The Chinese company Geely Automobile Holdings Wednesday reported a 35% rise in interim profits, higher than expected, but is facing a slowdown in sales due to increased competition in the biggest car market world.
The automaker, whose parent company Zhejiang Geely bought Volvo to Ford, posted a net profit of 804.85 million yuan (94 million euros) for the first six months of the year, against 595 910 000 yuan for the same period in 2009.
Analysts polled by Reuters had expected a profit of 756.4 million yuan.
"Despite the strong performance of group sales in the first half, the Board nevertheless expects that competition continues to intensify in the Chinese market as for export," said Geely.
The group remains confident in its ability to meet its target of 400,000 vehicles sold this year, or 22% more than in 2009, said its chairman and founder Li Shufu, the Henry Ford called Chinese.
In the first half, Geely sold 195,734 vehicles, or 42% more than in the first six months of 2009.However, group sales in July fell 12% over a year, falling to 21,684 vehicles.
"Sales of Geely are expected to decline during the remainder of the year and there are risks on the benefits for six to nine coming months," he warned before the announcement of Steve Man, an analyst at Samsung Securities.
The long-term prospects of Geely might be better if its parent is able to recover Volvo.This adjustment of Swedish manufacturer Geely deficit could allow to benefit from technology transfer and possibly to transfer the brand of luxury vehicles, "he added.
BYD, Geely Chinese competitor backed by billionaire Warren Buffett said Monday that quarterly earnings disappointed investors and announced the launch of new models to cope with the slowdown in the Chinese automotive market.
The growth of China's auto market should indeed slow in the second half with measures taken by the government to prevent overheating of the economy.
At the Stock Exchange of Hong Kong, the title yielded 0.38% to 2.60 HK dollars around 7.35 GMT.Since the beginning of the action Geely fell 39% due to the weakening of group sales, while the benchmark index of the Stock Exchange of Hong Kong, the Hang Seng has lost 6% in the same time.