SHANGHAI (Reuters) - Chinese carmaker Geely Automobile Holdings Ltd (0175.HK), whose chairman recently took a $9 billion stake in Germany’s Daimler AG (DAIGn.DE), said on Wednesday its profits more than doubled in 2017, driven by strong domestic sales of popular SUVs.
The automaker, based in the eastern Chinese city of Hangzhou, said in a stock exchange filing that 2017 net profit rose 108 percent to 10.6 billion yuan ($1.7 billion) from 5.1 billion yuan in 2016, slightly beating a forecast of 10 billion yuan from analysts polled by Reuters.
Geely, which is making waves globally after a series of high-profile deals by its parent, saw revenue rise 73 percent to 92.8 billion yuan from a year earlier, far outpacing tepid growth in the wider Chinese vehicle market.
Geely Chairman Li Shufu has been making a major global push. He owns Volvo Cars and has built up stakes in truckmaker AB Volvo (VOLVb.ST), Malaysian automaker Proton, flying car start-up Terrafugia and the maker of London’s iconic black cabs.
The Daimler deal, which makes Li the largest shareholder in the owner of Mercedes-Benz, is part of an effort to strengthen Geely’s technological muscle amid a shake-up of the global auto market by autonomous driving, electric vehicles and car-sharing.
Geely said in the filing that “numerous acquisitions” over the past few years by its parent group should provide “substantial opportunities for technologies and cost sharing, economies of scales and new market penetration.”
Li, sometimes compared to U.S. auto icon Henry Ford, founded unlisted parent Zhejiang Geely Holding Group in 1986, which was at the time focused on refrigerators. He moved into motorbike manufacturing in the 1990s before switching to cars in 1997.
The firm forecast vehicle sales of 1.58 million units this year, up 27 percent from 1.25 million vehicles in 2017. This would mark a slowdown from 63 percent growth last year. Geely’s export volume, however, dropped 46 percent last year.
China’s auto market is facing a broad slowdown, in part due to the withdrawal of subsidies for certain more fuel efficient cars. Vehicle sales for the first two months of the year rose 1.7 percent. Competition is also rising as firms race to meet tough new quotas for fully electric and plug-in hybrids cars.
“Competition in the China market should continue to intensify,” Geely said in the earning report, adding China was becoming the “world’s most competitive vehicle market”.
Reporting by Adam Jourdan; Editing by Stephen Coates & Shri Navaratnam