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SHANGHAI (Reuters) – China’s Geely Automobile Holdings Ltd said Monday that the first half profit had fallen by 43% due to the coronavirus outbreak slowing down car sales in the world’s largest market.
Geely, China’s largest automaker in the world due to the group’s investments in Volvo Cars and Daimler AG, posted a profit of 2.3 billion yuan in January-June ($331.37 million), compared to 4.010 million yuan the same time the previous year.
Revenues fell 23 percent to 36.820 billion yuan, Geely said. The result is an average of 36.890 million yuan from 3 analyst estimates compiled through Refinitiv.
Earlier this month, Geely maintained its annual sales target of 1.4 million cars set in January, shortly after the coronavirus outbreak first reported in China in 2019 in arrears. On Monday, it reduced the target from 6% to 1.32 million cars. Last year’s sales reached 1.36 million cars.
It sold 530,446 cars in January-June, about 19% less than its total during the same year.
Among competitors, first-half sales in China fell by 17% in Volkswagen AG, 25% in General Motors Co and 20% in its local counterpart Great Wall Motor Co Ltd. Sales fell 2.2% on Toyota Motors Corp.
The effects occur as China’s overall car sales continue since the beginning of the virus-infested year. Sales increased 16.4% in July compared to the same month of the previous year, marking the fourth consecutive month of profit. However, sales continue to fall by 12.7% so far this year to 12.37 million vehicles.
Geely’s Shares listed in Hong Kong closed the morning with a 1% drop from 1.2% of the Hang Seng benchmark.
PLANNED FUSION
Geely’s parent company, Zhejiang Geely Holding Group Co Ltd [GEELY. UL] plans to merge the car manufacturer with Swedish company Volvo Cars, which purchased Ford Motor Co in 2010, and include the resulting entity in Hong Kong and, in all likelihood, Stockholm.
The group, led by Taizhou-born billionaire Li Shufu, also owns 9.7% of Daimler from Germany, 49.9% of Malaysia’s Proton and a majority stake in the British sports car logo Lotus.
Its main publicly traded company, Geely Automobile, 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.
The car manufacturer plans to reorganize its plants at home and employ production platforms developed with Volvo Cars since 2013. It also plans to launch European exports of the 01 game application vehicle this year under its premium Lynk and Co logo.
(Reporting through Yilei Sun and Brenda Goh; Editing through Sayantani Ghosh and Christopher Cushing)