Changan Automobile H1 net profit to slump 63.21% to 67.54% year on year

Shanghai (Gasgoo)- Chongqing Changan Automobile Co., Ltd (Changan Automobile) forecasted that its net profit attributable to shareholders may reach RMB 1.5billion to RMB 1.7billion for the first half of this year, slumping 63.21% to 67.54% compared with the corresponding period in 2017. From January to June, the company saw its earnings per share drop to RMB 0.31 to 0.35 from RMB 0.96 in the year-ago period.

The automaker ascribed the net profit shrink to the comparatively drastic decline in the investment income from its joint ventures despite the growing profitability of its self-owned passenger vehicle (PV) company.

Changan Automobile delivered 188,173 vehicles in June, suffering a year-on-year drop of 19.1%. In the first half of 2018, the automaker saw its cumulative sales decline 15.5% over the previous year to 1,207,381 units, according to the data released by the company on July 10.

The automaker's self-owned brand handed over a total of 138,237 vehicles in June. Among that, Changan-branded PV sales were 76,669 units, falling 15.1% year on year, while rising 12.4% month on month.

With respect to joint ventures' performance, Changan Ford suffered a year-on-year slump of 54.7% with 29,085 vehicles delivered in June. For the first two quarters, the company witnessed its aggregate deliveries fall 38.95% over a year ago to 227,702 units. Changan Mazda's year-to-date sales were 90,237 units, basically remaining the same as that of the year-ago period.

It seems that the violent drop in joint venture's investment income mentioned above may relate to Changan Ford’s sales plunge.

Changan Automobile has previously said that the sales downturn of its self-owned brand and Changan Ford largely resulted from the uncompetitive products which are closing to their end of life cycle, therefore led to the regressive market competency and profitability.

The company expects to improve its sales performance by rolling out a series of upgrading models. Changan Ford has launched the all-new Ford Focus in April and will locally produce the Lincoln-branded vehicles in the future.

Indeed, Changan Automobile failed to complete its sales target of 3.3 million units last year with its annual sales volume falling 6.23% year on year to 2,872,456 units. The company has lowered its sales goal to 3.1 million units for 2018, while only 38.95% of the goal has been finished after half a year passed.