SAIC Motor has posted a drop of almost 50% in first-quarter earnings though its RMB626.9m (US$91.8m) net profit reversed losses in the fourth quarter. The company posted a RMB1.24bn net profit in Q1 2008.
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For full year 2008, net profit dropped 85.8% to 656.2m yuan, worse than the 55.1% drop forecast by Reuters Estimates. It posted a RMB1.57bn net loss during the fourth quarter, according to Reuters calculation
“The weak results for 2008 are no surprise at all due to the unexpected downturn of the car market in the second half. But the market is warming up since February and SAIC is already showing improvement in Q1 compared with Q4 of 2008,” Chen Qiaoning, an analyst with ABN AMRO TEDA Fund Management, told the news agency.
SAIC remained cautious, however.
“The outlook for the 2009 domestic auto market is not so optimistic with lots of uncertainties ahead,” it said in a statement.
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By GlobalDataSAIC plans to sell 1.8m vehicles in 2009, down slightly from 1.83m sold in 2008 but generally in line with the country’s overall market, which it predicted would remain flat for the year. Some other automakers have forecast a 10% rise.
SAIC’s turnover target for 2009 is RMB119.4bn, up from RMB105.89bn in 2008.
SAIC has vehicle assembly joint ventures in China with General Motors and Volkswagen. It also builds MG and Roewe models using technology and tooling bought from the former MG Rover Group here in the UK and owns MG Motor UK, which assembles MG TF LE500 two-seater sports cars at the British firm’s former site near Birmingham from CKD kits shipped from China.
SAIC announced new Roewe and MG models at the Shanghai motor show earlier this month.
Sales of SAIC’s own-brand cars, including the Roewe 750 (an updated Rover 75), the 550 sedan and various MG models quadrupled to 18,000 units in the quarter, the company said at the show.
SAIC’s 2008 earnings were hit by a RMB3.08bn provision made for the 51.33%-owned loss-making South Korean subsidiary SsangYong Motor, Reuters noted.
SsangYong, now under court receivership, said earlier this month it needed to slash 36% of its workforce and sell assets in an effort to avoid bankruptcy.
“SsangYong remains a big issue hanging out there for SAIC, but without additional provisions presumably this year, its results for 2009 could be prettier,” Chen told the news agency.
