China's SAIC profit growth slows on weak economy

Reuters (Beijing) - Profit growth at China's largest automaker SAIC Motor Corp slowed to its weakest rate in three and a half years, h it by a weakening economy and high fuel costs.

China's economy has slowed for seven consecutive quarters, crimping sales at automakers including SAIC, which operates ventures with the likes of General Motors Co and Volkswagen AG.

Adding to the pain, the government raised fuel prices twice in the quarter.

Net income rose 1 percent to 5.35 billion yuan ($856.88 million)in July-September, slightly higher than an average forecast of 5.13 billion in a Reuters poll of three analysts.

But it still marks SAIC's weakest quarterly earnings growth since the first quarter of 2009 when its net income was just 627 million yuan.

In a brief stock exchange filing on Tuesday, SAIC restated its 2011 third quarter earnings to 5.27 billion yuan from 4.72 billion yuan without elaborating.

SAIC outperformed many of its smaller local rivals, including Dongfeng Motor Group Co which operates ventures with Japanese automakers.

In the first nine months, SAIC sold over 3.3 million vehicles, up 11 percent from a year earlier and well ahead of a gain of 3.4 percent in the overall market.

Chinese companies with manufacturing ties with Toyota Motor Corp, Honda Motor Co and Nissan Motor Co , however, saw a plunge in sales after a diplomatic row between China and Japan over disputed islands. That triggered anti-Japanese protests and a boycott of Japanese goods.

Dongfeng Motor Group Co, whose partners include Nissan and Honda, posted a 30 percent drop in third-quarter profit.

Pang Da Automobile Trade Co, a major dealer for Fuji Heavy Industries Ltd's Subaru car, swung to a 516 million yuan net loss in July-September from a net profit of 299 million yuan a year ago.

Shares of SAIC, which is valued around $23 billion, closed down 0.3 percent in Shanghai on Tuesday ahead of the earnings results, lagging a 0.2 percent climb of the broader CSI300 index of top Chinese companies.

The stock has fallen around 10 percent this year, while Dongfeng has dropped around 28 percent and Great wall Motor Co Ltd jumped 83 percent.