Geely first-half profit rises 37pc as both domestic sales and exports jump

Domestic sales increase 17 per cent year on year as exports jump 26 per cent, boosted by rising share of markets in Russia and the Ukraine

PUBLISHED : Thursday, 22 August, 2013, 12:56pm
UPDATED : Friday, 23 August, 2013, 1:50am

Mainland carmaker Geely Automobile posted stronger-than-expected growth in first-half profit as car sales recovered at home and exports picked up but the company said it expected a challenging second half.

Net profit for the six months to June rose 37 per cent to 1.4 billion yuan, the company said in a statement filed with the Hong Kong stock exchange. Analysts had been expecting 20 per cent profit growth.

Revenue jumped 33 per cent to 14.85 billion yuan (HK$18.8 billion) as Geely sold 263,544 units in the first half, an increase of 19 per cent from the same period last year. That came about largely because of strong demand for the EC7 model and a recovery in sales in the mainland market of models such as Geely Panda, Vision and GC7.

Domestic sales grew 17 per cent year on year to 213,106 units, compared with a 9 per cent decline in the first half of last year. Exports continued to grow too, rising 26 per cent, to 50,438 units, boosted partly by an increase in market share in countries such as Russia and Ukraine, the statement said.

The company said the operating environment would be challenging for the remainder of the year. The economic environment in its major markets would be "more difficult" and the weakening of emerging-market currencies against the US dollar and yuan could dampen exports, it said.

The domestic market would see increased pressure as a result of competition from international companies and a more stringent vehicle warranty policy, Geely said.

No interim dividend was declared.

Chief executive Gui Sengyue told reporters in Hong Kong that sales in the first half accounted for 47 per cent of the full-year target of 560,000 units that he was confident of achieving.

He said localising production in overseas markets would help reduce foreign-exchange risk. The company would seek to set up assembly plants in emerging markets in South America and Eastern Europe, Gui said.

Separately, Great Wall Motor, the mainland's largest maker of sport utility vehicles, said first-half net profit rose 73.7 per cent year on year to 4.09 billion yuan. Revenue in the period increased 44.5 per cent to 26.4 billion yuan, with car sales growing 41.3 per cent to 370,301 units, it said in a filing to the exchange.

Domestic sales rose 51.6 per cent to 328,387 units, of which 169,706 units were SUVs. Its overseas sales came under pressure as a result of competition, with exports dropping 7.8 per cent to 41,914 units. It did not declare any interim dividend either.

The company said it expected domestic car sales to continue to grow despite concerns over an economic slowdown. In the next two years, the company plans to launch three new SUV models.