China’s Geely Automobile first-half profit down; trims full-year outlook

Employees move car parts through the Geely Automobile Holdings Ltd factory in Cixi, Zhejiang Province, China.
Employees move car parts through the Geely Automobile Holdings Ltd factory in Cixi, Zhejiang Province, China.

China's Geely Automobile Holdings Ltd said on Monday first-half net profit fell 43%, as the coronavirus outbreak slammed the brakes on car sales in the world's biggest market.

Geely, China's highest-profile car maker globally due to the group's investments in Volvo Cars and Daimler AG, posted January-June profit of 2.3 billion yuan (roughly R5,750,919,722), vs 4.01 billion yuan (roughly R10,030,912,528) in the same period a year earlier.

Revenue fell 23% to 36.82 billion yuan (roughly R92,105,611,860), Geely said. The result compared with the 36.89 billion yuan average (roughly R92,263,771,390) of three analyst estimates compiled by Refinitiv.

Geely earlier this month maintained its annual sales target of 1.4 million vehicles set in January, shortly after the coronavirus outbreak was first reported in China at the end of 2019. On Monday, it trimmed the target by 6% to 1.32 million vehicles. Sales last year reached 1.36 million vehicles.

It sold 530,446 vehicles in January-June, about 19% lower than its total over the same period last year.

Among rivals, first-half China sales fell 17% at Volkswagen AG, 25% at General Motors Co and 20% at local peer Great Wall Motor Co Ltd. Sales fell just 2.2% at Toyota Motors Corp.

The results come as China's overall car sales continue their recovery from the virus-blighted start to the year. Sales climbed 16.4% in July vs the same month a year earlier, marking the fourth consecutive month of gain. However, sales are still down 12.7% for the year to date at 12.37 million vehicles.

Geely's Hong Kong-listed shares ended morning trade down 1% vs a 1.2% rise in the benchmark Hang Seng index.

Planned Merger:

Geely's parent, Zhejiang Geely Holding Group Co Ltd plans to merge the car maker with Sweden-based Volvo Cars – which it bought from Ford Motor Co in 2010 – and list the resulting entity in Hong Kong and possibly Stockholm.

The group, led by Taizhou-born billionaire Li Shufu, also owns 9.7% of Germany's Daimler, 49.9% of Malaysia's Proton and a majority stake in British sport car brand Lotus.

Its primary listed company, Geely Automobile, has a market capitalisation of about $21.2bn (roughly R367,843,320,000), eclipsing international peers better known outside China such as Fiat Chrysler Automobiles NV and Nissan Motor Co Ltd.

The car maker plans to revamp factories at home and abroad using manufacturing platforms developed with Volvo Cars since 2013. It also plans to start European exports this year of sport-utility vehicle 01 under its premium Lynk & Co brand.

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