Brilliance turnover up in first half but accounting losses eat at profits
Brilliance China Automotive Holdings' losses deepened to 125.73 million yuan in the first half, compared with a loss of 113.59 million yuan last year.
However, excluding a 282.48 million yuan accounting loss on its 2011 convertible bond issue, Brilliance China saw profit of 156.75 million yuan due to higher sales after two difficult years. Turnover was 7.74 billion yuan, up 78 per cent year on year.
The company, which has a joint venture with German carmaker BMW, aims to sell 205,000 vehicles this year, an increase of 56 per cent from last year. Its self-branded Zhonghua car and BMW models are expected to be the main sales drivers.
From January to August, Brilliance China sold 149,366 vehicles, an increase of 58.6 per cent from a year earlier.
Company chief executive Qi Yumin said Brilliance China planned to double its production capacity to 600,000 units by 2010 to meet demand.
'Selling shares in the mainland stock market is a way to finance our expansion plans,' said chairman Wu Xiaoan. 'We're getting in touch with investment banks to work out the details.'
Ultimately, Brilliance wants to be able to raise money in the mainland market through Jinbei Automotive, the A-share listed subsidiary of its parent Huachen Automotive Group Holding.
Mr Wu added that the company also intends to boost its profit margin by using local suppliers.
'Our BMW cars are raising their localisation rate to 40 per cent, which means car parts import tariffs can be reduced to 10 per cent from 25 per cent. That difference will provide a good profit margin in the future,' he said.
The gross profit margin was 7.3 per cent in the first half, unchanged from last year.
Like other mainland carmakers, Brilliance China is seeking to boost sales by enhancing its export business.
The company plans to export 9,000 vehicles this year, up 78 per cent from last year.
Mr Qi said that next year the company planned to export 10,000 vehicles to western Europe, with Germany as the main market.
The company is also planning to export to the United States by next year.
'Our cars are undergoing safety tests now. We'll start selling vehicles in the market by next year with 500 distribution points,' Mr Qi said, without disclosing the company's sales target for the market.