BYD reports surge in H1 profit earningUpdated: 2013-08-27 06:50
Chinese battery and car maker BYD Co said that its net profit increased 25 times in the first half, as its three core businesses in the vehicle, cell phone and new energy sectors all saw strong growth.
BYD said in a financial report filed with the Shenzhen Stock Exchange that its net profit in the first six months surged 2,524 percent year-on-year to 427 million yuan ($69.76 million), from 16.27 million yuan in the same period last year. Its revenue jumped 15.32 percent year-on-year to 26.04 billion yuan.
The astonishing growth comes after the company's net profit slumped 94.15 percent year-on-year to 81 million yuan in 2012, the lowest level in at least four years.
The company's shares on the Shenzhen Stock Exchange decreased 2.39 percent to close at 35.10 yuan each on Monday.
The Warren Buffett-backed company attributed the gains to the robust recovery of its three core businesses amid a pickup in the sector.
In the first half, BYD sold about 250,000 vehicles in China, up 24.72 percent year-on-year, doubling the domestic market's year-on-year growth of 12.3 percent.
The strong performance was the result of the company's strenuous efforts to gradually improve the technology, quality and branding of its products in the past three years, the report said.
As one of the most competitive suppliers of cell phone parts, BYD's revenue in the segment increased 7.33 percent to 92.4 million yuan over the last year, as it expanded the business to more smartphone makers, based on its dominance of the supply chain to major manufacturers such as Nokia Corp, Apple Inc, Samsung Electronics Co Ltd, HTC Corp, as well as Chinese players Huawei Technologies Co Ltd and ASUSTeK Computer Inc, known as Asus.
The rapid growth in the smartphone sector also drove BYD's lithium-ion battery business. Data from market research company Gartner showed that in the first half, the shipment volume of cell phones increased 2.7 percent to 860 million units across the world, 50.5 percent of which was contributed by the demand for smartphones.
The recovery of the global photovoltaic industry this year also helped to boost BYD's revenue in the new energy sector to 2.61 billion yuan, up 9.37 percent year-on-year.
And even though BYD made its name in the global automotive market with leadership in the electric vehicle segment, analysts said the company's business will mainly depend on vehicles with traditional internal combustion engines, which contributed more than half of the company's total profits.
Qilu Securities said that BYD's investment of more than 8 billion yuan in research and development in the past two years helped the company to achieve its business recovery and will likely guarantee it stable growth. It predicted that BYD's vehicle sales will surge 22 percent year-on-year in 2013, and that the average price of its products will also improve more than 10 percent due to new competitive models.
Though the carmaker admitted that there are still many uncertainties in the domestic automotive sector, which may see a lackluster third quarter, it said it expects the market potential of China's fast-developing third- and fourth-tier cities to continue to support its vehicle sales.
The Shenzhen-based company conservatively estimated a net profit of between 430 and 477 million yuan in the first nine months, an increase of 19.6 times to 21.8 times year-on-year, meaning a net profit of 3 to 50 million yuan in the third quarter.