Autos

China's Geely first-half profit drops 43% as the automaker trims full-year outlook

Key Points
  • China's Geely Automobile Holdings said on Monday first-half net profit fell 43%, as the coronavirus outbreak slammed the brakes on auto sales in the world's biggest market.
  • Geely, China's highest-profile automaker globally due to the group's investments in Volvo Cars and Daimler AG, posted January-June profit of 2.3 billion yuan ($331.37 million), versus 4.01 billion yuan in the same period a year prior.
  • On Monday, it trimmed the target by 6% to 1.32 million vehicles. Sales last year reached 1.36 million vehicles.
Employees walk past Lynk & Co. 05 crossover sport utility vehicles as they move through final inspection on the production line at Geely Automobile Holdings Ltd. plant in Ningbo, Zhejiang Province, China, on April 28, 2020.
Qilai Shen | Bloomberg | Getty Images

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

Geely, China's highest-profile automaker globally due to the group's investments in Volvo Cars and Daimler AG, posted January-June profit of 2.3 billion yuan ($331.37 million), versus 4.01 billion yuan in the same period a year prior.

Revenue fell 23% to 36.82 billion yuan, Geely said. The result compared with the 36.89 billion yuan average 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, around 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 and 20% at local peer Great Wall Motor Sales fell just 2.2% at Toyota Motors Corp.

The results come as China's overall auto sales continue their recovery from the virus-blighted start to the year. Sales climbed 16.4% in July versus 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% versus a 1.2% rise in the benchmark Hang Seng Index.

Planned merger

Geely's parent, Zhejiang Geely Holding Group plans to merge the automaker 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 sports car brand Lotus.

Its primary listed company, Geely Automobile, has a market capitalization of about $21.2 billion, eclipsing international peers better known outside of China such as Fiat Chrysler Automobiles and Nissan Motor.

The automaker 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.