BYD may skid into a large loss, filings show

PUBLISHED : Wednesday, 24 August, 2011, 12:00am
UPDATED : Wednesday, 24 August, 2011, 12:00am

Warren Buffett-backed carmaker BYD Automobile may swing to a net loss of as much as 153.74 million yuan (HK$187.7 billion) in the quarter ending next month, an analysis of the company's stock exchange filings shows.

That would be the firm's first loss since it began quarterly reporting two years ago and follows the 99 per cent plunge in profit for the April-to-June quarter that the car, battery and mobile phone producer unveiled yesterday.

BYD's shares plummeted 14.3 per cent after it reported second-quarter net profit of 8.62 million yuan, down from 717.05 million a year ago. BYD is struggling with rising costs and the waning popularity of its F3 sedan, once the best-selling car in the world's biggest car market.

The company's car sales declined for the 12th month in a row last month, falling 16.8 per cent from a year ago to 27,496 units.

BYD chairman Wang Chuanfu said the company's present focus is on boosting the quality of its car line-up and strengthening its existing network of dealers. He said BYD was planning to begin exporting its much-delayed electric cars to markets including Europe and the United States 'next year,' repeating a pledge made in previous years.

Wang said he was 'confident we can maintain good relations' with Buffett, whose MidAmerican Energy paid HK$1.8 billion or HK$8 per share for a 10 per cent stake in BYD in September 2008. The value of that stake worth HK$3.64 billion based on yesterday's closing price of HK$16.80 per share, a 28-month low.

Despite price cuts in February, shipments of BYD's F3, which retails from 52,800 yuan, fell 28 per cent to 121,800 cars in the first seven months of the year, according to J.D. Power and Associates data.

The company has struggled to find a replacement for the F3.

Its dealer network has declined from a peak of around 1,000 locations to about 800 currently.

BYD forecast that net profit for the first nine months of the year would fall between 85 and 95 per cent to between 121.63 million yuan and 364.88 million yuan.

For the July to September quarter, that implies anything from a net loss of 154.74 million yuan to a profit of 89.52 million yuan.