Brilliance Auto

Brilliance China Automotive stalls dividend despite 41pc profit rise

Carmaker says shareholders might get payout next year after investment projects completed

PUBLISHED : Thursday, 30 August, 2012, 12:00am
UPDATED : Friday, 08 May, 2015, 9:59am

Brilliance China Automotive will consider declaring a dividend next year after it completes most of its investment projects.

The Shenyang-headquartered carmaker - which has a 50-50 joint venture with Germany's BMW - declared no interim dividend this year despite reporting a 41.6 per cent rise in net profit to 1.33 billion yuan (HK$1.63 billion). Chairman Wu Xiaoan said this was because it still needed to invest in certain projects. But he added that shareholders might be rewarded next year.

"We will consider paying a divided next year according to sales performance. But we are confident we will outperform the overall growth rate of 20 per cent we have forecast for the mainland's luxury auto sector next year," Wu said.

But JP Morgan analysts warned that the company might have to book up to 600 million yuan of start-up losses in next year's financial statements for a new electric car model expected to enter production in late 2013. Brilliance said sales of BMWs in China jumped 46.9 per cent year on year to 80,792 in the first six months - nearly double the luxury car market's average growth of 25 per cent.

Brilliance said it was likely to exceed its sales target of 153,000 units forecast for this year, backed by a new 3-series China-only car launched in July.

The company's minivan business continued to be a liability, with both sales and gross profit margin down due to slower sales of high-end minibus models. Brilliance said sales were likely to remain sluggish until it launched new models in 2014.

The company - which JP Morgan named as its top car share pick - has cut its dealership target for this year to 350 from 370.

Meanwhile, slowing mainland demand for commercial trucks dragged down Dongfeng Motor's net profit by 8.36 per cent to 5.37 billion yuan during the first six months. The mainland carmaker, which has a joint venture with Nissan, Honda, and Peugeot, said car sales grew 21.6 per cent to 939,500 units, while sales of commercial vehicles fell by 18.84 per cent to 236,753, but price cuts squeezed gross profit margins in both segments.