Key Takeaways
Geely Automobile Holdings Ltd. (0175.HK) reported a 31 percent jump in first-quarter core profit as surging exports and a richer product mix offset nearly flat vehicle volume, defying a broader industry downturn.
"A first-quarter core profit that set a record high is just a start," Geely Automobile Holdings Chief Executive Officer Gui Sheng Yue said on an April 29 earnings call, signaling confidence in the company’s high-end electric and overseas expansion strategy.
The Hangzhou-based automaker’s core profit climbed to 4.56 billion yuan ($630 million) for the three months ended March 31. Revenue increased 15 percent from a year earlier to 83.78 billion yuan, even as total sales volume grew just one percent to 709,000 units. The results stand in contrast to rival BYD Co., which saw its quarterly profit fall 55 percent. Apparent net income for Geely fell 27 percent to 4.17 billion yuan, weighed down by currency swings.
Geely’s performance highlights a successful pivot to more profitable vehicles. The average selling price for its cars jumped 18.3 percent to 112,000 yuan. This was largely driven by its premium electric brand Zeekr, which saw its own average price rise to 295,000 yuan. Exports were another key driver, more than doubling to 203,000 units and commanding margins about 10 percentage points higher than domestic sales.
While China’s auto industry grapples with a price war and a historical low profit margin of 3.2 percent, Geely’s gross margin expanded to 17.5 percent from 15.7 percent a year ago. The company’s core net margin reached 5.4 percent.
The growth comes from a strategic shift that is gaining traction. Sales of new-energy vehicles, including EVs and hybrids, rose nine percent to over 369,000 units, capturing 13.4 percent of the market. This occurred as overall industry NEV sales fell 24 percent. The company’s high-end Zeekr 009 multi-purpose vehicle has an average transaction price of 530,000 yuan, while the new Zeekr 008 secured 10,000 orders within 29 minutes of its launch.
Geely is aggressively expanding its global footprint to build on this momentum. The company raised its 2026 export target to 750,000 vehicles from an initial 640,000. The high-margin Zeekr 009 is scheduled to launch in the Middle East in June and Europe in September, with the 008 model to follow overseas in the fourth quarter.
The results signal that Geely's strategy of diversifying with high-margin exports and premium EVs is effectively countering intense domestic competition. Investors will watch the overseas launch of the Zeekr 009 and 008 models later this year as the next test of its global ambitions.
This article is for informational purposes only and does not constitute investment advice.
