Geely’s net profit tanks 43% in H1 on COVID-19 restrictions

Geely Automobile Holdings Ltd (OTCMKTS: GELYF) said on Monday that its profit in the first half (H1) of the ongoing fiscal year came in 43% lower on an annualised basis. The company attributed the decline to the Coronavirus pandemic that weighed heavily on the world’s largest auto market in recent months.

Shares of the company slid about 12% on Monday. Including the intraday decline, Geely is now exchanging hands at £2.02 per share. In comparison, the stock was reported trading as low as £1.30 per share in late March when the impact of COVID-19 was at its peak. Investing in the stock market online is easier than you think. Here’s a simple guide to get you started.

Geely reports a 23% decline in H1 revenue

The novel flu-like virus has so far infected more than 21 million people worldwide and caused over 0.75 million deaths. Geely also slashed its guidance for annual sales on Monday due to the dovish performance in the first six months of the financial year.

July marked the fourth month in a row for China to have seen an improvement in overall auto sales that were still reported about 12.7% down on a year over year basis. Geely, that made investments in Daimler AG and Volvo Cars in recent months, registered £252.62 million of net profit in H1 on Monday.

It highlighted to have sold 530,446 vehicles in the fiscal first half that represents a 19% decline as compared to the same period last year. Consequently, its revenue tanked 23% to £4.05 billion that was in line with what the experts had forecast.

Geely’s annual financial guidance

According to analyst Shi Ji of Haitong International:

“Geely’s 1H20 earnings are largely in line with our expectations, thanks to its significant cost cut efforts, especially in wages and investments in fixed assets.”

For the full year, the car manufacturer slashed its target for revenue by 6%. It now forecasts to sell 1.32 million vehicles this year that marks a 3% decline versus last year. Geely was in talks with the Swedish carmaker, Volvo, for a potential merger earlier this year. The talks, however, were put on hold in late June.

Geely performed fairly upbeat in the stock market last year with an annual gain of roughly 30%. At the time of writing, it is valued at £19.80 billion and has a price to earnings ratio of 15.71.