BEIJING (Reuters) -Chinese electric vehicle maker BYD’s quarterly profit fell for the first time in more than three years, as its expansion hit a speed bump amid a government campaign against price wars.
Net profit at the world’s biggest EV producer totalled 6.4 billion yuan ($894.74 million) in the second quarter, it reported on Friday, down 29.9% from a year earlier, after rising 100.4% in the first quarter. Revenue increased 14% to 200.9 billion yuan in the three months to June 30.
First-half profit was up 13.8% on revenue up 23.3%.
The biggest Chinese rival to Tesla has faced challenges in recent months as Chinese authorities have called for a halt to a bruising price war in China that has pressured profit margins across the entire industry.
BYD has set a target to sell 5.5 million cars globally this year, but it sold 2.49 million in the first seven months of the year, meeting 45% of its goal.
“The outlook for BYD meeting its ambitious full-year targets appears pessimistic,” said Rosalie Chen, analyst at Third Bridge.
Nomura analysts said on August 12 that they expect BYD to sell 5 million to 5.2 million cars this year.
BYD, which generates nearly 80% of its sales in China, saw vehicle sales fall in its home market for the third straight month in July, while its production slid for the first time in 17 months.
The automaker has slowed production and delayed capacity expansions at factories in China, Reuters reported in June.
BYD was among major automakers that pledged in June to make payments to suppliers within 60 days after Chinese authorities ordered carmakers to make payments more promptly and to stop a price war.
The pledge has led analysts to scrutinise the working capital of BYD and other automakers more closely. Working capital is the difference between a company’s current assets and current liabilities and shows how much the business has available for day-to-day expenses.
BYD’s working capital deficit expanded to 122.7 billion yuan as of June 30, from 95.8 billion yuan at the end of March. It stood at 125.4 billion yuan at the end of 2024.
Its debt to asset ratio rose to 71.1% by the end of June, from 70.7% at the end of the first quarter.
($1 = 7.1529 Chinese yuan renminbi)
(Reporting by Qiaoyi Li, Zhang Yan and Brenda GohEditing by Jamie Freed, David Goodman and Susan Fenton)
