Geely Guides for Sales Growth Amid Price War as Results Beat Estimates — Update

By Kimberley Kao

Geely Automobile posted better-than-expected net profit and revenue for 2023 and reiterated its outlook for further sales growth despite the continuing price war in China's electric-vehicle industry.

The Chinese carmaker on Wednesday said its full-year net profit rose to 5.31 billion yuan ($737.6 million) from CNY5.26 billion in 2022. The result beat the market consensus estimate of CNY4.5 billion-CNY5.0 billion, according to Citi Research. Geely said net profit would have surged 51% if not for a one-off bargain purchase gain of CNY1.75 billion in 2022.

Revenue rose 21% to CNY179.20 billion.

Its gross margin was relatively stable at 15.3%, rising 1.2 percentage points. The carmaker attributed the higher margin to large-scale cost cuts and better product structure. However, research and development expenses rose 15% as the company increased investments to speed up the "pace of electrification and intelligentization transformation," it said.

Geely sold nearly 1.7 million vehicles in 2023, up 18% but slower than China's passenger vehicle sales growth. Chinese-brand passenger vehicle sales rose 24% to 14.6 million units last year.

The company said it "faced unprecedented fierce competition, with price wars throughout the year." Despite this, sales rose as pandemic restrictions were lifted and supply chains stabilized, supporting a 38% rise in exports, it said. Sales also benefited from the fall in prices for batteries and chips, the company said.

Its three brands, Geely, Zeekr and Lynk & Co, will each launch new models this year, the company said.

Geely set its 2024 sales volume target at 1.9 million units, about 13% higher than 2023 levels, but it cautioned that the automotive industry will remain challenging and competitive.

China's automotive market continues to face headwinds as growth momentum in the EV industry slows. Tesla, BYD and Geely have all introduced price cuts this year to woo customers.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

March 20, 2024 07:15 ET (11:15 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.