Geely core-EBIT up 300% in Q2, ‘good set of results’ says Citi By Investing.com

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 rose 3.8 percentage points quarter-on-quarter and 3.5 percentage points year-over-year to 5.1%, leading to an increase of 300 % of absolute underlying EBIT number to 2.78 billion yuan.

The automaker also reported a surge in second-quarter revenue, which rose 5.1 percent from the previous quarter to 55 billion yuan. Geely managed to reduce its sales and distribution (S&D) expenses as a percentage of revenue by 1.2 percentage points quarter-on-quarter to 5.3%. Administrative expenses, when adjusted for Zeekr’s incremental stock-based compensation, were flat 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% year-over-year growth and represents 40% of the company’s 2024 forecast for net profit. In comparison, net profit for the first half of 2023 was 30% of the full-year forecast for that year.

Geely’s cash flow also showed significant improvement. The company’s free cash flow (FCF) in the first half of 2024 doubled year-on-year to 7.15 billion yuan. In addition, Geely’s net cash level rose 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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