BYD's Q2 profit falls 99% on sales dent
Source: Bloomberg News |
August 23, 2011, Tuesday
|
Print Edition
Print Edition
BYD Co, the Chinese automaker part-owned by Warren Buffett's Berkshire Hathaway Inc, yesterday reported a 99 percent plunge in second-quarter profit as the end of preferential taxes for small cars led to a drop in sales.
Net income fell to 8.62 million yuan (US$1.35 million) from 717 million yuan a year earlier, according to calculations by Bloomberg News subtracting first-quarter from first-half figures. Profit in the first six months of the year dropped 89 percent to 275.4 million yuan, the company said yesterday in a statement to the Shenzhen Stock Exchange.
Demand for BYD's cars has slowed as rivals, including General Motors Co and Honda Motor Co, introduced models and China's government phased out buying incentives and imposed purchase restrictions to curb traffic congestion.
The Shenzhen-based automaker's vehicle sales fell 23 percent in the first seven months of this year versus a rise of 5.9 percent in China's industry-wide passenger-car deliveries.
The automaker has suffered from poor sales and excessive inventory, "and had dealers fleeing their network," said Jay Srivatsa, managing director of New York-based Chardan Capital Markets LLC. "BYD cars are now viewed as a poor alternative to other domestic auto manufacturers."
He has a "sell" recommendation on BYD stock.
The first-half earnings drop was less than the 95 percent plunge that BYD had cited as possible on July 12.
Its vehicle sales have fallen every month in the 12 months to July as the popularity of its best-selling model, the F3 sedan, has waned.
First-half revenue dropped 12 percent to 22.5 billion yuan. Profit in the first quarter fell 84 percent to 239.6 million yuan.
Net income fell to 8.62 million yuan (US$1.35 million) from 717 million yuan a year earlier, according to calculations by Bloomberg News subtracting first-quarter from first-half figures. Profit in the first six months of the year dropped 89 percent to 275.4 million yuan, the company said yesterday in a statement to the Shenzhen Stock Exchange.
Demand for BYD's cars has slowed as rivals, including General Motors Co and Honda Motor Co, introduced models and China's government phased out buying incentives and imposed purchase restrictions to curb traffic congestion.
The Shenzhen-based automaker's vehicle sales fell 23 percent in the first seven months of this year versus a rise of 5.9 percent in China's industry-wide passenger-car deliveries.
The automaker has suffered from poor sales and excessive inventory, "and had dealers fleeing their network," said Jay Srivatsa, managing director of New York-based Chardan Capital Markets LLC. "BYD cars are now viewed as a poor alternative to other domestic auto manufacturers."
He has a "sell" recommendation on BYD stock.
The first-half earnings drop was less than the 95 percent plunge that BYD had cited as possible on July 12.
Its vehicle sales have fallen every month in the 12 months to July as the popularity of its best-selling model, the F3 sedan, has waned.
First-half revenue dropped 12 percent to 22.5 billion yuan. Profit in the first quarter fell 84 percent to 239.6 million yuan.
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