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 (~$1) 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.
