China's Geely warns of coronavirus headwind after 35% 2019 profit drop
China's Geely Automobile Holdings Ltd on Monday said 2020 may be "amongst the most difficult years" in its history, as pressure stemming from the coronavirus pandemic on production and sales is likely to persist in the near future.
The automaker, based in the eastern province of Zhejiang, also said lower sales drove net profit down 35% in 2019 when the country's overall auto market suffered a prolonged slump.
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China's most globally high-profile automaker - due to parent Zhejiang Geely Holding Group Co Ltd's investments in European manufacturers Volvo Car and Daimler AG - posted profit of 8.19 billion yuan ($1.15 billion).
That compared with the 9.14 billion yuan average of 33 analyst estimates, Refinitiv data showed.
"The recent outbreak of novel coronavirus had caused serious disruption to our supply chain and thus our production levels, meaning additional pressure on our business volume and profitability in 2020," Geely said in a filing to the Hong Kong exchange.
The current headwind is likely to persist in the near future, making 2020 probably amongst the most difficult years in the group's history, Geely said.
Revenue fell 9% from a year prior to 97.40 billion yuan. Analysts had estimated 99.43 billion yuan.
Geely Automobile sold 1.36 million cars in 2019 and aims to sell 1.4 million cars in 2020.
Industry-wide auto sales fell 8.2% last year, pressured by new emission standards and the impact of Sino-U.S. trade tension.
Geely Automobile and Volvo - which Geely's parent bought from Ford Motor Co in 2010 - are planning to merge and list in Hong Kong and possibly Stockholm. Volvo dropped a move to list its stock two years ago.
A merger would come as global automakers pursue alliances to respond better to the cost of meeting tougher emission rules, electrification and autonomous driving.
It would also come as the industry worldwide begins to revive sales after governments halted business activity and imposed restrictions on movement to slow the spread of the coronavirus, which has killed over 30,000 people globally.