HONG KONG: China's Geely Automobile said Wednesday that net profit last year rose 16 percent on the back of soaring revenue, driven by the country's booming economy and rising demand for vehicles.
The firm said net earnings of 1.37 billion yuan ($208.7 million), up from 1.18 billion yuan in the previous year, while sales soared 43 percent to 20.1 billion yuan.
But the results were below some analysts' forecasts and shares in the firm ended down 5.6 percent at HK$3 (38 US cents) in Hong Kong on Wednesday.
Geely the Hong Kong listed unit of Zhejiang Geely Holding Group, which bought Sweden's Volvo last year said the results were boosted by Beijing's effort to promote economy sedans among the country's growing middle class.
"The group kept up its growth momentum throughout 2010 and achieved the performance targets set at the beginning of the year," Geely said in a statement to Hong Kong's stock exchange.
"The strong performance was partly helped by the Chinese government's policies to promote economy sedans, but also as a result of the group's improving brand and product image."
The firm said it sold almost 416,000 sedans up 27 percent year on year but warned that demand in export markets was weaker than expected and "remained slow throughout the year." Export sales accounted for about five percent of the company's total in 2010, Geely said.
Auto sales in China overtook the United States in 2009 to make it the world's largest car market and it hit a new record last year, rising more than 32 percent to 18.06 million units sold.
"Cost pressure also intensified during the year due to higher inflation in China and rising commodities prices during 2010," Geely said, adding that it "still managed to capitalize on the strong demand in the domestic market and maintained its domestic market share."
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