Guangzhou Automobile Group Co., which makes cars with Toyota Motor Corp., Honda Motor Co. and Fiat SpA, reported first-half profit that missed analysts’ estimates amid an industry-wide slowdown in vehicle demand.
Net income fell 14 percent to 1.48 billion yuan ($233 million), or 0.24 yuan a share, in the six months ended June 30, compared with 1.72 billion yuan, or 0.28 yuan, a year earlier, Guangzhou Auto said in a statement to Hong Kong’s stock exchange today. Sales rose 5.6 percent to 5.48 billion yuan.
Profit was 28 percent lower than the average net income estimate of three analysts compiled by Bloomberg. Distributors have stepped up discounts amid rising stockpiles, as demand slowed with the weakest economic expansion in three years.
“In the second half of the year, the company will further heighten its sense of crisis and urgency,” said Guangzhou Auto in the statement today. China’s vehicles market “will maintain its growth trend with the focus of development gradually shifting to the third and fourth-tiered cities,” the company added.
Guangzhou Auto shares fell 0.4 percent to HK$5.76 in Hong Kong trading today before the announcement, widening its loss this year to 11.1 percent. The company’s Shanghai-traded stock fell 5.2 percent to 6.24 yuan today.
The city government of Guangzhou, where the carmaker is based, imposed a cap on new vehicle registrations in the 12 months from July 1, or about half of last year’s total, as part of measures to control traffic jams and reduce pollution.
Protests broke out in Guangzhou and other Chinese cities this month as Japanese activists landed on an island in the East China Sea claimed by both countries. Demonstrators called for a boycott of Japanese goods, the state-run China Youth Daily reported Aug. 20.
Zhongsheng Group Holdings Ltd., which distributes Toyota, Honda and Nissan Motor Co. cars in China, said the same day that the anti-Japan protests had limited impact on sales.
Guangzhou Auto began producing the Viaggio car with Fiat in June. The venture plans to boost annual sales of locally built cars to 200,000 cars in 2014, Jack Cheng, general manager of the joint venture, GAC Fiat Automobile Co., said in an interview in April.
— With assistance by Tian Ying, and Daryl Loo