SAIC reported full-year profit lower than analysts’ estimates, as growth stalled at its JV with GM.
In 2012 net income rose 2.6% to 20.8 billion yuan ($3.3 billion), according to SAIC, which has joint ventures with VW and GM. The company’s full-year profit missed analysts’ estimates of 22 billion yuan and so did sales which increased 10% to 478.4 billion yuan. GM, which is the largest foreign car maker in China, also saw profit in this market drop 0.2% last year after an increase of 14% in 2011.
SAIC expects revenue this year to increase 2.4% to 490 billion yuan, the slowest pace in the past 5 years and deliveries are to rise 9.1% to 4.9 million vehicles. If GM’s brands increased only 7.1% in China last year, VW manages to rise 15% in this market.
Last month GM announced it has bought back 1% stake in its JV with SAIC. GM has sold its 1% stake back to SAIC, which after this deal owned 51% of the JV, in return for some cash and a loan to avoid bankruptcy in 2009. SAIC offered $84.5 million for the stake and help in getting a $400 million line of credit the company used to bring its Korean operations back on track. After avoiding bankruptcy the US automaker closed a deal with SAIC in September 2012 to buy back the stake for $119 million.