ChinaBYD reported second-quarter net profit of 8.2 billion yuan ($1.21 billion), up about 30% year on year and its first quarterly profit growth in five quarters. Revenue over the same three months fell 3.2%, to 194.6 billion yuan ($28.7 billion). Figures here use the rate implied by BYD’s own half-year conversion, about 6.77 yuan to the dollar.
Where the money came from
Sales outside China did the work. BYD sold 792,256 cars overseas in the first half, up around 70% year on year and about 44% of its global volume. Overseas revenue reached 181.3 billion yuan ($26.8 billion), which is 52.6% of the company’s total revenue and the first time the figure has passed half. That total is group revenue, so it includes BYD’s electronics contract-manufacturing business as well as cars.
Margins are the other half of the explanation. Gross margin on the overseas business was about 21.7%, up 1.9 points, at a time when Chinese revenue fell 30.7% under continuing domestic price competition. BYD is selling fewer cars at home, for less, while the cars it ships abroad earn more per unit.
The half-year is still down
One quarter of profit growth is not a recovery, and the six-month figures say so. First-half vehicle sales fell 15.7% to 1.81 million. Revenue fell 7.1% to 344.8 billion yuan ($50.9 billion). Net profit fell 20.5% to 12.3 billion yuan ($1.82 billion).
So the Q2 number is a change in direction inside a half-year that is worse than the last one on every line. What it establishes is narrower and more specific than a turnaround: BYD’s growth is now coming almost entirely from outside its home market, and the domestic business it was built on is shrinking faster than exports can replace it.
