BYD, A Buffett-Backed Automaker, Loses 94% Profit On Solar Units And Handsets

BYD Co., which is a Chinese carmaker that Warren Buffett and Berkshire Hathaway own a piece of, said that their first-half profits have plunged by a total of 94%. This profit is being dragged down by their handset units and solar cell units.

The net income of this company dropped to 16.3 million yuan, which is a total of 2.6 million American dollars during the six-month period which ended on June 30. This drop is compared to the of 275.4 million yuan that they made a year ago at the same time. The company sales rose however by 0.2% to a total of 22.6 billion yuan. We learned this in a statement that BYD gave to the Shenzhen stock exchange today.

The company BYD is a supplier of mobile phone makers HTC Corp. and Nokia OYJ. They mentioned that there first-half profits would drop about 95% during the month of April, because they suffered a decline in market share. They were also hurt by the debt crisis in Europe which affected their solar cell business. The delivery of vehicles also declined this year at BYB, and the F3 model which was very popular unfortunately waned because there is a lot more increased competition from the foreign car companies such as Volkswagen AG.

The company also made a statement that the nine-month income forecasts that they will give in September are expected to fall around 95% to 17.6 million yuan. “During the third quarter of 2012, due to the impact of macro-economic uncertainties at home and abroad, China’s auto demand is expected to remain weak while market competition will intensify.” This is a direct statement that BYD made today. They even believe that their handset and solar cell units are going to continue to decline during this nine-month period.

BYD Shares Fall

BYDs shares fell today a total of 2.8% to the amount of HK$13.36 during the trading hours in Hong Kong prior to the announcement. This gave the automaker a total of a 21% loss on the year. But on the flipside, the company’s Shenzhen-listed stock actually rose a total of 1.1% to 15.08 yuan today.

The revenue from their handset assembly and components division dropped a total of 11.6% from a year earlier, and it is now 8.6 billion yuan. Their rechargeable battery sales also fell this time around by a total of 5.5%, and that number was 2.4 billion yuan. We learned this in a statement that they gave today. Their automobile sales actually increased by a total of 12.7% to the amount of 11.6 billion yuan. Their total vehicle sales actually fell 11% during the first seven months of the year, and dropped to 231,902 units. This is being compared with the 19% gain that Volkswagen achieved during the same time with their eponymous brand that rose up to 1.1 8 million. This data was derived from industry researcher LMC automotive.

Throughout the entire industry, passenger car sales actually rose a total of 7.5% to the amount of 8.74 million units during the first seven months. This information was gathered from the China Association of Automobile Manufacturers. The shares of BYD actually dropped the most it has in more than two months in Hong Kong during the month of May when a newspaper reported that three people were killed during an accident that took place in one of their E6 electric taxis. The car unfortunately caught fire after the crash and killed the passengers. But the official investigations found that there weren’t any flaws in the safety design of the vehicle, which we learned when the company told us on August 3.

Midsized Sedan

BYD actually introduced the Su Rui, which is a midsized sedan. They introduced it in Beijing this August, and they are using it as a way to expand their overseas sales in markets such as Uruguay and Israel. They are providing fleet trials of its electric buses, the company told us today.

MidAmerican Energy Holdings Co., which is also a unit of Berkshire Hathaway, actually bought out 9.9% of BYD during the month of September in 2008. They did this as a way to tap into the rising demand of clean technology. After Buffett invested in the company, the shares of BYD rose ninefold and hit a record high of HK$85.50 in Hong Kong on October 23, 2009.

There are 21 analysts that cover the stock, and none of them actually recommend BYD as a buy. 12 of the analysts have this company rated as a sell, and the other nine recommend it as a hold. This is information that was gathered from data compiled by Bloomberg.

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