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Geely Auto has a host of electric car brands, including Zeekr, Polestar, Geometry and Lynk & Co. Photo: Shutterstock Images

Billionaire Li Shufu-controlled Geely’s first-half profit misses estimates, warns global chip shortage could hit sales

  • Geely’s first-half car shipments rose 20 per cent, but it has still not crossed the halfway mark of its projected annual target of 1.53 million units
  • Deliveries of the first model of its new electric-car brand, Zeekr, are expected to start next month
Geely Automobile Holdings reported first-half income that missed analyst estimates as a spike in car shipments failed to offset a global chip shortage that is still hampering production.

The Hangzhou, China-based carmaker reported net income of 2.4 billion yuan (US$367 million) for the six months ended June 30, versus 2.3 billion yuan in the same period a year ago, according to a filing on Wednesday. Analysts were looking for 3.2 billion yuan. Revenue rose 22 per cent to 45 billion yuan, lower than average analyst estimates of 48.9 billion yuan.

“The rise in raw material prices should subside in the remainder of the year but chip shortage could persist,” Geely said in a statement, adding that the “launch of more new and competitive vehicle models should enable the group to perform better in the second half”.

Despite an almost 20 per cent pick up in car shipments in the first six months of 2021, Geely is not even halfway to meeting its full-year target of 1.53 million units. Like every carmaker, it has been hit by a worsening semiconductor shortage that has silenced production lines and prompted regulators in China to launch an investigation into possible price manipulation.
The 001 is the first model from Geely’s new premium electric vehicle brand Zeekr. Photo: Reuters

Geely on Wednesday maintained its full-year sales forecast, which represents a growth of 16 per cent from 2020, but said the “recent worsening of the chip shortage and the resurgence of Covid-19 cases globally could pose a significant threat to our sales performance over the next few months, thus undermining our chance to achieve the target”.

Hong Kong-listed Geely, whose parent is Zhejiang Geely Holding Group, is China’s largest private carmaker and is controlled by Li Shufu, a billionaire who owns a large stake in Daimler and who has amassed interests in European legacy brands such as Lotus and lower-end players like Malaysia’s Proton. Its shares closed 2.5 per cent higher on Wednesday.

The impact of the chips shortage can be seen in Geely’s gross margins. The carmaker said gross margins were “relatively stable” for the period compared with 17 per cent in the first half of 2020, as the “impact from higher raw materials costs was largely offset by improving product mix”.

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Geely is also pushing into electric cars and has a suite of brands including Geometry, Polestar, Lynk & Co, and, most recently, Zeekr. 
“The transformation from conventional vehicles to new-energy vehicles, and the scheduled relaxation of foreign investment restrictions in China’s automobile industry, should represent additional challenges to Chinese passenger vehicle manufacturers,” Geely said. “The group’s response is the creation of Zeekr to fully consolidate resources to strive for better performance in the highly competitive market for electric vehicles.”

The Zeekr range, unveiled before the Shanghai car show in April, is aimed at taking on the car offerings from tech giants like Xiaomi. Deliveries of the first Zeekr 001 model are due to start next month. Sales of around 8,000 are targeted in the fourth quarter, Geely president Andy Conghui An said in an interview earlier this year.