Changan Automobile may see net profits plunge around 90% year on year

Shanghai (Gasgoo)- Chongqing Changan Automobile Co., Ltd (Changan Automobile) may see its net profits attributable to shareholders of listed company in 2018 reached RMB500 million to RMB750 million, the automaker announced on January 30. Compared to the RMB7.137 billion of net profits in 2017, the company is likely to suffer a sharp year-on-year plunge of 89.49% to 92.99%.

Besides, basic earnings per share in 2018 amounted to RMB0.1 to RMB0.16, while this number for 2017 was RMB1.49.

Changan Automobile attributes the net profit slump to the reduction in the investment income from joint ventures.

The automaker saw its full-year sales in 2018 slid 25.6% from the previous year to 2,137,785 units. The annual sales of its self-owned Changan brand amounted to 1,499,747 units, exceeding 1 million units for the fourth year in a row, yet still presenting a decline over the performance in 2017.

The investment income from joint ventures was the mainstay for Changan Automobile’s annual net profits. Its net profits in 2016 and 2017 were RMB9.564 billion and RMB6.855 billion respectively, among which RMB9.029 billion and RMB6.039 billion were coming from Changan Ford.

However, the sales of the Sino-U.S. joint venture in 2018 were halved over a year ago to only 377,739 units, which directly led to the precipitous decline in net profits.

To survive the current plight, Changan Automobile has taken a number of measures to speed up the transformation towards electrification. As early as October 19, 2017, it announced its Mission Shangri-La new energy strategy, aiming to build a special platform for three new energy cars before 2020. Besides, the automaker vows to cease selling petrol vehicles by 2025, instead solely focusing on electric models.

Moreover, Changan Automobile claimed on August 28, 2018 that it planned to reorganize internal assets by transferring part of NEV-related assets, business and staff members to its wholly-owned subsidiary, Chongqing Changan NEV Science and Technology Co., Ltd., aiming to boost its development of new energy vehicle (NEV) businesses.