Net income dropped to 1.7 billion yuan ($270 million), from 2.3 billion yuan a year earlier, Guangzhou Auto said in a Hong Kong stock exchange filing. Sales fell 4.5 percent to 28 billion yuan.

The maker of Toyota Camry sedans and Honda Fit compacts said it will pursue unspecified "effective measures" in the second half to minimize losses brought about by the earthquake. Industry-wide growth in Chinese car sales should also reach 10 percent in the half after slowing to 3.4 percent in the first six months from 32 percent in 2010, the company said.

"The upturn tendency of the Chinese economy as a whole will remain unchanged and therefore the automobile industry will see an end to the downturn trend and resume a level of steady and rapid growth," Chairman Zhang Fangyou said in the statement.

The ventures with Toyota and Honda have suffered severely, Shanghai-based Phillip Securities (HK) Ltd. analyst Zhang Jing said in an Aug. 15 note, adding that discounts on offer as the company struggles to meet sales targets may crimp margins.

Guangzhou Auto sold 314,190 vehicles in the first half, 18 percent fewer than a year earlier, according to figures from the China Association of Automobile Manufacturers. ?

IPO on Track
"Our normal production and operation activities were seriously disturbed, with output and sales volume lagging behind business objectives due to the effect caused by the Japanese earthquake," the Guangzhou, southern China-based automaker said.

Chinese sales also slowed after the government reinstated a 10 percent sales tax on small cars and phased out scrappage subsidies in rural areas.

Guangzhou Auto plans to push ahead with an initial share sale on the Chinese mainland, according to the statement. The company listed in Hong Kong last year by purchasing shares of Denway Motors Ltd. unit that it didn't already own.