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China’s Geely warns of chip shortage, but keeps annual vehicle sales target By Reuters

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© Reuters. FILE PHOTO: The Geely Automobile Holdings logo is pictured at the Auto China 2016 auto show in Beijing, China April 25, 2016. REUTERS/Kim Kyung-Hoon

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BEIJING (Reuters) -China’s Geely Automobile Holdings (OTC:) Ltd warned on Wednesday of a potential short-term performance hit due to a global chip shortage and a resurgence in COVID-19 cases, but kept its annual sales target, betting on new product launches.

The company’s upbeat forecast and a strong first-half revenue growth helped send shares of the Hangzhou-based car maker up nearly 4%.

Geely posted a 22% rise in six-month revenue to end-June of 45 billion yuan ($6.94 billion), driven by an improved product mix.

Its total vehicle sales rose 19% to 630,237 cars, underperforming a 27% growth in China’s overall passenger vehicle sales.

More than 90% of Geely’s vehicles are sold in China and the company has been pushing to increase exports in recent years, focusing mainly on Southeast Asia and Europe.

“We believe the rise in raw material prices should subside in the remainder of the year but chip shortage could persist during the period,” Geely said.

“Despite these, the upcoming launch of more new and competitive vehicle models should enable the Group to perform better in the second half,” the company said, maintaining its full-year sales target of 1.53 million vehicles.

Geely said six-month net profit grew just 4% to 2.38 billion yuan due to share-based payments of 641 million yuan.

Its parent Zhejiang Geely Holding Group, which has stakes in Daimler AG (DE:) and Volvo Cars, created a new electric vehicle (EV) brand called “Zeekr” to consolidate its resources and better challenge in the highly competitive EV market. Geely said it would seek external funding for Zeekr and would introduce more electric models in its overall lineup.

The company, which abandoned a merger plan with Volvo Cars earlier this year, said the two firms would combine their powertrain operations and also jointly develop next generation EV architecture and autonomous driving solution.

($1 = 6.4824 renminbi)

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