Shanghai Automotive Co Ltd, owner of a fifth of General Motors' largest car venture in China, on Saturday posted a more than one-half drop in second quarter earnings, warning it may post a loss for the first three quarters.
The listed arm of China's biggest car maker - Shanghai Automotive Industry Corp - unveiled a worse-than-expected fall in quarterly net profit as price wars and slowing growth hammered the world's third-largest vehicle market.
The listed unit's net profit is expected to slip 4 percent in 2005, according to three analysts polled by Reuters Estimates, with decelerating demand, rising steel costs and persistent discounts at its venture with GM all eating into earnings.
"We expect that in the first three quarters of the year we may post a loss or a big drop from the same period last year," said the components maker that is the sole listed arm of GM's main Chinese partner, in first half results published in the Shanghai Securities News.
Shanghai Auto posted a net profit of 322.79 million yuan ($39.84 million) in the second quarter, based on Reuters calculations from previously available figures, versus 721.33 million yuan a year ago.
April-June turnover dropped 35 percent to 1.396 billion yuan, as the company blamed falling sales and output for its problems.
Two analysts polled by Reuters had offered a forecast for quarterly net earnings of about 335 million yuan, though they expected a slight upturn in the second half.
Shanghai Auto said its investment income - most of which reflects its shareholding in Shanghai GM, the Detroit-based company's main Chinese venture - fell to 408.23 million yuan in the first half from 1.21 billion yuan a year ago.
GM's venture headquartered in China's financial hub, which cranks out Buicks, Chevrolets and Cadillacs, accounts for about three quarters of listed Shanghai Auto's earnings.
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