Deutsch Motors posts W23.3b operating profit in H1, up 8% on BYD growth

Deutsch Motors, a comprehensive automotive services company, grew its operating profit in the first half of this year despite a slowdown in the imported car market, partly offsetting weak sales of conventional imported vehicles with growth from its BYD electric vehicle business.

Deutsch Motors disclosed Monday that its consolidated first-half sales reached 1.35 trillion won ($920 million) and operating profit came to 23.3 billion won. Sales rose 9.4 percent year-on-year and operating profit increased 7.8 percent. Net profit for the period was 3.2 billion won, up 183 percent over the same period last year.

Second-quarter sales rose 8.6 percent year-on-year to 710.9 billion won, though operating profit slipped 6.0 percent to 12.9 billion won.

The imported car market has faced intensifying price competition among brands this year, while consumer sentiment has been slow to recover. As electrification accelerates and Chinese electric vehicle brands expand their presence in South Korea, established dealers face growing pressure to restructure their business portfolios.

Deutsch Motors said its multi-brand strategy and improved subsidiary earnings helped defend profitability. The BYD business, which the company launched in earnest last year, was cited as a key driver of first-half earnings improvement.

DT Networks, the subsidiary handling the BYD business, posted sales of 144.9 billion won and operating profit of 4.3 billion won in the first half. An expanded vehicle lineup and a broader sales network combined to push the unit into the black.

The BYD business's growth helped compensate for the slowdown in the traditional imported combustion-engine vehicle market. For Deutsch Motors, building the electric vehicle brand into a new growth engine is also expected to strengthen the stability of the group's overall business structure.

The company is also restructuring with a focus on profitability. Deutsch Motors wound down British Auto, the subsidiary that had handled its Jaguar Land Rover business, at the end of June. The move is an effort to exit a low-margin business and concentrate resources on brands and service areas with stronger growth potential.

Deutsch Motors plans to continue adjusting its brand portfolio and expanding electric vehicle sales in the second half. With competition in the imported car market intensifying, profitability management rather than volume growth is expected to be the key determinant of earnings performance.

"We will work to complete a sustainable and stable business structure as quickly as possible this year, and do our utmost to secure profitability," Kwon Hyeok-min, chief executive of Deutsch Motors, said. "We will continue to pursue policies to enhance shareholder value, including a stable dividend policy, so that we can meet the expectations of our shareholders."