Geely warns COVID-19, chip shortage pose 'significant threat' to earnings

Automotive Industry

Source: Automotive News Europe, 2021-08-18

China's Geely Automobile Holdings said its first-half net profit grew 4%, as sales in the world's biggest auto market recover from COVID-19 pandemic lows.

Geely on 18 August posted a January-June profit of 2.38bn yuan ($367.20m) versus 2.3bn yuan in the same period in 2020.

Revenue rose 22% to 45bn yuan with vehicle sales climbing 19% to 630,237 cars.

The results missed analyst estimates as the increase in car shipments failed to offset a global chip shortage that is still hampering production.

The production disruption from the semiconductor crunch also means that Geely isn’t even halfway to meeting its full-year target of 1.53m units.

More than 90% of Geely's vehicles are sold in China and the company has been pushing to increase exports in recent years, focusing mainly on Southeast Asia and Europe.

Geely maintained its full-year sales forecast, which represents growth of 16% from 2020, but said the "recent worsening of the chip shortage and the resurgence of COVID-19 cases globally could pose a significant threat to our sales performance over the next few months, thus undermining our chance to achieve the target." 

Geely said the launch of more new and competitive vehicles "should enable the group to perform better in the second half."

Geely has created a new EV brand called Zeekr with its parent group, Zhejiang Geely Holding Group, which is China’s largest private carmaker and is controlled by Li Shufu, a billionaire who owns a large stake in Daimler and who has amassed interests in European legacy brands such as Lotus and lower-end players like Malaysia’s Proton.

Geely has said it would seek external funding for the Zeekr brand and would introduce more electric models in its overall lineup.

The company, which abandoned a merger plan with Geely Group sister brand Volvo Cars earlier in 2021, said the two automakers would combine their powertrain operations and also jointly develop next-generation EV architecture and autonomous driving solutions.

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