Geely dips as it looks to an electric future

Geely Automobile (0175) says it is well-prepared for electric vehicles and they can contribute to the results this year after posting a 9 percent rise in net profit to 5.26 billion yuan (HK$6 billion) and maintaining a final dividend of 21 HK cents.

Chief executive Gui Shengyue said Geely's performance last year disappointed investors, as it dipped to No 3 among mainland carmakers.

But Geely has made comprehensive preparation for EV development and its performance this year "deserves expectations," added Gui.

The automobile manufacturer in mainland China sets a sales volume target of 1.65 million units, up by 15 percent from the 1.43 million units sold last year.

Revenue jumped 46 percent to 147.96 billion yuan last year, as the income from sales of vehicles and related services climbed 40 percent and the sales volume grew 8 percent.

The average ex-factory selling price increased by 30 percent yearly, after adjusting the product pricing and product mix.

But the gross profit margin ratio dipped 3 percentage points yearly to 14.1 percent last year, as the EVs still posed a much lower gross margin ratio than that of fuel vehicles, while the proportion of EV sales surged to 22.9 percent last year, compared with 6.2 percent in 2021.

Meanwhile, total borrowing soared 1.84 times yearly to 10.8 billion yuan last year, mainly to support the rapid growth of EV brand Zeekr, which delivered 71,941 units in 2022.

The huge investment thus put Geely's profitability under pressure, in addition to the surging cost of batteries, chips and other components.

Separately, BYD (1211) is reported to have cut worker shifts in two of its factories in China amid weak demand, while looking to launch a smartwatch product to replace car keys next month.