The profit for the first half of the year of Dongfeng Motor Group Co., the Chinese partner of Nissan Motor Co. and Honda Motor Co., fell by 10% as the March 11 Japan earthquake affected sales as it hurt the production and the demand.
In a filing to the Hong Kong stock exchange, Wuhan, Hubei province-based Dongfeng said that its net income for the first six months of 2011 dropped to 5.9 billion yuan ($925 million), or 0.68 yuan per share, from 6.53 billion yuan, or 0.76 yuan, in the previous year.
However, this still exceeded the 5.5 billion yuan average of the estimates that Bloomberg compiled from four analysts.
Dongfeng experienced disruptions in its production when the earthquake resulted to a parts shortage as well as some power interruptions. In China, shipments had slowed this year with the reinstatement of a 10% sales tax on small cars and with the government’s move to phase out the trade-in subsidies in rural areas.
Sales in the first half of the year increased by 3% to 63.7 billion yuan. The China Association of Automobile Manufacturers said that the country sold 9.3 million automobiles in the first half of the year, a 3.4% increase from the previous year.
Dongfeng experienced a 5.8% increase to HK$12.72 at the 4 p.m. close in Hong Kong trading before the announcement was made. Its stock fell 5.1% this year compared with a 12% decline in the benchmark Hang Seng Index.
Dongfeng said that China will have to contend with macroeconomic uncertainties in the second half of the year and that the car industry would have a slower pace compared to the same period last year. Dongfeng has a market share of about 11% in China.