Geely Outperforms BYD! Geely's Mid-Year Report: Revenue Breaks 1500 Billion, Net Profit Down 14%
August 14th, Geely Automobile (0175.HK) released its mid-year report. In the first half of this year, Geely Automobile's revenue reached 1502.8 billion yuan, a growth of 27% compared to the same period last year; net profit attributable to shareholders was 92.9 billion yuan, down 14% from the previous year.
Image source: Reporter of Times Weekly
Geely Automobile is one of the fastest-growing car brands in terms of sales volume this year. In the first half, its sales reached 140.9 million units, up 47% from the same period last year. The silver logo brand performed exceptionally well, with sales reaching 54.8 million units, up 232%.
During the mid-year report conference, Geely Automobile's President and Executive Director, Liu Yu, stated that Geely Automobile's market share has narrowed to within 4 percentage points of the largest car brand in the country. This gap will further narrow or even surpass others in the near future.
Geely Automobile is also working on merging with extreme, a company listed on the New York Stock Exchange (NYSE: ZK). The merger requires both Geely Automobile and Extreme to hold shareholder meetings to pass the resolution. If both meetings are passed, the merger will be formally completed from a legal perspective.
On July 15th, under the leadership of its parent company, Zhejiang Geely Holding Group (hereinafter referred to as "Geely Holding"), Geely Automobile merged with Extreme, which had gone public in the United States for a year before delisting. Geely Holding hopes to drive internal integration, improve efficiency, and reduce waste through this merger.
In the first half of this year, Geely Automobile's revenue reached 1502.8 billion yuan, setting a new high; net profit was down 14% from the previous year, reaching 92.9 billion yuan; and gross profit rate decreased by 0.3 percentage points to 16.4%.
The main reason for the decrease in net profit is that last year's period included a transaction related to Renault Automobile, which resulted in a gain from the sale of related assets. Excluding this one-time gain and asset impairment loss, core profits have increased significantly.
Image source: Official website
The decrease in gross profit rate is related to the change in product sales structure. Geely Automobile's silver logo brand has positioned itself as a mainstream new energy market, with strong growth in sales volume, which has increased its share of the group's sales structure and led to a decrease in average vehicle sales revenue by 1.4 million yuan, or approximately 9.6 million yuan per unit.
The silver logo is Geely Automobile's brand launched in early 2023. It has become the group's new energy car main force. In the first half of this year, sales reached 54.8 million units, up 232% from the same period last year.
The brand currently offers 10 models, focusing on high-quality and affordable routes, with a price range of less than 15 million yuan. The latest model, silver A7, was launched on August 8th at a starting price of 8.18 million yuan.
The same is true for the extreme brand, which has sales of 9.1 million units in the first half, up 3% from the same period last year.
In terms of exports, Geely Automobile's overseas export sales reached 18.4 million units in the first half.
Overall, with the drive of self-owned brands, Geely Automobile's sales reached 140.9 million units in the first half, ranking second only to BYD (214.6 million units) and SAIC Motor (205.3 million units), up 47% from the same period last year.
At the group level, Geely Holding's sales reached 193.2 million units in the first half, up 30% from the same period last year. Among them, new energy car sales exceeded 100 million units for the first time, up 73%. Geely Holding's Volvo brand sold 35.4 million units, while extreme sold 3.0 million units and long-distance new energy commercial vehicles sold 6.4 million units.
Using a "car army" strategy to charge towards the goal of 300 million units
Geely Automobile is still working on merging with extreme.
Liu Yu revealed that Geely Automobile will hold its shareholder meeting on September 5th, while extreme will hold its shareholder meeting on September 15th. If both meetings pass the resolution, the merger will be formally completed from a legal perspective. Subsequent delivery work will be completed by the end of the year.
After the merger, Geely Automobile will establish the silver logo business group and extreme technology business group, as well as the original China star fuel car series, with a total of four brands: Geely, silver logo, extreme, and leichi.
"These four brands will have their own clear positioning, providing different comprehensive needs to the market and customers."
At the same time, with the increase in the full-year sales target, Geely Automobile will accelerate the launch of new products in the second half of the year.
According to CFO Dai Yong, Geely Automobile's silver logo brand plans to release a compact plug-in hybrid car, Xiaoyue 6, by the end of this year, with a target sales volume of 100 million units.
Extreme's new large-scale new energy SUV, extreme 9X, will debut in July and begin pre-sales in August. The existing models, extreme 001, extreme 007, and extreme 7X, will also release new car models. Leichi brand's mid-to-large-sized plug-in hybrid car, leichi 10 EM-P, is expected to be launched in September.
"We are very confident that we can complete or exceed our annual target."
In the eyes of industry insiders, Geely Automobile is continuously narrowing the gap with top car brands like BYD. If Geely Automobile and extreme can smoothly integrate and improve efficiency, Geely Automobile will have a strong chance of releasing more competitive products in the second half of this year.
However, Geely Automobile also needs to pay attention to the decline in gross profit rate. How to balance car sales volume and pricing system is a challenge for Geely Automobile.