Dongfeng Motor Defies Sales Drop to Beat Profit Estimate

Dongfeng Motor Group Co., China’s biggest maker of Japanese-branded cars, reported full-year profit that beat analyst estimates even as sales declined.

Net income fell 13 percent to 9.1 billion yuan ($1.5 billion), the Wuhan, China-based company said in a statement to the Hong Kong stock exchange yesterday. That surpassed the 8.4 billion yuan average of 31 analyst estimates compiled by Bloomberg. Sales fell 5.6 percent to 124 billion yuan.

Dongfeng is recovering from Chinese consumer aversion toward its Japanese partners’ products after a wave of protests erupted in September due to the territorial dispute between China and Japan over a group of islands in the East China Sea. Both Nissan and Honda said traffic and demand were on the uprise at the end of last year.

China’s auto industry was “under a slow growth in 2012,” Xu Ping, Dongfeng’s chairman, said in the earnings statement. “The growth in of general consumption market provided momentum and tremendous room for improvement.”

Dongfeng rose 2.1 percent to HK$10.78 as of 3:11 p.m. in Hong Kong trading, trimming this year’s loss to 9.9 percent. The benchmark Hang Seng Index slid 0.6 percent today.

Passenger-vehicle sales increased 5.7 percent to 1.7 million units, while commercial vehicle sales dropped 21 percent to 414,754 units, according to the statement.

Anti-Japan Protests

In addition to Japanese brands Nissan and Honda, Dongfeng is a partner of France’s PSA Peugeot Citroen to produce cars in China.

Xu said in a briefing in Hong Kong today that the automaker is still recovering from the anti-Japanese backlash over the disputed Diaoyu islands -- known as Senkaku in Japanese -- and that some impact will still be seen this year.

The weaker yen is beneficial for Dongfeng and the currency will probably continue to weaken and may reach 100 to the dollar, Xu said. The automaker will also make the Nissan Leaf electric vehicle in China, he said.

Dongfeng signed an agreement in December with another French automaker, Renault SA, to build a 7 billion yuan production facility in Wuhan.

On Fisker Automotive Inc., Xu said that Dongfeng ended acquisition talks as there was “some distance” between Fisker’s future development and Dongfeng’s plans.

Dongfeng wants to be competitive globally and will consider overseas acquisitions and cooperation to help reach that goal, Xu said. The automaker will consider acquiring both passenger and commercial vehicles, as well as crucial technology.

Board Secretary Cai Wei said at the same briefing that the automaker is looking at acquisition opportunities both within and outside China.

— With assistance by Alexandra Ho

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