Geely profits more than double as Volvo tech boosts sales
Geely Automobile Holdings posted its biggest profit growth in eight years on Wednesday, as improved product design and engineering since its 2010 purchase of Volvo helped propel it to record sales.
For 2016, Geely's net profit more than doubled to 5.1 billion yuan ($741 million), its strongest growth since 2008. Profits are expected to rise 37 percent to 7 billion yuan in 2017, according to a Reuters poll of analysts before Geely's filing.
Geely, which also owns the maker of London's black cabs, has forecast a 31 percent jump in sales for the current year as sales of affordable models such as its GC9 sedan and Boyue SUV exceed initial estimates.
Geely, long seen as a no-frills marque, has transformed itself into an automaker with upmarket aspirations, using its Volvo r&d advantage to boost market share in China, where it is the seventh-largest brand.
Lynk & CO
In 2019, Geely plans the next phase of expansion as it introduces its new brand, Lynk & CO, in developed markets such as Europe and the United States.
Geely's China sales grew 50 percent last year to 766,000 vehicles, and it wants to top 1 million this year, a Geely official told Reuters.
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 Taiwan 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," said the person who was not authorized to speak publicly on the firm's investments and so declined to be named.
Overseas gamble
Geely and parent Zhejiang Geely Holding Group Co. have spent 10 billion yuan on r&d in each of the past three to four years, or about 15 percent of current revenue, said spokesman Victor Yang. That compared with rival BYD Co.'s r&d expenditure of 2 billion yuan in 2015, according to Thomson Reuters data.
But Geely's sales growth in China may flatten, now that the government has raised its sales tax on small vehicles.
"The current focus of our work is firstly the pace of development in China and increasing our share of the Chinese auto market, then next we can focus our work abroad," Geely Chairman Li Shufu told reporters this month in Beijing.
But entering markets where the brand is unknown is a gamble, and it could take years to gain traction, said James Chao, Asia chief of consultancy IHS Markit Automotive.
As there is still plenty of room for growth in China, however, there is no need to be concerned about the move abroad, said fund managers at two investment firms that hold Geely stock.
One manager said: "If they do well abroad it's a bonus, and if they don't then it's not a big reason to worry."
Geely, which also owns the maker of London's black cabs, has forecast a 31 percent jump in sales for the current year as sales of affordable models such as its GC9 sedan and Boyue SUV exceed initial estimates.
Geely, long seen as a no-frills marque, has transformed itself into an automaker with upmarket aspirations, using its Volvo r&d advantage to boost market share in China, where it is the seventh-largest brand.
Lynk & CO
In 2019, Geely plans the next phase of expansion as it introduces its new brand, Lynk & CO, in developed markets such as Europe and the United States.
Geely's China sales grew 50 percent last year to 766,000 vehicles, and it wants to top 1 million this year, a Geely official told Reuters.
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 Taiwan 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," said the person who was not authorized to speak publicly on the firm's investments and so declined to be named.
Overseas gamble
Geely and parent Zhejiang Geely Holding Group Co. have spent 10 billion yuan on r&d in each of the past three to four years, or about 15 percent of current revenue, said spokesman Victor Yang. That compared with rival BYD Co.'s r&d expenditure of 2 billion yuan in 2015, according to Thomson Reuters data.
But Geely's sales growth in China may flatten, now that the government has raised its sales tax on small vehicles.
"The current focus of our work is firstly the pace of development in China and increasing our share of the Chinese auto market, then next we can focus our work abroad," Geely Chairman Li Shufu told reporters this month in Beijing.
But entering markets where the brand is unknown is a gamble, and it could take years to gain traction, said James Chao, Asia chief of consultancy IHS Markit Automotive.
As there is still plenty of room for growth in China, however, there is no need to be concerned about the move abroad, said fund managers at two investment firms that hold Geely stock.
One manager said: "If they do well abroad it's a bonus, and if they don't then it's not a big reason to worry."
