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China's Dongfeng Motor posts 39 pct rise in Q3 profit

SHANGHAI, Oct 31 (Reuters) - China's Dongfeng Motor Group Co Ltd, which is in capital injection talks with struggling French carmaker PSA Peugeot Citroen, posted a 39 percent rise in third-quarter profit on the back of China's auto market recovery.

Net profit rose to 2.45 billion yuan ($1.30 billion) during the July-September period, according to Reuters calculations based on nine-month earnings data released by the automaker on Thursday.

Dongfeng made a profit of 1.76 billion yuan in quarterly profit a year earlier.

State-owned Dongfeng, which operates joint ventures in China with PSA, Nissan Motors Co and Honda Motor Co, said consolidated net profit during the first nine months rose to 7.95 billion yuan from 7.1 billion yuan a year earlier, up around 12 percent.

The results were weighed down by its Sino-Japanese car ventures that have struggled to fully recover following an outbreak of anti-Japanese sentiment last year.

PSA is preparing a 3 billion euro ($4.1 billion) capital increase in which Chinese partner Dongfeng and the French government would take matching stakes in the carmaker, people with knowledge of the matter told Reuters earlier this month.

A Dongfeng executive said last week the company is still weighing the benefits of investing in PSA, hinting a deal with the French carmaker could take a long time. ($1 = 6.0938 Chinese yuan) (Reporting by Samuel Shen and Kazunori Takada; Editing by Jeremy Laurence)