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(Bloomberg) — Geely Automobile Holdings Ltd.’s first-quarter profit missed analyst estimates as China’s auto market weakened following the winding back of government subsidies.
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Net income declined 27% to 4.2 billion yuan ($614 million) in the three months ended March 31, compared with 5.7 billion yuan the previous year, the Hong Kong-listed arm of billionaire Li Shufu’s auto empire said in a statement Wednesday. That fell short of the 4.5 billion yuan average of analyst estimates compiled by Bloomberg. Revenue increased 15% to 83.8 billion yuan.
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The profit decline, which the carmaker attributed to impact from foreign exchange fluctuations, follows that of its biggest rival BYD Co., which on Tuesday reported first-quarter profit dropped 55% to the lowest level in more than three years.
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But both Geely and BYD shares rose in Hong Kong trading Wednesday as investors bet the first quarter would mark the bottom for Chinese auto earnings. Geely climbed 2.6% while BYD gained 4.4%.
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Geely’s overall first-quarter vehicle sales of 709,358 slightly edged out BYD’s of 700,463, though BYD regained the monthly lead in March.
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Global electric car sales have surged since the start of the Iran war sent fuel prices higher, prompting drivers to make the switch to an EV. The oil shock has helped to boost first quarter exports in new energy vehicles to increase by more than four-fold to 125,000, according to Chief Financial Officer Dai Yong.
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“Everyone is focusing on Chinese automakers going global even more,” Senior executive Gui Shengyue said in an earnings call on Wednesday. “Domestic car sales volume still hasn’t recovered.”
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The Hangzhou-headquartered company has raised its international sales target to 750,000 vehicles this month from an initial goal of 640,000 — something that executives said they’re confident in achieving. Geely has also forged partnerships with global automakers, including a tie-up with Renault SA in Brazil to make Geely-branded vehicles for the South American market.
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Geely aims to grow sales in the key markets of South America, Asean, Europe and the UK to 200,000 units per year, according to Chief Executive Officer Jerry Gan.
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Ahead of the Beijing auto show, Geely launched a new hybrid technology it says can beat Toyota Motor Corp. and other Japanese manufacturers as it looks to compete more internationally. At home, it is offering its 8X luxury sport utility vehicle with a package of incentives worth 27,000 yuan as China’s auto market remains stuck in the grips of a fierce price war that has eroded margins.
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(Adds commentary from earnings call from fifth paragraph.)
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English (US)