[HONG KONG] Geely Automobile Holdings, the Hong Kong-listed unit of billionaire Li Shufu’s sprawling auto empire, said that first-quarter profit surged as sales climbed and it continued on a cost-cutting drive to stay on top of China’s ultra-competitive car market.
Net income more than tripled to 5.67 billion yuan (S$1 billion) in the three months ended Mar 31, from 1.56 billion yuan a year earlier, the company said on Thursday (May 15). That was broadly in line with guidance the company provided last month following a change in its accounting policy. Revenue rose 25 per cent to 72.5 billion yuan.
“The group achieved record-high sales and experienced strong growth in its new energy business,” it said. “This led to significant scale effects and a substantial increase in overall profitability.”
Geely Auto earlier this month announced a bid to take the premium electric car brand Zeekr private. The move, which came almost exactly a year after Zeekr started trading in New York, values Zeekr at about US$6.4 billion and is part of Li’s drive to streamline his business empire – which also includes a stake in Volvo Car, iconic UK sportscar brand Lotus, and the maker of London’s ubiquitous black taxis.
Separately, Zeekr on Thursday reported a first-quarter net loss of 718 million yuan, narrowing 63 per cent from last year. Total revenue was largely flat, increasing just 1.1 per cent to 22 billion yuan.
Zeekr merged with the Lynk & Co connected car brand earlier this year, and the period was the first quarter with the full integration of the two marques, Zeekr Group chief executive officer Andy An said.
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“The two brands’ initial technological consolidation has already boosted profitability through optimised R&D and shared platforms,” An said.
Geely recorded net current liabilities of 11.3 billion yuan, but said that after a comprehensive assessment, this has no significant impact on its ability to continue, because the business continues to generate stable cash flows, has good relationships with financial institutions and is carrying out plans to improve liquidity, it said.
Geely continues to enjoy strong growth in China, with deliveries rising 48 per cent in the first three months of this year. Popular models such as the electric Xingyuan hatchback and Xingyue L sport utility vehicle are among the best-selling vehicles in the world’s largest auto market.
But like other Chinese automakers, Geely is facing stiff trade headwinds. The European Union’s tariffs on Chinese electric vehicles and the increase in taxes on car imports and weak consumer sentiment in Russia – where Geely is a top seller, are impacting exports.
Overseas deliveries grew just small 2 per cent in the first quarter, compared with a 66 per cent surge in a year earlier, according to a separate company filing in April. BLOOMBERG
