On Monday, Geely reported a notable increase in its core earnings before interest and taxes (EBIT), which excludes certain expenses related to its Zeekr brand. The company's second-quarter core-EBIT margin grew by 3.8 percentage points quarter over quarter and 3.5 percentage points year over year to 5.1%, leading to a 300% surge in the absolute core-EBIT number to 2.78 billion yuan.
The automotive manufacturer also saw a rise in its second-quarter revenue, which increased by 5.1% from the previous quarter to 55 billion yuan. Geely managed to reduce its selling and distribution (S&D) expenses as a percentage of revenue by 1.2 percentage points quarter over quarter to 5.3%. Administrative expenses, when adjusted for incremental Zeekr share-based compensation, remained steady at 6.1% of revenue.
In terms of profitability, Geely's net profit (NP) for the first half of 2024, after adjusting for a 7.5 billion yuan asset revaluation gain, was 3.13 billion yuan. This marks a substantial 99% increase year over year and represents 40% of the company's full-year net profit forecast for 2024. In comparison, the net profit for the first half of 2023 was 30% of that year's full-year forecast.
Geely's cash flow also showed significant improvement. The company's free cash flow (FCF) in the first half of 2024 doubled year over year to 7.15 billion yuan. Additionally, Geely's net cash level climbed to 39 billion yuan by the end of the first half of 2024, up from 31 billion yuan at the end of the previous fiscal year.
"We view this as a good set of results," Citi analysts said.
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