Brilliance China says profit may fall 40% on BMW venture’s costs
By Bloomberg
Brilliance China Automotive Holdings Ltd. said it expects first-half net income to decline about 40 percent from a year earlier because of a drop in earnings contribution from a joint venture.
The profit at BMW Brilliance Automotive Ltd., the group’s venture with BMW AG, fell because of higher selling costs as growth slowed in China’s economy and its auto industry, the company said in a stock exchange filing Monday. The venture also incurred expenses related to introduction of new models and on production facilities, it said.
The warning comes after the state-backed China Association of Automobile Manufacturers projected passenger-vehicles sales to grow about 6 percent this year, possibly less if the stock market doesn’t stabilize. With the recent stock market rout and economic growth continuing to moderate, there are concerns demand will slow further even as auto factories are added.
The automaker said it expects to announce its earnings for the six months ended June next month. Shares of Brilliance China have declined 9 percent this year, compared with a 6.9 percent gain in the benchmark Hang Seng Index.
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