materials has shut down three lines totaling 250,000 tons for maintenance.

So, what is the reason for the Brazil Company’s borrowing? The answer may be: financial management.

In recent years, International Composite Materials’ trading financial assets soared from 120 million yuan in 2020 to 294 million yuan in 2023, increasing their proportion of total assets from 0.86% to 1.28%, mainly due to the purchase of income-generating financial products for the Brazil Company.

In 2024, International Composite Materials decided to leverage more heavily to “place a big bet,” increasing guarantee limits for the Brazil Company, with actual guarantees growing by 143.27% year-on-year, and the company’s debt ratio rising 1.53 times to 60.84%.

That year, the company sold about 255 million yuan of trading assets. Meanwhile, the Brazil Company also suffered huge losses, with net profit recorded at -141 million yuan.

Regarding the reasons for the Brazil Company’s losses, International Composite Materials stated it was due to production line shutdowns, maintenance, and exchange rate losses in the first half of 2024.

The key point is that the Brazil Company was already in decline in 2023, with net profit around 50 million yuan, down over 70% year-on-year. Based on some disclosed financial data, this decline is related to falling revenue; in 2022, the Brazil Company’s revenue was about 566 million yuan, but in 2024, it dropped to only 246 million yuan.

Facing this downturn, International Composite Materials still chose to “leverage up” in the Brazilian market. Guarantee limits for the Brazil Company increased to 359 million yuan in 2024, further rose to 410 million yuan in 2025, and now, through the reallocation of external guarantee quotas, the total limit has surged to 710 million yuan.

This time, International Composite Materials changed its financial management strategy: shifting toward precious metals.

In the guarantee quota adjustment, the company will increase the guarantee for Brazil’s metal leasing in early March 2026 from $22.985 million to $57.86 million.

A sudden “big change” after listing

While increasing leverage for the Brazil Company and experiencing losses and impairments, such situations have been common for International Composite Materials over the past two years.

In June 2021, the company first applied for an IPO on the ChiNext board of the Shenzhen Stock Exchange, successfully listing in December 2023. During multiple regulatory inquiries, issues raised included the company’s dual roles involving shareholders and suppliers, subsidiaries involved in real estate, abnormal fluctuations in subsidiary performance, large-scale internal transactions, etc.

One key indicator was R&D expenses.

From 2021 to 2023, International Composite Materials’ R&D investments were 259 million, 293 million, and 297 million yuan respectively, with R&D expense ratios of 3.12%, 3.71%, and 4.15%, just over the standard line.

Regulators focused on whether the R&D expense ratio affected the company’s qualification as a high-tech enterprise, which could impact tax benefits and government subsidies, or lead to recovery of tax incentives. The company denied this.

However, right after its IPO in late 2023, the company’s performance experienced a “big change”: revenue fell 9.3% to 7.156 billion yuan, and net profit halved to 592 million yuan. In 2024, although revenue rebounded, net profit recorded a loss of 374 million yuan.

The ongoing profit decline is largely due to: large-scale impairment provisions.

In 2023 and 2024, the company recorded impairment losses of 106 million and 193 million yuan respectively, compared to 37 million yuan in 2021 and 2022. These impairments mainly involved inventories, fixed assets, and accounts receivable.

When entering the A-share market, International Composite Materials raised about 1.7 billion yuan, and within a year, nearly all funds were used for production line construction, upgrades, and working capital, with a utilization rate of 97.3%. Later, in 2025, the remaining funds were also reclassified as working capital.

The result was that in 2024, fixed assets increased sharply, accompanied by large impairment provisions—depreciation rates exceeding 7%, compared to less than 2% the previous year. During that period, the fiberglass industry was facing supply-demand imbalance, and inventory write-downs were also severe, with impairment provisions reaching 83 million yuan.

The combination of increased investment in production lines and expanded impairment provisions exposed issues in the company’s production, sales, and operations.

Fortunately, International Composite Materials was lucky: in 2025, the explosion of AI computing power and the iteration of high-end electronics created new demand. Coupled with prior capacity adjustments, the price of electronic-grade fiberglass (also called “dot yarn”) entered a rising trend, enabling the industry to recover profitability collectively.

CICC statistics show that from Q1 to Q3 2025, the fiberglass industry’s total revenue was about 42.8 billion yuan, up 24.25% year-on-year; net profit attributable to the parent was 4.6 billion yuan, up 95%.

In Q3 2025, International Composite Materials achieved revenue of 6.413 billion yuan, up 19%; net profit was 330 million yuan, up 313.3%; and net profit attributable to the parent was 273 million yuan, up 273.53%.

However, despite demand surging and product prices rising, the overall industry inventory remained high in the short term. According to Zhuochuang Information, industry inventory at the start of 2025 was 794,000 tons, a record high for the same period; by late September, nationwide kiln inventory dropped to 865,000 tons, with an inventory days of 36.4 days, down 2.2 days month-on-month.

During the same period, impairment losses for International Composite Materials amounted to about 48 million yuan, mainly due to receivables and inventory write-downs.

This indicates that, under the current multiple price increase trends, profit recovery is short-term and uncertain.

Therefore, International Composite Materials first seeks profit internally. In Q3 2025, the company reduced “three expenses” to 580 million yuan, contributing as much as 124 million yuan in profit. The main savings came from management and R&D expenses.

Regarding management expense reductions, the company stated in its mid-year report that the decrease was due to fewer management personnel and lower employee compensation.

In an industry still battling “internal competition,” International Composite Materials can only “suffer a bit” with its employees for now.

As for the changes in external guarantees for the Brazil Company, anti-dumping investigations, performance fluctuations, large impairment provisions, and the significant reduction in “three expenses,” Yuan Media Exchange has inquired with International Composite Materials but has not received a response as of press time.

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