On the face of it, BYD, the world's biggest EV maker from China, has reported a solid half-year result for the six months to June, with revenue and earnings up sharply from a year ago.
However, on a quarter-by-quarter basis, there was a noticeable fall in gross profit margins from the March to the June quarters as competition intensifies in China’s EV market (both battery and plug-ins).
The Chinese EV giant informed the Hong Kong Stock Exchange that its net profit climbed 24% to 13.63 billion yuan (around US$1.91 billion) in the first half of 2024, compared to a year earlier.
Revenue rose 16% to 301.13 billion yuan (around US$42 billion), thanks to robust sales of its EV models despite slowing demand in China.
BYD sold a record 986,720 NEVs in the second quarter, up 40.2% year-on-year and more than 57% above the 626,263 sold in the first quarter.
This totals a record 1.613 million vehicles in the six months to June, up 29% from the same period in 2023.
The company’s largest foreign shareholder, Warren Buffett’s Berkshire Hathaway, has been a significant seller of BYD shares. It bought 220 million shares in 2008 (around 20%) and held them until August 2022, when it began selling shares gradually onto the market.
By late July of this year, Berkshire Hathaway had reduced its stake to under the 5% disclosure level (to 4.94%) on the Hong Kong Stock Exchange.
BYD reported that its gross profit margin increased to 20.0% in the six months to June from 18.3% a year earlier.
Despite the record vehicle sales, BYD noted that its gross margin declined in the June quarter due to the intense price war in China's NEV market.
While BYD's net income in the second quarter was up 98.36% to 9.06 billion yuan (US$1.27 billion) from the first quarter, the gross margin fell to 18.69%, down 3.19 percentage points from the March quarter and flat with the 18.7% in the June quarter of 2023.
The second-quarter profit of 9.06 billion yuan was the second highest on record, following the 10.41 billion yuan reported in the third quarter of the previous year.
BYD reported revenue of 176.2 billion yuan in the second quarter, the second-highest on record after 180 billion yuan in the final quarter of 2023, marking an increase of 26% year-on-year and 41% above the first quarter.
Revenue from vehicles, vehicle-related products (EV batteries), and other products for the first half of the year was 228.3 billion yuan (around US$32.1 billion), up 9.3% year-on-year.
Revenue from cell phone components (especially for iPhones), assembly, and other products amounted to 72.78 billion yuan (around US$10 billion), a year-on-year increase of 42.4% after acquiring the Singapore-based business of a US company in the same sector.
BYD is expected to surpass Tesla as the largest battery-powered EV maker this year, with a 17.7% share of the global market, compared to Tesla's 17.2%, according to Counterpoint Research.
BYD has also expanded its international presence to Europe, Mexico, Hungary, and Turkey, where it plans to set up manufacturing. It recently began producing cars in Thailand and assembling vehicles from packs in Uzbekistan.
The company faces a 17% additional tariff for exporting EVs from China to countries in the European Union, and Canada has recently imposed a 100% tariff on Chinese EVs.
