SHENZHEN — Geely Automobile Holdings Ltd. anticipates increasing raw material costs and worldwide semiconductor shortages to weigh on its profitability and sales this year, the Chinese business said on Wednesday, after the announcement of a 12 percent decline in 2021 earnings.
The carmaker made a profit of 4.85 billion yuan ($761.64 million) in 2021, down from 5.53 billion yuan the previous year, owing to its investments in Volvo Cars and Mercedes. Revenue increased 10% to 101.6 billion yuan.
“The increased competition in China, the increase in raw material prices, other pandemic-related disruptions, and global shortages of chip supply have shown no signs of abating and are expected to continue to exert pressure on the Group’s sales performance and profitability in 2022,” Geely Automobile said in a statement.
Geely Automobile aims to sell 24 percent more cars this year, totaling 1.65 million, and says it will continue to boost export sales to new countries in Southeast Asia, the Middle East, and western Europe.
China’s car sales increased last year, aided by a surge in new energy vehicle sales, but industry leaders have warned of the effect of a worldwide semiconductor shortage and increasing raw material costs, which have been worsened by supply chain delays caused by Russia’s invasion of Ukraine.
In a Wednesday results call, Geely Auto Group CEO Jerry Gan said that the company’s dependence on bespoke chips and worldwide supply chains resulted in a “significant influence” on output, which Geely intends to address via localization and in-house chip development, among other steps.