Guangzhou Automobile Group Co.(02238.HK), the Chinese carmaker which assembles vehicles for Toyota Motor Corp. (7203) and Honda Motor Co., said first-half profit fell 26 percent after the March 11 earthquake in Japan hurt component shipments.
Net income dropped to 1.72 billion yuan ($270 million), or 0.28 yuan a share, from 2.31 billion yuan, or 0.59 yuan, a year earlier, Guangzhou Auto said today in a Hong Kong stock exchange filing. Sales fell 4.5 percent to 27.6 billion yuan.
The maker of Toyota Camry sedans and Honda Fit compacts said it will pursue unspecified “effective measures” in the second half to minimize losses brought about by the earthquake. Industry-wide growth in Chinese car sales should also reach 10 percent in the half after slowing to 3.4 percent in the first six months from 32 percent in 2010, the company said today.
“The upturn tendency of the Chinese economy as a whole will remain unchanged and therefore the automobile industry will see an end to the downturn trend and resume a level of steady and rapid growth,” Chairman Zhang Fangyou said in the statement.
Guangzhou Auto declined 0.24 percent to close at HK$8.28 prior to today’s earnings announcement. The stock has plunged almost 23 percent this year, compared with a 12 percent decline in the benchmark Hang Seng Index.
The ventures with Toyota and Honda have suffered severely, Shanghai-based Phillip Securities (HK) Ltd. analyst Zhang Jing said in an Aug. 15 note, adding that discounts on offer as the company struggles to meet sales targets may crimp margins.
Guangzhou Auto sold 314,190 vehicles in the first half, 18 percent fewer than a year earlier, according to figures from the China Association of Automobile Manufacturers.
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“Our normal production and operation activities were seriously disturbed, with output and sales volume lagging behind business objectives due to the effect caused by the Japanese earthquake,” the Guangzhou, southern China-based automaker said.
Chinese sales have also slowed as the government reinstates a 10 percent sales tax on small cars and phases out subsidies for trade-ins in rural areas.
Guangzhou Auto plans to push ahead with an initial share sale on the Chinese mainland, according to the statement. The company listed in Hong Kong in August last year by buying shares of the Denway Motors Ltd. unit it didn’t already own.