SHANGHAI -- Dongfeng Motor Group Co., the Chinese partner of Nissan Motor Co. and Honda Motor Co., posted a 10 percent decline in first-half profit as slowing demand and production disruptions after Japan's earthquake hurt sales.
Net income in the first six months fell to 5.9 billion yuan ($925 million), or 0.68 yuan per share, from 6.53 billion yuan, or 0.76 yuan, a year earlier, the company said in a filing to the Hong Kong stock exchange today. That beat the 5.5 billion yuan average of four analysts' estimates compiled by Bloomberg.
The automaker faced output disruptions after Japan's March 11 earthquake and tsunami caused shortages of electricity and parts at Nissan and Honda.
Shipments have also slowed in China this year after the government reinstated a 10 percent sales tax on small cars and phased out trade-in subsidies in rural areas.
First-half sales at the Wuhan, Hubei province-based Dongfeng rose 3 percent to 63.7 billion yuan. The country sold 9.3 million automobiles in the first six months, up 3.4 percent from a year earlier, according to the China Association of Automobile Manufacturers.
Dongfeng rose 5.8 percent to HK$12.72 at the 4 p.m. close in Hong Kong trading, before the announcement. The stock has declined 5.1 percent this year compared with a 12 percent drop in the benchmark Hang Seng Index.
China will face macroeconomic uncertainties in the second half and the automobile industry may "grow at a slower speed as compared to the corresponding period of 2010," Dongfeng, which has a market share of about 11 percent in China, said today.
Nissan restarted normal operations in China in June as the company prioritized shipments of auto parts to the country and North America, Shiro Nagai, a spokesman at the Yokohama-based carmaker, said Aug. 29.
Dongfeng's venture with Nissan announced plans on July 26 to invest 50 billion yuan by 2015. The partners will increase the number of dealers to 2,400 from 1,400, and aim to raise annual auto sales to more than 2.3 million from 1.3 million. Dongfeng had net income of 2.86 billion yuan in the first quarter of the year, the company said on April 29.