Denway Motors, a Chinese joint venture partner of Honda, has posted a worse-than-expected 20% fall in second-half earnings, sending its share price sharply lower, according to Reuters.
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The news agency said Denway reported a net profit of $HK914.61m ($US117m) for the six months ended December, down from $HK1.14bn the previous year, as higher material costs and lower vehicle prices squeezed profit margins.
The result lagged a mean forecast of $HK1.07bn from 23 analysts polled by Reuters Estimates.
Analysts reportedly said Chinese auto makers’ earnings probably bottomed out in 2005 as margins started to improve in the fourth quarter on easier material prices, and Denway was expected to return to a growth trend this year.
For full-year 2005, Denway generated net profit of HK$1.91bn, down 7.6% from HK$2.06bn in 2004.
The result lagged a mean forecast of HK$2.06bn, according to Reuters Estimates.
Guangzhou Honda, a 50/50 joint venture between Denway and Honda, makes Accord sedans, Odyssey multiple purpose vehicles and Fit (Jazz) cars, in China’s southern Guangdong province, Reuters noted.
