(April 28): BYD Co’s quarterly profit tumbled to its lowest level in more than three years as the world’s largest maker of electric vehicles (EVs) offered more discounts on its cars to fend off mounting competition.
Net income fell 55% to 4.08 billion yuan in the three months ended March 31, the Shenzhen-based automaker said on Tuesday. That’s in line with the 4.1 billion yuan average of five analyst estimates compiled by Bloomberg. Revenue fell 12% to 150.2 billion yuan.
The results extended the Shenzhen-based company’s streak of profit drops to four quarters as it faced intensifying competition from the likes of Xiaomi Corp and Geely Automobile Holdings Ltd. That’s prompted the industry leader to slash prices to stay ahead, with discounts in March climbing to the highest level in two years, and eroding profits that BYD generates from each car.
“Margin pressure in the first quarter [1Q] looks underestimated, but we expect it to ease in coming quarters,” Macquarie Capital Ltd analyst Eugene Hsiao wrote in a note before the earnings were released. Still, his team would “remain cautious” in the near term, he wrote.
There were some greenshoots. Overseas sales jumped more than 50% in 1Q as surging oil prices boosted demand for electric cars. Exports accounted for about 45% of BYD’s deliveries in 1Q, putting it on track to reach its target of selling 1.5 million cars outside China this year.
The stock also received a boost on Monday on reports BYD had received more than 30,000 pre-orders within the first 24 hours of the launch of its new flagship Great Tang sport utility vehicle. Unveiled at the Beijing auto show, the seven-seater features BYD’s latest blade batteries capable of driving nearly 1,000km (620 miles) on a single charge and is expected to start at 250,000 yuan.
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But the shares fell 2.2% to HK$103.70 in Hong Kong on Tuesday.
At the auto show, which started last week, BYD occupied an entire exhibition hall to showcase its multibrand strategy and showed off cars equipped with the latest versions of its top-of-the line “blade batteries”.
A recovery appears to be taking shape in the second quarter, Bloomberg Intelligence analyst Joanna Chen wrote in a note before the earnings were released. “New models with BYD’s second-generation Blade battery are boosting showroom traffic, while global energy shocks due to the Iran war drive robust orders for the company’s overseas EV and energy storage businesses,” she wrote.
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