Geely Automobile reports 35% YoY drop in 2019 net profit

Shanghai (Gasgoo)-  China's Geely Automobile Holdings Limited (Geely Automobile) said in its annual financial result that 2020 is likely to be the toughest-ever year in its history due to the fallout from the spread of the coronavirus and the uncertainty in political and economic situations that will keep affecting China's PV demands.

The automaker said its 2019 profit attributable to equity holders slumped 35% year on year to RMB8,189,638,000. The annual revenue amounted to RMB97,401,248,000, sliding 9% from a year ago.

“The financial performance in 2019 is lower than the management's expectation,” the company made such self-assessment.

Regarding the reason causing the profit downturn, many of the blames have been laid on the higher-than-expected decrease in sales volume and pressure on pricing led by weaker demands and fierce market competition.

Last year, the company sold a total of 1,361,560 vehicles (including the sales of Lynk & Co-branded models), a year-on-year drop of 9%. With 1,303,569 vehicles sold, the domestic market suffered a decline of 12%, the chief factor that brought the overall sales down. However, the export volume surged 109% from the previous year to 57,991 units, thanks to more new models launched overseas.

Besides, Geely Auto recognized a total expense of RMB3.067 billion in its 2019 R&D activities, a remarkable growth of 57% over the year-ago period. The cost of product R&D qualified for capitalization was increased by RMB4.6 billion, which was mainly in relation to the development of new models, and partly to that of the powertrain and NEV technologies.

In spite of the decrease in both sales volume and profit, some bright spots were still reported. For instance, Geely Auto's market share by deliveries stood at 6.5% in 2019, 0.3 percentage points higher than that of 2018, according to Zhejiang Geely Holding Group, Geely Auto's parent company.