On March 20th, Geely Automobile Holdings Limited (hereinafter referred to as "Geely Automobile") (0175.HK) announced its 2023 financial report. The financial report shows that during the reporting period, the company achieved operating income of 179.2 billion yuan, a year-on-year increase of 21%, a record high; The net profit of returning to the mother reached 5.308 billion yuan, compared with 3.511 billion yuan after deducting the one-time bargaining acquisition income in 2022, up 51% year-on-year; The net cash level increased by 46% year-on-year to RMB 28.4 billion.
In terms of sales volume, in 2023, Geely Automobile exceeded its sales target, with a cumulative annual sales volume of 1.687 million vehicles, including 487,000 new energy vehicles. The total annual sales volume and new energy sales volume reached a record high simultaneously; In the whole year, the total export volume was 274,000 vehicles, with a year-on-year increase of over 38%, and the export volume reached a new high.
At the financial results conference, Gui Shengyue, CEO and executive director of Geely Automobile Holdings Co., Ltd. said that Geely Automobile has full confidence to win the final victory in the fierce competition in the automobile market. Not only that, Geely still has the confidence to return to China as the first national brand.
Gui Shengyue said that his confidence mainly comes from three levels. First, Geely Automobile has great ability and potential of new energy and intelligence, which has been confirmed in the current achievements; Second, Geely Automobile has the ability to respond to market changes at any time to meet the needs of various users and maintain the healthy and stable development of the company. I believe that the evaluation of car companies in the capital market will eventually return to profitability; Third, Geely Automobile insists on fighting a value war and a moral war. Every time Geely Automobile sells a car, it is responsible for users and environmental protection, and "long-term doctrine" will definitely be rewarded by the market.
Deepening of new energy business
Gross profit margin increased steadily.
It is reported that 2023 is the year of transformation and upgrading of Geely’s new energy. According to public data, in 2023, the proportion of new energy products of Geely Automobile increased steadily, with a penetration rate of 29% and a monthly penetration rate of over 40%.
Product structure optimization, cost reduction and scale effect have improved the gross profit situation. According to the financial report data, in 2023, the total gross profit of Geely Automobile increased by 31% to 27.4 billion, and the gross profit margin increased from 14.1% in 2022 to 15.3% in 2023.
Facing the increasing volume of the automobile market, how Geely Automobile can continue to maintain a high gross profit level under fierce competition is one of the focus issues of the market.
In this regard, Yan Jiayue, CEO of Geely Automobile Group, said that the market was very voluminous in 2023. From the perspective of automobile price index, the average discount rate has soared from about 2% in previous years to 8%. In 2024, the competition in China’s automobile industry will be more intense, and the knockout round will begin in an all-round way, and the industry will enter a period of integration and reshuffle.
In this context, Ganjia said that Geely Automobile will adhere to the principle of laying a foundation, practicing internal strength and long-term, give full play to its scale advantages, systematic efficiency and innovative ability, improve product quality and achieve cost reduction and efficiency increase.
It is reported that in 2024, Geely Automobile will accelerate the pace of new energy transformation and intelligence, with the annual sales target of 1.9 million vehicles, an increase of 13% compared with the total sales in 2023. Among them, the sales target of new energy vehicles has increased by more than 66% compared with the total sales achieved in 2023.
An Conghui, President of Geely Holding Group, Chairman of Geely Automobile Group, Executive Director of Geely Automobile Holding Co., Ltd. and CEO of Extreme Smart Technology, said that the new energy penetration rate of Geely Automobile Group will be further improved in 2024. In the future, the benefits of platformization and scale will drive the company’s profitability to continue to improve.
The international territory continues to expand.
According to public information, in 2023, Geely brand completed the listing of 10 high-value products in 43 countries around the world. By the end of 2023, Geely has set up 533 sales and service outlets in 70 countries around the world, and achieved business layout in five major regions of the world: Europe, Africa, Latin America, the Middle East and Asia-Pacific.
Regarding the layout of overseas markets, Yan Jiayue said that Geely Automobile adheres to the strategy of "going out, going in and going up" in overseas layout, and will focus on promoting the localization of brand operation and enhancing overseas core competitiveness.
Plate synergy is prominent.
In February this year, the Lotus brand under Geely Holding Group was listed in the US stock market, which aroused great concern about the capital operation of Geely’s sub-brands.
In this regard, Li Donghui, CEO of Geely Holding, said that the listing of Lotus is conducive to enhancing its own brand power and diversification of governance structure, which is of great strategic significance for its future R&D, sales network and other capacity building, and is also conducive to improving the capital adequacy ratio of its subsidiaries and the overall anti-risk ability of Geely Holding.
Li Donghui believes that the listing of sub-brands, including Lotus, is of great positive significance for consolidating the core business of Geely Holding. Geely Holding and its global strategic partners have maintained continuous, stable and growing cooperation for a long time in terms of technology authorization and technology research and development services. The development of sub-brands has created a good foundation for internal collaboration of Geely Holding and cooperation with Geely Automobile based on the principle of marketization, and also brought opportunities for revenue growth for Geely Automobile Group.