Geely’s first-half profit beats estimates as price war rages on
Sign up now: Get ST's newsletters delivered to your inbox
Geely’s gross margin remained at 14 per cent despite the growth in revenue and decline in battery raw material prices.
PHOTO: REUTERS
Follow topic:
HONG KONG - Geely Automobile Holdings, one of China’s largest private carmakers, posted first-half earnings that beat estimates, weathering a price war that continues to hit the industry.
Net income rose 1 per cent to 1.57 billion yuan (S$296 million) in the six months ended June 30, the company said in a statement on Tuesday, beating analyst estimates of 1.51 billion yuan, according to data compiled by Bloomberg. Revenue climbed 26 per cent to 73.18 billion yuan.
“The decline of the price of lithium carbonate in the first half of the year resulted in the decrease of battery prices, which exerted a positive influence on the cost control of new energy vehicles,” the company said in the earnings release.
“However, the group’s gross profit margin was still impacted by the new energy transformation and intensified competition in the automobile market.”
The price war has forced most of the industry to slash prices on some models, and Geely’s gross margin remained at 14 per cent despite the growth in revenue and decline in battery raw material prices.
Investments in developing clean cars added to that, as Geely tries to speed up its transition to electric vehicles (EVs) to take on competitors such as Tesla and BYD, although the company has reined in some spending in this area compared with in 2022. Total research and development costs fell 8 per cent to three billion yuan.
Deliveries of the company’s battery EVs and plug-in hybrids increased by 44 per cent in the first half of 2023, faster than the overall market which grew at 37 per cent, according to the China Passenger Car Association. The premium Zeekr range was a star performer, with sales climbing 124 per cent in the first six months.
Despite the weak economy
Geely’s board said it has decided not to pay an interim dividend. BLOOMBERG
