BYD’s Q3 net profit rises 28% year-on-year to RMB 10 billion

BYD The financial report for the third quarter of this year was announced on the evening of the 29th. Revenue was RMB 221.48 billion, an increase of 13.5% year-on-year. The parent company’s net profit was RMB 10.01 billion, an increase of 28% year-on-year. Single-quarter profit reached recent high.

However, due to exchange losses and the decline in investment income, BYD’s cumulative net profit attributable to the parent company in the first three quarters of this year was RMB 22.345 billion, a year-on-year decrease of 4.2%, and non-deduction net profit was RMB 21.004 billion, a year-on-year increase of 2.5%. However, the expansion of foreign trade led to a 60% increase in inventory and an annual increase of 33.3% in operating cash flow to RMB 54.47 billion.

BYD’s performance improved significantly in the third quarter, with single-quarter profitability rising significantly to RMB 10.01 billion, an annual increase of 28%, which is the strongest single-quarter performance in recent times. After deducting non-recurring profits and losses, net profit for the single quarter was RMB 8.63 billion, an annual increase of 25.2%, showing that the profitability of the core business continues to improve.

The driving force behind the improved performance in the third quarter mainly came from revenue growth and cost control. Operating costs in the first three quarters were RMB 461.42 billion, down from RMB 465.05 billion in the same period last year, leading to an improvement in gross profit margin. At the same time, R&D expenses decreased from RMB 43.74 billion in the same period last year to RMB 36.27 billion, a significant decrease, which made a certain positive contribution to profits.

In terms of non-recurring profits and losses, non-recurring profits and losses in the third quarter totaled 1.38 billion RMB. The main sources included in current profit and loss were government subsidies of RMB 820 million and gains from changes in the fair value of financial assets of RMB 1.13 billion.

Financial expenses were the main factor that put pressure on profits in the first three quarters. Financial expenditures in the first three quarters were 7.36 billion yuan, compared with -2.93 billion yuan (ie, net income) in the same period last year. The main reason was exchange loss this year and exchange gain in the same period last year. There was a difference of more than 10 billion yuan between the two.

BYD’s investment income has also declined significantly. Investment income in the first three quarters of this year was only RMB 240 million, down 87.8% from RMB 2.04 billion in the same period last year. This was primarily due to an increase in losses on derecognition of financial assets measured at amortized cost and widening of losses from disposal of traded financial assets.

The expansion of overseas business has increased both inventory and receivables, and BYD’s overseas automobile business is in the stage of rapid expansion. By the end of September, the inventory balance reached RMB 221.57 billion, a significant increase of 60% from RMB 138.42 billion at the beginning of the year. BYD clearly stated in its financial report that this was mainly due to the growth of overseas automobile business and increase in inventory.

The accounts receivable balance increased to RMB 56.47 billion, an increase of 52.6% from RMB 37 billion at the beginning of the year, which was also attributed to the increase in overseas automobile business. At the same time, contract liabilities (advance receipts) increased to RMB 92.94 billion, an annual increase of 80.5%, reflecting good advance receipts of automobile orders.