HONG KONG: Brillance China issues profits warning
Brilliance China Automotive Holdings has issued a profits warning, saying in a statement that it expects the consolidated results of the group for the year ended 31 December "will be materially adversely affected principally by an operating loss of Zhonghua sedan and a possible provision for impairment of intangible assets, resulting from the general production overcapacity and intensified price competition of the [Chinese] automobile industry during the year".
Reiterating comments made in its half-year results announcement, Brilliance said the Chinese automobile industry continued to be adversely affected by general production overcapacity, falling prices and increasing competition and the difficult market conditions were exacerbated by rising global fuel prices, which have affected petrol prices in China.
"In addition, potential regulatory measures also increase the costs of owning a vehicle in China," the company added.
It said ongoing low sales volume of the Zhonghua sedan resulted in an operational loss for that business and the board is considering making a possible provision for impairment of intangible assets relating to the development of the Zhonghua sedan.
"In the circumstances, the board believes that the consolidated results of the Group for the year ended 31 December will be materially adversely affected", the statement said without giving details.
Full-year results should be announced by the end of April.