Mainland electric carmaker BYD's third-quarter profit slumped 94 per cent due to weak domestic demand and losses from it solar panel business.
The Shenzhen-based company forecast the full-year net profit to slide up to 98 per cent compared with last year, saying it could post profit of between 27.7 million yuan (HK$34.6 million) and 110.8 million yuan, compared with 1.38 billion yuan last year.
BYD attributed the profit drop to a slowdown in the country's car market caused by economic uncertainties this year, it said in a filing to the Hong Kong stock exchange.
The company also said that while it expected losses from its solar panel business to narrow in the second half, it would remain a major reason for BYD's poor performance.
BYD shares rose 3.6 per cent to close at HK$15.70 each yesterday before the results announcement.
Its stock fell 0.7 per cent in Shenzhen trading to 14.35 yuan.
BYD, which is backed by American veteran investor Warren Buffett, has suffered from the sluggish demand in its domestic market this year.
According to the filing, BYD posted a net profit of 4.6 million yuan for July to September. Revenue dropped nearly 11 per cent to 10.5 billion yuan. The company said it sold about 77,000 cars in the quarter, down 18 per cent from a year ago.
From January to September, net profit slumped 94 per cent to 20.9 million yuan.
Estimates by the China Association of Automobile Manufacturers said the country's vehicle sales in the third quarter rose about 4.3 per cent. Overall vehicle sales on the mainland are expected to grow 5 to 8 per cent this year, far below the 46 per cent growth of 2009 and 32 per cent in 2010, according to Reuters.
Over the past few months, sales of Japanese cars in China have fallen dramatically following the territorial dispute between the two countries.
But the market share lost by the Japanese companies has been mainly taken by their rivals from Germany, the United States and South Korea. Domestic manufacturers including BYD benefitted little.
BYD has been actively trying to expand overseas. Earlier this month it said it signed a deal with Green Tomato Cars, the second-biggest cab operator in London, to start a trial use of 50 of BYD's e6 sedans in the British capital late next year. It will be the city's first all-electric fleet.
BYD's K9 electric buses and e6 electric cars have also entered the Hong Kong market over the past two months.