Reuters (Shanghai) - Top Chinese automaker SAIC Motor Corp (600104.SS) reported a surprise 56 percent rise in first quarter earnings to a record high, defying a cooldown in the world's largest auto market after two consecutive years of breakneck expansion.
SAIC's diversified portfolio has enabled it to hold up much better than most of its rivals, such as Chongqing Changan Automobile 000625.SS, which ended the quarter with a 9.3 percent year-on-year decline in earnings due to weak mini-van sales.
For the full year, SAIC is expected to register a double-digit increase in its earnings, even though the market is expected to remain subdued after Beijing stripped away most of its policy incentives for new buyers.
"Auto sales were up less than 10 percent in the first quarter, way off compared with the over 70 percent jump a year ago. That's quite a challenge for each and every player and the situation is not going to get any better till the peak season in autumn," Cao He, an analyst with Minzu Securities in Beijing, said before the earnings were released.
"As such, double-digit bottom-line growth is pretty solid as many automakers might end up losing money."
Beijing in 2009 introduced tax incentives for small cars and handed out subsidies for farmers who traded in old, oil-guzzling vehicles for more fuel-efficient ones.
It scaled back the package in 2010 and scrapped them completely at the beginning of this year to steer the market to a slower, but more sustainable growth pattern.
From January to March, SAIC's net profit was 4.50 billion yuan ($689 million), compared with 2.88 billion yuan a year earlier, it said in a brief filing to the Shanghai Stock Exchange. The result was much better than the average forecast of 3.24 billion of three analysts polled by Reuters.
Revenues rose 54 percent to 96.7 billion yuan.
SAIC did not provide guidance for the upcoming quarters or the full year. Its sales in the first quarter were up 18.4 percent to 1.06 million units, outpacing the 8.1 percent rise in the overall Chinese vehicle market.
OWN-BRAND CARS
SAIC, the China partner of General Motors (GM.N) and Volkswagen (VOWG.DE), sold 3.58 million vehicles last year, up 31.5 percent from a year earlier.
It expects to sell more than 4 million vehicles this year, its president Chen Hong said in March, equivalent to an 11.7 percent year-on-year rise at least.
Sales of its own-brand cars are expected to hit around 230,000 units, up from 160,626 units last year.
SAIC is among a growing band of Chinese firms, including Geely Automobile (0175.HK) and Chery Automobile, which are attempting to build global brands.
It became the owner of MG Rover's 10,000-unit Longbridge plant in Birmingham in central England after a merger with its much smaller rival, Nanjing Automobile Group, in late 2007.
The facility had in May resumed making MG 6 sedans, targeting the Britain initially and the rest of Europe eventually.
