Dongfeng Auto Co., a light commercial vehicle producer under China’s third largest automaker Dongfeng Motor Group, on Saturday announced that 2007 net income was almost flat although gross profits were up 9.5% on rising demand for trucks and diesel engines.

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Gross profit reached CNY677.8m (USD95m), from CNY619.3m a year earlier, the Wuhan-based company said in a statement to the Shanghai Stock Exchange.


Net income rose 0.6% to CNY489.3m last year, it said.


Per-share earnings rose to CNY0.245 from CNY0.243 in 2006.


Revenue was up 26.6% to CNY12.8bn after the company raised vehicle sales by 18.9% to 150,038 units during the year.

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Some three quarters of the vehicles produced by the firm were light trucks.


Dongfeng Auto, which is a partner of Japan’s Nissan Motor Co., produces Nissan-brand sport-utility vehicles (SUV) mainly in a Zhengzhou plant.


Hong Kong-listed Dongfeng Motor Group and Nissan each owns 50% of the parent of Dongfeng Auto.


It also makes diesel engines with Cummins Inc. – sales were up 42.2% to 136,973 units last year.


AFX reported that the company did not give an explanation for low profit growth levels. However, according to its earnings report filed with the Shanghai Stock Exchange, growth in operating costs just about matched revenue growth, with operating margins very thin. The report said that the company was hit by higher costs.


The company also said that in 2008 it will face a more severe business environment due to rising raw material prices, stricter environmental standards, and intense competition, while the stronger yuan will blunt its export advantage.