BYD first-half profit triples despite price war

Beijing — China’s BYD said on Monday first-half profit jumped 204.7% as the electric vehicle (EV) maker broke its delivery record and retained its crown as the country’s biggest-selling motor brand.

Net earnings for the six-months ending June 30 reached 10.95-billion yuan ($1.50bn), up 204.7% from 3.6-billion yuan a year earlier, on a 72.7% rise in revenue to 260.12-billion yuan, BYD said in a stock market filing.

The company posted a 6.82-billion yuan net profit for the April-June quarter, up 144.7%, a Reuters calculation showed. That was a smaller increase than in the first quarter when profit jumped fivefold. The second quarter earnings report was within BYD’s net profit forecast of between 6.37-billion yuan and 7.57-billion yuan.

The Shenzhen-based carmaker, whose investors include Warren Buffett’s Berkshire Hathaway, has managed to cement its leadership in the world’s largest auto market in the face of intensifying price competition and slowing demand. It outsold Volkswagen-branded cars in China for the first time in October.

A BYD unit was revealed on Monday to have struck a deal to buy US-based Jabil’s mobility business in China for $2.2bn.

Buoyed by its Dynasty and Ocean series of plug-in petrol-electric hybrids cars and battery-only electric vehicles, BYD set a monthly sales record in July after deliveries hit 700,244 vehicles in the second quarter.

Still, profitability is under pressure from a price war initiated by US EV rival Tesla at the start of the year and which has drawn in more than 40 brands.

Since February, BYD has launched new versions for eight of its best-selling models with prices 4%-25% lower compared with older versions.

BYD has also joined a wave of Chinese EV makers looking abroad, with showrooms in countries such as Singapore and Australia. Of the 612,425 battery-only EVs sold by BYD in the first half, 10% were exports, according to data from the China Association of Automobile Manufacturers. Tesla sold 889,015 EVs globally in the same period.

BYD’s second-quarter gross profit margin was 18.73%, compared with 17.86% in the first three months, an analysis of its financial disclosure showed.

Tesla recorded a decline in quarterly automotive gross margin in the second quarter, prioritising sales over earnings.

The US  EV maker slashed prices in China for the second time in three days in mid-August, fuelling a fresh round of discounts among peers vying to survive a cooling market.

China’s passenger vehicle sales shrank for the second consecutive month in July, as consumers wary of buying amid a frail economy and piecemeal government stimulus.

Reuters