Changan Automobile posts 239.17% plunge in H1 profit amongst sales volume drop

Shanghai (Gasgoo)- Chongqing Changan Automobile Company Limited (Changan Automobile) said its first-half revenue dropped 16.18% over the prior-year to RMB29.876 billion, while it posted a loss in shareholders' net profit of RMB2.24 billion, a year-on-year plunge of 239.17%.

The sales slump was primarily blamed for its sharply sliding net profit. For the first half of 2019, the automaker saw its cumulative auto sales volume dip 31.7% from the previous year to 825,208 units with its all subsidiaries hit by decrease. Two joint ventures—Changan Ford and Changan Mazda—suffered decline of 67% and 32.2% respectively over a year earlier.

Negative growth in sales volume also impinged on net profits of subsidiaries and joint ventures. Changan Ford got a profit loss up to RMB776.89 million, a steep decline of 56% compared with the first-half 2018. Moreover, Changan Suzuki and Jiangling Holding posted net profit loss of RMB245.76 million and RMB472.83 million respectively.

Although the sales volume growth represented negative for the first six months, Changan Mazda gained a net profit of RMB873.96 million, while 31% less than that of the year-ago period.

Changan Automobile said it has negotiated with JV partners to develop the Changan Ford Revitalization Plan. It fully implements the “two leading” strategy of effect and products, and the “five major upgrades” strategy of marketing, efficiency, quality, supply chain and new-field cooperation to promote the rapid improvement of Changan Ford's management quality.

(Photo source: Changan Mazda)

Changan Mazda launched the CX-5 and Angke Sela annual models, and the cloud control version to boost sales, with 61,161 units sold in the first half of the year.

Operating expenses tumbled 43.26% year over year to roughly RMB1.443 billion mainly due to the decrease in sales volume, the reduction in the use of commercial resources and freight, the carmaker said.

However, the group's first-half administrative expenses jumped 20.16 to RMB1.26 billion, offsetting the decrease in operating expenses to some extent.

More expenses were plowed in R&D. According to the interim report, Changan Automobile's R&D expenses evidently rose 17.75% to approximately RMB1.303 billion.

Operating revenue from the automobile manufacturing business totaled RMB29.101 billion, shrinking 15.51% from a year ago. Gross margin of the sector reached at 7.67%, down by 4.73 percentage points over the previous year.