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By Yilei Sun and Brenda Goh
SHANGHAI (Reuters) – Geely Automobile Holdings Ltd reported on Monday a four-year drop in 7-month profit and cut its year-round sales target, reducing its stock through fourArray as the coronavirus outbreak continues to disrupt the world’s largest automotive market.
The effects occur when overall car sales in China are slowly recovering from a virus-infested start of year. Sales were up for the fourth month in a row in July, but have still fallen by 12.7% so far this year.
China’s largest automaker, due to the group’s investments in Volvo Cars and Daimler AG, posted a profit from January to June of 2.3 billion yuan ($331.37 million).
It has 530,446 vehicles, a 19% year-on-year drop, leaving profits by 23% to 36.820 million yuan, in line with analyst estimates.
“Geely 1S20’s earnings are broadly in line with our expectations, thanks to her significant cost-cutting efforts, mainly on wages and capital investments,” said Shi Ji, an analyst at Haitong International.
However, the automaker raised its year-round sales target to 1.32 million cars, 3% less year-on-year, just two weeks after maintaining a target set in a time before the virus crashed in China in January.
Geely’s percentage value fell to 4%, with a 1.5% increase in the Hang Seng benchmark.
PLANNED FUSION
Geely has a market capitalization of approximately $21.2 billion, eclipsing its best-known foreign peers outside China, such as Fiat Chrysler Automobiles NV and Nissan Motor Co Ltd.
Its parent company, Zhejiang Geely Holding Group Co Ltd, plans to merge the car manufacturer with its subsidiary Volvo Cars and list the successor in Hong Kong and, in all likelihood, in Stockholm.
However, merger talks were suspended in June, while hong Kong-listed automaker runs on directory shares on the NASDAQ-type STAR chart in mainland China.
Geely plans to reorganize its plants in Belgium and employ production platforms developed with Volvo Cars since 2013. It also aims to launch this year the European exports of the 01 game application vehicle under its premium Lynk and Co logo.
(Reporting through Yilei Sun and Brenda Goh; Editing through Sayantani Ghosh and Christopher Cushing)