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Geely Auto not to cut job, salaries amid anti-coronavirus fight

Monika From Gasgoo| April 02 , 2020 16:57 BJT

Shanghai (Gasgoo)- China's Geely Auto will not lay off employees, cut salaries or delay wage payment amid the combat against coronavirus, said An Conghui, president and CEO of Geely Auto Group, despite the revenue and profit downturn for 2019 and the impact from the viral outbreak.

The high-profile automaker announced its 2019 annual results on March 30. Its full-year revenue slid 9% year on year to RMB97.401 billion, for the first time facing decrease in recent five years. Besides, both net profit and gross margin represented double-digit decline.

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

Geely profit 2019, Geely new product launch 2019, China automotive news

(Photo source: Geely Auto's WeChat account)

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.

The increase in R&D investment was also accountable for that. 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 unfavorable financial numbers and severe market climate, the automaker has not adjusted its sales target—1.41 million units. Before that, some companies like Great Wall Motor and GAC Group lowered their goals to weather the coronavirus-caused hardship.

Geely is emboldened for certain reasons. The strong cash flow will endow it with outstanding anti-risk capability. According to Li Donghui, executive vice president and the CFO of Zhejiang Geely Holding Group, said Geely's cash level in 2019 increased by 23% year on year to RMB19.3 billion, mainly thanks to its great efforts to increase revenue, decrease receivables, cut operational cost and rationalize investment deployment.

On the other hand, the intensive new product launching plan makes Geely more confident in selling more cars and gaining more market shares. An Conghui revealed the company plans to roll out six all-new models in 2020, three of which will be under the Geely brand—a compact SUV, namely, the Geely ICON, a large-sized SUV and a compact sedan models. Moreover, Lynk & Co will release the Lynk & Co 05 crossover SUV, and Geometry will launch a brand new all-electric SUV model.

Overseas businesses may contribute new growth points to Geely’s development. In 2019, the revenue generated from Malaysian and East European markets skyrocketed 975.89% and 157.7% respectively over a year ago to RMB2.722 billion and 1.593 billion. The Lynk & Co brand is set to be launched in Europe at the end of this year.

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