BYD profits hit by slumping PV prices, stiff competition
Chinese car and battery maker BYD said on Tuesday that its net profit in 2011 fell by 44 percent from a year earlier due to fierce competition in the world's largest auto market and a sharp fall in photovoltaic product prices.
Backed by US financier Warren Buffett, BYD said that the drop was the result of large discounts it had to make in the face of intensifying auto market competition.
The Shenzhen- and Hong Kong-listed company said its net profit for the year ended December 31 totaled 1.4 billion yuan (USD222 million), down from 2.52 billion yuan in 2010, BYD said in a preliminary earnings statement to the Shenzhen Stock Exchange.
Global photovoltaic product prices declined drastically in 2011, which had a greater impact on the BYD, which also engaged in photovoltaic business, ultimately resulting in a drop in the company's net profit, said the statement.
However, "BYD's investment in R&D of electric cars, solar panels and other green technologies will create new profits in the long run," Bai Xiaolan, an auto analyst at Guotai Jun'an Securities, told the Global Times, predicting the company's car sales to grow at 10 percent to 500,000 vehicles in 2012, with its new energy vehicles contributing more than 15 percent.
Investor confidence in BYD has been waning steadily as sales of its automobiles remain weak, standing at around 448,000 last year, down nearly 14 percent year-on-year.