Shanghai Automotive Co, owner of a fifth of General Motors' (GM) largest car venture in China, posted Saturday a more than one-half drop in second-quarter earnings, warning it may post a loss for the first three quarters.
The listed arm of China's biggest carmaker -- Shanghai Automotive Industry Corp -- unveiled a worse-than-expected fall in quarterly net profit as price wars and slowing growth hammered the world's third-largest vehicle market.
The listed unit's net profit is expected to slip 4 percent this year, according to three analysts, with decelerating demand, rising steel costs and persistent discounts at its venture with GM all eating into earnings.
"We expect that in the first three quarters of the year we may post a loss or a big drop from the same period last year," said the components maker, which is the sole listed arm of GM's main Chinese partner, in first half results.
Shanghai Auto posted a net profit of 322.79 million yuan (US$39.84 million) in the second quarter, based on calculations from previously available figures, versus 721.33 million yuan a year ago.
April-June turnover dropped 35 percent to 1.396 billion yuan, as the company blamed falling sales and output for its problems.
Two analysts had offered a forecast for quarterly net earnings of about 335 million yuan, though they expected a slight upturn in the second half.
"The trend so far this year has still been for slowing car sales," said analyst Xu Xiang at China Southern Securities. "The second half should be slightly better as sales start rising faster again."
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