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August 28, 2009

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Home » Business » Auto

SAIC net profit reverses

FIRST-HALF profit for SAIC Motor Corp Ltd reversed 26.4 percent from a year earlier as the nation's biggest car maker suffered a big drop in returns on its investment in South Korea's Ssangyong Motor Corp.

But operating profit jumped 57 percent in the first six months of the year on strong momentum of its core business, which boosted investor confidence in the company for the second half.

Net income of the Chinese partner of General Motors Corp and Volkswagen totaled 1.45 billion yuan (US$212 million), or 0.22 yuan per share, for the first six months, compared with 1.97 billion yuan, or 0.3 yuan per share, a year earlier, according to its statement to the Shanghai Stock Exchange yesterday.

The car maker said it set aside provisions worth 1.18 billion yuan for its investment in South Korea's Ssangyong Motor, which has been under court receivership since January due to a sales slump and mounting debts.

SAIC suffered an 87.5 percent plunge in its returns from the investment.

SAIC is among Chinese auto manufacturers to report stronger sales after the government offered lower tax and subsidies to help the industry offset a global sales slump. Industrywide vehicle sales rose 17 percent in the first half.

SAIC sold 1.22 million vehicles, an annual increase of 23.7 percent, from January to June, and boosted its market share to 20.1 percent, the statement said.

Analysts said the impact of Ssangyong's bankruptcy will be minor for SAIC in the second half of the year and profitability may further rise as sales are set to continue to climb as it introduces competitive new models.

"SAIC's car sales for the second half of this year may rise 10 percentage points from the first half and the whole year net profit may reach 4.58 billion yuan," said Zhang Liping, an analyst at Bohai Securities Co.

SAIC said it's upbeat about China's auto market and overall industry sales could reach 11.5 million units, a 20 percent rise annually.


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