Arab Today, arab today byd’s earnings plunge 94 in h1
Last Updated : GMT 21:25:08
Arab Today, arab today
Arab Today, arab today

BYD’s earnings plunge 94% in H1

Arab Today, arab today

Arab Today, arab today BYD’s earnings plunge 94% in H1

Beijing - Agencies

BYD Co, a Chinese carmaker backed by billionaire investor Warren Buffett, posted a 94 per cent drop in first-half earnings, underperforming most of its rivals as sales sagged and its solar energy business lost money. The outlook remains challenging as China’s auto market, the world’s largest, is facing only sluggish growth, and the solar panel-making operation is under pressure from eurozone crisis that has sapped demand globally. “The Buffett halo effect has long faded. BYD has been dragged down by its solar business and the S6 seems to be the only car holding up well,” said Sheng Ye, associate research director for Greater China at industry consultancy Ipsos, referring to BYD’s sport utility vehicle which was last year named China’s “SUV of the Year”. Ye was speaking before the earnings were announced late on Monday. In a stock exchange filing, BYD blamed the profit slide on slowing car sales, a weak domestic economy and the spreading euro zone debt crisis, and warned about the challenges ahead . “Our business is fairly directly affected by the changing economic situation at home and abroad,” said the company, which is 10 per cent-owned by Buffett’s Berkshire Hathaway. “The future downward pressure on the global and Chinese economies may affect demand for our core businesses in key markets, and would affect our performance to a certain extent.” January-June net income plunged to 16.3 million yuan ($2.56 million) from 275.4 million yuan a year earlier. BYD had previously warned its profit would slide 75-95 per cent. Turnover was flat at 22.6 billion yuan. Local rivals Geely Automobile Holdings and Great Wall Motor Co, China’s leading SUV maker, last week reported first-half profit increases of around 9 per cent and 30 per cent, respectively, helped by growth in exports. Overall vehicle sales in China are expected to grow 5-8 per cent this year -a far cry from explosive growth of 46 per cent and 32 per cent in 2009 and 2010 respectively, bolstered then by government incentives. BYD Chairman Wang Chuanfu said in March the company could outpace the market this year, but its first-half sales of 199,700 vehicles were down 9.3 per cent from a year earlier, lagging a 2.9 per cent increase in the overall market, according to the company’s annual report. Last week, BYD launched a new sedan, the Su Rui, which is seen as the upgraded F3, China’s best selling car in 2009 and 2010, and which has caught the imagination as it comes with an external remote-control device. Like other Chinese solar companies which shipped most of their panels overseas, BYD faces pressure in the United States and Europe, where the Chinese are accused of undercutting the market with cheaper products. BYD also faces headwinds in its electric vehicle business. Beijing wants to have half a million electric vehicles (EVs)and plug-in hybrids by 2020, but sales have been dismal due to high battery costs and a lack of charging facilities. Output of hybrids and EVs was just 8,368 last year, with sales of 8,159, including those for government pilot programmes for e-taxis and e-buses, official data showed. The safety of BYD’s electric car was called into question after an e6 taxi caught fire in a fatal accident in May even though a probe showed the lithium-ion phosphate battery that powers the car did not explode after the collision. Chinese parts supplier Wangxiang Group is set to become a serious challenger to BYD’s auto battery business -which first attracted the Buffett investment - as it takes a controlling stake in troubled US battery maker A123 Systems Inc. A123 has battery contracts with BMW, SAIC and US startup Fisker Automotive. It is also slated to provide batteries for General Motors’ upcoming Chevrolet Spark EV. BYD shares closed down 2.8 per cent in Hong Kong on Monday ahead of the results. The stock has more than halved since early February - and is down 85 per cent from its highs almost 3 years ago - underperforming the Hong Kong index which has slipped around 5.5 per cent since Feb.8. From gulftoday

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