China's BYD expects 2018 profit to fall by a third as competition rises
BEIJING/SHANGHAI, Oct 29 (Reuters) - Chinese electric
carmaker BYD Co Ltd <002594.SZ><1211.HK>, which is backed by
U.S. investor Warren Buffett, said on Monday it expected
full-year net profit to drop almost a third as competition heats
up in the world's largest auto market.
China's market for electric cars is booming, but profits in
the sector have been squeezed by intense competition between
established firms and start-up rivals, as well as moves by
Beijing to slash subsidies for the market. [nL4N1WO20V]
The Shenzhen-based firm posted a 1.9 percent fall in third
quarter net profit to 1.05 billion yuan ($150.97 million), down
from 1.07 billion yuan a year earlier.
That was the smallest quarterly drop since the end of 2016,
but it said 2018 profit would be between 2.73 billion yuan and
3.13 billion yuan, down as much as 32.94 percent.
First half profits at BYD, which makes battery electric and
plug-in hybrid cars - as well as public transport vehicles and
batteries - had plunged over 70 percent, hit by the drop-off in
policy support for new energy vehicles (NEVs). The carmaker said
then it hoped profitability would improve in the second half of
the year. [nL3N1VK1L5]
Although sales of traditional petrol-engine cars have
stalled, sales of NEVs have been buoyant in China, rising 81
percent in the first nine months of the year to 721,000 units,
China's top auto industry body said this month. [nL4N1WS2VQ]
BYD, whose models include the Tang series and plug-in hybrid
EV model Qin, has been trying to shift to fully-electric
vehicles but has faced battery shortages. It is now building
several new battery production bases to boost capacity.
Analysts also expect BYD's main local rivals Geely
Automobile Holdings Ltd <0175.HK> and Great Wall Motor Co Ltd
<601633.SS><2333.HK> to miss their full-year sales targets.
Great Wall reported a record quarterly sales drop on Friday,
blaming the sharp slowdown in China's auto market that has
spooked automakers and dealers alike. [nL3N1X63WF]
Geely had reached just 72 percent of its annual sales
target at the end of the third quarter, according to its sales
report.
China's overall car sales fell 11.6 percent in September,
the steepest monthly decline in nearly seven years, stoking
concerns of a first annual market contraction in decades.
[nL4N1WS2VQ]
($1 = 6.9550 Chinese yuan renminbi)
(Reporting by Yilei Sun in Beijing and Adam Jourdan in
Shanghai; Editing by Kirsten Donovan)
((Y.Sun@thomsonreuters.com; +010 66271262; Reuters Messaging:
y.sun.thomsonreuters.com@reuters.net))
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