HONG KONG (Reuters) – the Chinese electric car maker BYD Co Ltd reported preliminary net earnings for 2018, that is 31.4 percent lower than a year earlier, the pins the blame on the intensification of competition in the world’s largest car market.
A bus, manufactured by the chinese BYD, is seen as part of the new fleet of electric buses for public transport in Santiago, Chile, November 28, 2018. Photo taken on 28 November 2018. REUTERS/Rodrigo Garrido
The result comes as the chinese market for new energy vehicles is booming, but the profits in the sector is squeezed by the competition between established automakers and a multitude of startups, as well as the government’s reduction of subsidies.
The profit probably fell 2.79 billion yuan ($416.5 million) from 4.07 billion yuan, such as slowing car sales in China, increased competitive activity among vehicle manufacturers, and pressure on the profitability of the fuel’s auto business, BYD said in a filing to the Hong Kong stock exchange late on Tuesday.
The carmaker, backed by U.S. investor Warren Buffett, also said orders and profits in the smartphone component and assembly business were negatively impacted by the weak demand and the competition.
It also saw the deeper loss in the photovoltaic business as a result of a change in the policy of the government and the provision for impairment loss, while an increase in the financing of the costs hit overall profitability.
Total operating revenue increased 22.8 percent to 130.06 billion yuan.
The Shenzhen office reported rapid growth in the sales of new energy vehicles – that is not entirely powered by internal combustion as the sector develops at a pace and also by the company’s new product cycle. It said that on the first place in the global volume of sales of these vehicles for the fourth consecutive year.
BYD in October said it expects 2018 profit to fall almost a third as a result of the increased competition. It is expected to report final figures for the full year in late March, as per the past year.
The price of BYD’s Hong Kong-listed shares fell 0.3 percent in early trade to 0.2 percent compared to a rise of the benchmark Hang Seng Index.
($1 = 6.6980 Chinese yuan renminbi
Reporting by Donny Kwok; Editing by Christopher Cushing