Geely earnings beat estimates on strong sales and cost cutting

HONG KONG: Geely Automobile Holdings Ltd.'s full-year profit beat analyst estimates after the carmaker increased sales volumes and reduced costs to better compete in the cut-throat Chinese market.

Net income surged 213% to 16.6 billion yuan (RM10bil), the Hong Kong-listed arm of billionaire Li Shufu's auto empire said in a statement today.

That topped the 14.6 billion yuan profit expected by analysts. Revenue climbed 34% to 240.2 billion yuan in the 12 months ended ended Dec 31, the company said.

Profits were helped by a one-time gain on the deemed disposal of subsidiaries. Excluding the impact of the gain and other non-recurring losses, net income would have been 8.52 billion yuan, a 52% increase.

Vehicle sales rose 32% to 2.1 million units last year, including the Zeekr and Lynk & Co. brands.

Several of its new electric models such as the Xingyuan hatchback are proving popular with customers, outselling rival BYD Co.'s Seagull in some months.

"In 2024, despite the fierce competition and slowing growth in China's automobile market, the group's sales volume still achieved year-on-year growth of 32%," the company said in the statement.

The overall gross margin also increased by 0.6 percentage points to 15.9% as a result of economies of sales, improvement in product mix and cost control optimisations driven by advancement in vehicle architectures and technologies, the statement also said.

Li, whose empire also includes Europe's Volvo Car AB, electric car maker Polestar Automotive Holding and the UK's Lotus Technology Inc., last year published a document titled the Taizhou Declaration which set out a new strategy of consolidation and cost-cutting for the group, after more than a decade of expansion.

One of the first moves was to combine Zeekr and Lynk & Co. to eliminate overlap between the two brands and reduce costs.

Under the new organisational structure, each brand will have distinct pricing categories to reduce cross-competition.

For example, Zeekr will focus on cars that start from 300,000 yuan (RM184,000), while Lynk & Co.'s target range will be between 200,000 yuan (RM123,000) and 300,000 yuan.

The realignment comes as the automaker deals with intense competition in China, led by BYD, and an uncertain global environment as tariffs and sanctions against Chinese-made cars grow.

Geely is trying to catch up to BYD, the top-selling brand in the domestic market. which has been relentless in launching new features, such as affordable smart driving tech for most of its vehicles and a new battery and charging system that's capable of providing around 400km of range in five minutes.

While exports grew 43% to more than 403,900 vehicles last year, Geely and its peers face tariffs in markets such as Europe, Turkey and Canada.

Chinese automakers are also effectively shut out of the US due to a more than 100% import tax on cars and a ban on smart EV technology.