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China’s Geely Automobile Holdings Ltd said on Monday 2020 may be one of its toughest years yet, as pressure stemming from the coronavirus outbreak on production and sales persists.
But it said it planned to go ahead with global expansion, despite lower sales and net profit for 2019, when the country’s auto market suffered a slump, even before the novel coronavirus led to lockdowns that have paralyzed economic activity and disrupted supply chains.
Geely Automobile, based in the eastern province of Zhejiang, is China’s most globally high-profile automaker following investments by parent company Zhejiang Geely Holding Group Co Ltd’s in European manufacturers Volvo Car and Daimler AG.
China car sales fall 92% as coronavirus keeps buyers home
Auto sales in China, the world’s largest market, have slumped as coronavirus fears prevent buyers at home.
The profit announced on Monday of 8.19 billion yuan ($1.15 billion) was lower than the 9.14 billion yuan average estimate by 33 analysts on Refinitiv.
Its shares closed at 11.28 HKD on Monday, down 4.08% from last Friday.
“The recent outbreak of the novel coronavirus had caused serious disruption to our supply chain and thus our production levels, meaning additional pressure on our business volume and profitability in 2020,” Geely Automobile said in a filing to the Hong Kong exchange.
Geely Automobile, which plans to roll out 6 new models under the Geely, Lynk&Co and Geometry marques this year, sold 1.36 million cars in 2019. It is maintaining a sales target of 1.41 million cars in 2020.
The headwinds are likely to persist in the near future, making 2020 probably one of the most difficult years in the group’s 23-year history, Geely said.
Revenue fell by 9% from the previous year to 97.40 billion yuan. Analysts had estimated 99.43 billion yuan.
Geely Automobile’s president An Conghui told a conference call the company plans to start selling Lynk&Co in Europe at the end of this year and share more models with Malaysian automaker Proton, in which it has a stake.
Geely Automobile and Volvo – which Geely’s parent bought from Ford Motor Co in 2010 – are planning to merge and list in Hong Kong and possibly Stockholm.
The new company would have improved research capabilities, lower cost and brands in different segments, Geely’s chief executive Gui Shengyue said.
That could help to position it as global automakers pursue alliances to respond better to the cost of meeting tougher emission rules, electrification and autonomous driving.
The industry worldwide will also be seeking to revive sales as soon as there is a widespread easing of restrictions on movement to slow the spread of the coronavirus, which has killed more than 30,000 people globally.
