Business / Companies

BYD H1 profit plunges 94%

( Updated: 2012-08-28 17:02

China's battery producer and automaker BYD posted a 94 percent drop in earnings for the first half of 2012 due to the economic slowdown and overall depressed market share of domestic brands, the company's interim report said.

BYD's 27.04 million yuan ($4.26 million) net profit in the first quarter was eclipsed by its second quarter loss of 10.77 million yuan, the first quarterly loss after its stocks were listed on both mainland and Hong Kong stock markets.

BYD's automobile business, which accounted for half of the company's revenue, has been dragging down its profit margin due to weak demand and rising costs. For the first half of 2012, BYD recorded total automobile sales of 199,700 units, a 9.27 percent decrease from last year and far from the industry's average growth rate of 2.9 percent.

For the components and assembly business, due to a decrease in sales to major customers, intense competition and rising costs, the gross profit margin for the period fell 1.80 percentage points year-on-year to 10.21 percent.

Despite the sluggish demand in the first half, BYD's S6 and G6 models were well-received by the medium to high-end auto markets. The two models are expected to maintain sales growth in the second half, a traditional peak season for the industry.

BYD forecasted that the demand in China's automobile industry would remain weak with more intense competition in the third quarter of 2012. From Jan to Sept 2012, the performance of its automobile business is expected to be similar to that in the corresponding period of last year.

Meanwhile, the performance of the handset components and assembly business is expected to drop due to a decline in sales at major customers. As for the solar battery business, the company expected losses to narrow due to an increase in marketing efforts and appropriate cost-control initiatives.

The company's net profit from Jan to Sept 2012 is expected to fall between 75 percent and 95 percent compared with last year, the interim report said.

BYD's shares are now trading at around HK$13 per share at the Hong Kong stock market, significantly lower than its all-time high of HKD$88.4 per share after Warren Buffett bought an about 10 percent stake in 2008, according to

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