Brilliance China set for reversal of fortunes
Liaoning carmaker may turn a profit this year as sales surge
Brilliance China Automotive Holdings, the Liaoning carmaker that has been sputtering since its high-flying founder fled the mainland under a cloud of accusations five years ago, expects to turn a profit this year after two years of losses.
The company's Hong Kong-listed shares jumped 8.2 per cent yesterday, closing at HK$1.98, after it was announced at a shareholders' meeting that last month's sales grew more than sixfold to 45,000 units over the same period last year.
'The bad performance of the company in the past few years has been due to a management problem, not competition in the industry,' said chairman Wu Xiaoan.
The company, which from 2002 until last year was managed by the Liaoning provincial government, is struggling in an increasingly competitive but rapidly growing car market.
The China Association of Automobile Manufacturers reported that overall vehicle sales last month in the mainland reached 552,500 units, up 31.03 per cent from a year earlier.
Brilliance China was the ninth largest mainland carmaker in terms of sales for the month, the association said.
Brilliance China expects to sell 230,000 vehicles this year, 60 per cent more than last year. The company's total sales last year jumped 82 per cent to 149,600 vehicles.
The carmaker had a net loss of 649.6 million yuan in 2005. Merrill Lynch, in a report released on Thursday, estimated the company would post a 26.9 million yuan loss for last year but that its balance sheet would turn black this year, with 518.3 million yuan in profits.
The province took over management of Brilliance China in 2002 when its founder, Yang Rong, fled to the United States amid accusations of committing economic crimes, which he denied.
Only last year did the provincial government appoint a replacement chief executive - Qi Yumin, a former vice-mayor of Dalian city.
But before he left, Yang Rong created a joint venture with Munich-based Bayerische Motoren-Werke (BMW) that started production in 2003.
Last month, the venture sold 29,000 mainland-made BMW cars, 60 per cent better than a year ago. The company itself sold 6,000 Jinbei Grace minibuses last month, up 57 per cent from last year and 10,000 Zhonghua sedans, 10 times more than last year.
'We aim at enhancing production capacity and profitability this year,' said chairman Mr Wu. 'Hopefully, plans for production capacity enhancement would be settled in the second half.'