Manufacturing News

Dongfeng Motor profit rises 58% to 6.25 billion yuan

Dongfeng Motor Group Co., the Chinese partner of Nissan Motor Co., Honda Motor Co. and PSA Peugeot Citroen, said profit rose 58 percent last year as government sales incentives raised demand for new cars.

Net income rose to 6.25 billion yuan ($915 million) from a revised 3.96 billion yuan, the company said in a statement to the Hong Kong stock exchange today. Profit was in line with the 6.3 billion yuan median estimate of 10 analysts compiled by Bloomberg. Revenue was 91.8 billion yuan from 70.6 billion yuan.

Dongfeng boosted sales of vehicles by 44 percent last year to 1.9 million unit after the Chinese government cut consumption taxes for small cars and offered subsidies to rural auto buyers. Sales at its joint venture with PSA Peugeot jumped 52 percent to 270,006 vehicles.

"The sales growth of Dongfeng's PSA Peugeot venture, which was previously the weak point for the group, helped beef up Dongfeng's 2009 profit," Vivien Chan, an analyst at SinoPac Securities Asia Ltd. in Hong Kong said before the announcement. "Dongfeng will continue to grow this year in line with the market expansion."

Dongfeng and Honda said in January they will invest 1.15 billion yuan to build a second plant in China as vehicle demand rises in the world's largest automobile market.

The factory will start production in the second half of 2012 and have an initial capacity of 60,000 units. Honda, Japan's second-largest carmaker, will increase total capacity in China to 710,000 vehicles after the plant starts production.

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