China’s Geely Automobile posts stronger than expected 35.8pc profit growth in first half
Chinese carmaker Geely Automobile posted a stronger-than-expected profit growth of 35.8 per cent in the first-half on buoyant sales of new sports utility vehicle models and higher sedan sales driven by a new product lineup.
Net profit for the six-month period increased to 1.91 billion yuan (HK$2.24 billion) from 1.4 billion yuan in the same period last year. The figure beat the 1.62 billion yuan median forecast of four analysts polled by the South China Morning Post.
No interim dividend was declared.
Despite the forecast-beating growth, Geely’s share price fell 4.97 per cent in Hong Kong trading to close at HK$5.55 on Thursday.
Revenue for the first half rose 31 per cent to 18.09 billion yuan from last year’s 13.8 billion yuan, the company said in a statement to the Hong Kong stock exchange.
Geely, which owns Swedish premium brand Volvo, sold 280,377 cars in the first half of this year, an increase of 11 per cent year on year.
Chairman Li Shufu said Geely’s first-half profit exceeded the company’s expectations with strong demand for its sedans and positive market response for new SUV models. However, its export business remained uncertain in markets including Eastern Europe, the Middle East and Africa.
“It is envisaged these external factors would persist and the group’s exports business could continue to face tremendous challenges in the remainder of 2016,” Li said in the exchange statement.
Exports in the first six months were down 40 per cent to 10,688 units from a year ago.
Geely’s president An Conghui said the profit margins on SUV products will continue to improve as output expands, with plans to add more offerings to the lineup.
Average selling prices, which increased 17 per cent in the first half, will continue to rise as the company expects to sell more higher-priced SUV models in the second half, An told reporters at a press conference in Hong Kong.
“Geely’s growth momentum is expected to sustain in the second half on the back of more new model launches,” said Kelvin Lau, an analyst with Daiwa Capital Markets.
He said the market demand for the high-spec version of its SUV model Boyue is strong and that will help Geely to improve its profit margin in this segment.
Under the SUV segment, the Zhejiang-based carmaker’s sales of three models reached 40,697 units in the first half, up 23 per cent from a year ago. The strong growth was boosted by the launch of two new models – Boyue and a crossover SUV Emgrand GS.
The combined sales of the Emgrand series sedans was 106,959 units, an increase of 7 per cent from last year.