August 20, 2014 / 4:55 AM / 3 years ago

China's Geely says H1 profit down 20 pct, cuts annual sales target

HONG KONG, Aug 20 (Reuters) - Geely Automobile Holdings Ltd on Wednesday posted a 20 percent fall in first half net profit, hit by slowing sales at home as local brands fall out of favour and a drop in exports to major markets in eastern Europe and the Middle East.

Geely, whose parent company owns Swedish carmaker Volvo, said net profit fell to 1.11 billion yuan ($180.6 million) for the January-June period from 1.398 billion yuan the same period a year ago. The figure beat analysts’ average of forecast of a 959 million yuan profit.

Turnover fell 32 percent year-on-year to 10.16 billion yuan. It sold 187,296 vehicles during the first half, down 29 percent from a year ago.

“Challenges remain in the second half of 2014 in view of the rapid changes in economic and regulatory environment in China,” chairman Li Shu Fu said in a filing to the Hong Kong bourse.

“Competitive pressure on indigenous brands in the China market should continue to intensify in the coming years as most major international brands have been strengthening their presence in the China market,” he added.

Geely said it decided to revise down its full year sales volume target to 430,000 units from 580,000 units.

Geely had said in March that it will consolidate brands and sales network to cut costs amid sluggish sales.

China’s automobile market, the world’s biggest, is rebounding with about 10 percent growth expected this year, but indigenous brands are losing market share amid competition from foreign rivals such as Ford Motor Co, Volkswagen AG and General Motors Co. ($1 = 6.1459 Chinese yuan) (Reporting by Donny Kwok; Editing by Miral Fahmy)

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