Business

Geely first-half earnings rise 35% on uptick in car sales

By Liza Lin (China Daily)
Updated: 2010-08-26 14:59

A Geely car at a Beijing auto show.

SHANGHAI - Geely Automobile Holdings Co, whose parent company this month completed the biggest overseas acquisition by a Chinese automaker, boosted profit 35 percent in the first half as car sales rose.

Net income increased to 804.8 million yuan ($118.4 million) or 0.0996 yuan a share, from 595.9 million yuan, or 0.0893 yuan, a year earlier, it said in a statement to the Hong Kong stock exchange on Wednesday. Sales at the listed unit of Zhejiang Geely Automobile Co rose 55 percent to 9.24 billion yuan in the same period. Geely, maker of the Kingkong compact car, expects sales to rise 27 percent to 412,000 units this year even as growth declines in the world's largest auto market, the company said on Aug 19. Auto sales in China have been rising at a slower pace since April as inflation erodes disposable incomes and government measures to cool down the economy weaken demand.

"Geely and other domestic local car companies have to shift to building brands and establishing their reputations in order to retain customers, not just attract first-time customers," said Bill Russo, a Beijing-based senior adviser at Booz & Co. Sales growth has slowed as the government has reduced financial support for new-car buying, he said in an interview with Bloomberg Television interview on Tuesday. Geely's parent bought Sweden's Volvo Cars for $1.5 billion earlier this month, after a doubling in profit last year allowed it to expand overseas.

Car buyers are returning after high summer temperatures kept them away from dealerships in July and August, An Conghui, Geely's executive vice-president, said at a conference in Ningbo, Zhejiang province, on Aug 19. An forecasts the nation's industrywide vehicle sales to reach 16 million this year. "We usually see explosive growth in September, October, until the end of the year," he said.

China's July car sales to dealers rose at the slowest pace in 16 months. Wholesale deliveries rose 13.6 percent to 946,200 last month, compared with 19 percent growth in June, the China Association of Automobile Manufacturers said on Aug 9.

Geely sold 227,200 vehicles in China during the first seven months of 2010, 34 percent more than its 169,170 deliveries a year earlier. The company's sales numbers fell 11.9 percent in July, the first decline since January 2009, Steve Man, an analyst at Samsung Securities Co Ltd, wrote in an August 11 report. July's sales "underperformed the industry by a significant margin", Man wrote, predicting Geely will lower its full-year sales target. The automaker, founded by Li Shufu, sold 325,413 vehicles in China last year, according to a filing to the Hong Kong stock exchange in January. China's auto sales growth will increase more than 10 percent next year from this year's total, Ye Shengji, assistant secretary-general of the China Association of Automobile Manufacturers, said in Ningbo.

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