Reuters: Market News: CORRECTED-UPDATE 1-Dongfeng 2011 net weak, outlook improves on Honda recovery

Reuters: Market News Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

CORRECTED-UPDATE 1-Dongfeng 2011 net weak, outlook improves on Honda recovery Mar 28th 2012, 05:15 Wed Mar 28, 2012 1:15am EDT * 2011 net fell on Honda's parts supply woes * Outlook to improve in 2012 as Honda revives * Braved market slowdown, thanks to Nissan * Investing $6.5 billion in 2012 and 2013 * New CR-V and Venucia to help lift sales By Fang Yan and Ken Wills BEIJING, March 27 (Reuters) - Dongfeng Motor Group , China's second-largest automaker, reported a 4.6 percent decline in its annual earnings in 2011 as a slowing market and parts supply disruption from natural disasters dented the sales of its Japanese partner, Honda Motor. The outlook should improve steadily in 2012, industry observers say, as the No.3 Japanese automaker recovers. "Honda was a drag for Dongfeng last year. CR-V's production at Dongfeng-Honda was suspended for quite some time because of supply problems," said John Zeng, Asia Pacific chief at industry consultancy LMC Automotive. "But the new CR-V that hit the market in February and other new models at Dongfeng's joint ventures will definitely be a big help." Dongfeng's earned 10.48 billion yuan ($1.66 billion) in 2011 net income, down 4.6 percent from a year earlier and slightly off the consensus forecast of 10.95 billion yuan from 23 analysts polled by Thomson One. Revenue came to 131.44 billion yuan, up 7.4 percent year on year. SAIC had predicted a more than 40 percent jump in its annual earnings on solid auto sales and an asset purchase deal with its state parent. In a statement posted on the Hong Kong Stock Exchange website, Dongfeng said it remained upbeat for the outlook and pledged to invest 41.6 billion yuan ($6.59 billion) in 2012 and 2013 in vehicle development and capacity expansion. "We are confident that there are still a lot of opportunities and bright prospect for Chinese auto industry," it said, citing China's low auto penetration rate and strong demand for vehicles in lower tier cities among other factors. Car sales in China climbed 5.2 percent in 2011, the slowest pace of growth since the nation's car culture took off at the turn of the century after Beijing scrapped tax incentives for small cars. The policy change hurt Chinese brands more than foreign brands because people are no longer motivated to buy cheap Chery or BYD cars without any incentives. As such, Dongfeng and other auto groups with foreign affiliations held up better than some independent players, such as BYD and Chery Automobile Co. Dongfeng sold 2.17 million vehicles in 2011, up 11.7 percent, vastly outperforming a 2.5 climb in the overall China market, thanks to stellar performance of its other Japanese partner, Nissan Motor, which made up 68 percent of its annual tally. Dongfeng's bigger rival, SAIC Motor, which makes vehicles in partnership with General Motors and Volkswagen AG, delivered more than 4 million vehicles, up 12 percent. Dongfeng's Hong Kong-listed shares closed at HK$13.2 on Tuesday, down 0.15 percent ahead of the release of its annual earnings, lagging a 1.83 percent gain of the Hang Seng Index . HONDA PARTNER Honda, which contributed to 11.8 percent of Dongfeng's deliveries in 2011, is the smallest of Dongfeng's three foreign partners, which also include PSA Peugeot-Citroen. Honda was also the slowest to recover from supply chain disruptions after the March 2011 Japanese earthquake and tsunami and it was the only carmaker whose factory was inundated by devastating floods in Thailand, Southeast Asia's export hub. Its global output dropped last year by a fifth to 2.91 million cars, which prompted it to slash its annual profit guidance to the lowest level in three years. [ID: nL4E8CV11N] Honda, which also operates a car venture with Guangzhou Automobile Group Co, recorded a 22.8 percent sales decline in the first two months, lagging the overall market. Sales were expected to pick up as the new CR-V and other new models, hit the showrooms, industry observers say. Dongfeng-Nissan, meanwhile, rolled out their first joint venture brand, Venucia, last week. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions