(Yicai) Aug. 21 -- Chinese carmaker Chery Automobile reported a nearly 12 percent decline in net profit in the first half of the year, mainly because of foreign exchange losses.

Net profit neared CNY8.6 billion (USD1.3 billion) in the six months ended June 30, compared with CNY9.7 billion a year earlier, the company based in Wuhu, Anhui announced yesterday. Meanwhile, revenue rose 1.2 percent to CNY143.3 billion (USD21.3 billion), and gross profit margin improved to 16 percent from 13 percent.

Chery Auto recorded net foreign exchange losses of CNY2.1 billion in the first half, versus net foreign exchange gains of CNY3.4 billion in the same period last year, caused by exchange rate fluctuations.

To ensure that its currency risk exposure is maintained at an acceptable level and to minimize mismatches between assets and liabilities denominated in the same currency, the firm has entered into foreign currency forward contracts to hedge part of its foreign exchange exposure, Chery Auto noted.

Despite the net foreign exchange losses, the company's financial expenses narrowed to CNY549 million (USD81.7 million) from CNY1.5 billion in the first half from the same period last year, and it recorded net impairment gains on financial assets of CNY186 million, compared with net impairment losses on financial assets of CNY133 million.

Chery Auto's globalization strategy continued to achieve breakthroughs in the first six months of the year, as revenue from overseas markets soared 51 percent to CNY99 billion (USD14.7 billion) from a year ago.

Revenue from the company's new energy vehicle business jumped 64 percent to CNY59.3 billion in the period, accounting for over 41 percent of the total, up from 26 percent.

Research and development expenses also surged, up 28 percent to CNY6.7 billion, reflecting Chery Auto's ongoing investment in electrification and intelligence.

Chery Auto had 12 major production bases globally, including three overseas, as of June 30. It has initiated a plan to broaden its product lineup, increase R&D investment, strengthen electrification and intelligence, and continue to advance its globalization strategy in the second half of the year.

Chery Auto [HKG: 9973] was trading up 5.8 percent at HKD27.02 (USD3.44) as of 3.10 p.m. in Hong Kong today.

Editor: Futura Costaglione