China's Geely Automobile trims full-year sales outlook after profit plunge

[SHANGHAI] Geely Automobile Holdings Ltd on Monday booked a 43 per cent drop in half-year profit and trimmed its full-year sales goal, sending its shares down 4 per cent, as the coronavirus outbreak continues to trouble the world's biggest auto market.

The results come as China's overall auto sales slowly recovers from a virus-blighted start to the year. Sales climbed for the fourth consecutive month in July yet are still down 12.7 per cent for the year to date.

China's highest-profile automaker - due to group investments in Volvo Cars and Daimler AG - posted January-June net profit of 2.3 billion yuan (S$453.9 million).

It sold 530,446 vehicles, down 19 per cent on year, leaving revenue down 23 per cent at 36.82 billion yuan, meeting analyst estimates.

"Geely's 1H20 earnings are largely in line with our expectation, thanks to its significant cost cut efforts, especially in wages and investments in fixed assets," said Haitong International analyst Shi Ji.

However, the automaker knocked 6 per cent from its full-year sales goal to 1.32 million vehicles - down 3 per cent on year - just two weeks after maintaining a target set shortly before China's virus lockdown in January.

Geely's share price fell as much as 4 per cent, versus a 1.5 per cent rise in the benchmark Hang Seng Index.

PLANNED MERGER

Geely has a market capitalisation of about US$21.2 billion, eclipsing international peers better known outside of China such as Fiat Chrysler Automobiles NV and Nissan Motor Co Ltd.

Its parent, Zhejiang Geely Holding Group Co Ltd, plans to merge the automaker with affiliate Volvo Cars and list the successor in Hong Kong and possibly Stockholm.

Merger talks were suspended in June, however, while the Hong Kong-listed automaker worked on listing shares on mainland China's Nasdaq-like STAR board.

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

REUTERS