Fri, Jan 28, 2000 - Page 18 News List

China Motor sees sales rise, profit fall

By Tu Po-heng  /  STAFF REPORTER

China Motor Corp (中華汽車), Taiwan's leading commercial vehicle manufacturer, is projecting sales this year of NT$51 billion, up slightly from NT$50.77 billion last year.

But the car and car parts manufacturer, a local maker of Mitsubishi models, is also predicting that pre-tax profits will shrink from last year's NT$3.75 billion to NT$2.7 billion this year because of the current strength of the Japanese yen. Based on this prediction, earnings per share will decline to NT$2.5 this year from NT$3.5 last year. The financial projection was approved by the company's board on Wednesday.

Su Ching-yang (蘇慶陽), president of China Motor, said "these figures are conservative estimates, as they are based on an exchange rate of ?103 to one US dollar."

China Motor anticipates the yen and the NT dollar are likely to depreciate to ?110 and NT$32 to the US dollar respectively. Since much of China Motors imports are from Japan, a depreciation in the yen would decrease the company's import costs, thus increasing the profit margin.

The Japanese yen and NT dollar closed yesterday at ?105.70 and NT$30.78 to one US dollar respectively.

Despite the prospect of shrinking profits with the NT dollar exchange rate at its current level, the company is upbeat about its sales, including whole cars and car parts. China Motor projects it will sell 151,040 cars this year in both domestic and overseas markets, up from 123,047 units in 1999.

Su attributed the increase to higher overseas demand. He said the company's board has approved a proposal that will allow its factories in China to start manufacturing China Motor's "Freeca" model vehicles from this year. The factories will also start manufacturing the "Freeca" model in Indonesia, the Philippines, and Vietnam.

The decision means the company expects to export 55,840 sets of car parts to overseas markets this year, up from 23,880 units exported to foreign countries in 1999.

However, domestic demand will decrease from 99,167 units to 95,200 units.

Despite this expected drop, Su said the company has raised its sales target for January from an original 120,000 units to 150,000 units. "Up to Jan. 25, we sold more than 10,000 units. So it's won't be too difficult to reach a sales goal of 150,000 units this month," said Su. He added that the company is expecting to register sales of NT$7.1 billion this month.

In 1999, China Motor had the most officially registered sales in Taiwan with 97,834 units in 1999, down 9.4 percent from 1998.

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