5.1b yuan net profit last year as im­proved prod­uct de­sign, en­gi­neer­ing pro­pel sales

New Straits Times - - Business -

BEI­JING af­ter the Volvo ac­qui­si­tion, such as its GC9 sedan and Boyue sport-util­ity ve­hi­cle, ex­ceed ini­tial es­ti­mates.

Long seen as a no-frills brand, Geely has trans­formed it­self into a car­maker with up-mar­ket as­pi­ra­tions, us­ing its Volvo re­search-and-de­vel­op­ment ad­van­tage to climb the sales ta­ble in the world’s largest auto mar­ket, where it ranks around seventh.

Come next year, Geely plans its next phase of ex­pan­sion as it aims to be­come China’s first car­maker to mar­ket its own brand — new Volvo col­lab­o­ra­tion Lynk & Co — in de­vel­oped mar­kets, be­gin­ning with Europe and the United States.

En­ter­ing ma­jor mar­kets with an un­known Chi­nese brand is an ex­pen­sive risk, an­a­lysts say, but in­vestors are un­per­turbed: Geely’s share price has tre­bled over the past 12 months.

“It’s a to­tal turn­around story,” said a fund man­ager at a Tai­wan­based in­vest­ment firm that bought a sig­nif­i­cant amount of Geely stock last year. “Be­fore it was just a nor­mal do­mes­tic brand, but af­ter sev­eral new prod­uct launches it suc­cess­fully el­e­vated its brand im­age.”

Geely’s China sales grew 50 per cent last year to 766,000 ve­hi­cles, pow­ered by the GC9 and Boyue, as well as small cars fea­tur­ing Volvo tech­nol­ogy. It aimed to top one mil­lion this year, though it could sell far more de­pend­ing on mar­ket con­di­tions, said a Geely of­fi­cial.

For last year, net profit more than dou­bled to 5.1 bil­lion yuan (RM3.27 bil­lion), its strong­est growth since 2008. The fig­ure is set to rise 37 per cent to seven bil­lion yuan this year, showed a Reuters poll of an­a­lyst es­ti­mates prior to Geely’s fil­ing yes­ter­day.

To be sure, growth has come at a cost. Geely and par­ent Zhe­jiang Geely Hold­ing Group Co Ltd had spent 10 bil­lion yuan on R&D in each of the past three to four years, or about 15 per cent of cur­rent rev­enue, said spokesman Vic­tor Yang. Reuters

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