BEIJING (Reuters) - Chinese automaker BYD Co Ltd (002594.SZ)(1211.HK), backed by U.S. investor Warren Buffett, said on Monday net profit fell sharply for the first half of the year, as Beijing reins in subsidies and other policy support for green energy cars.
The Shenzhen-based manufacturer, which has invested heavily in making battery electric and plug-in hybrid vehicles, posted net profit of 1.72 billion yuan ($259.9 million) for the January-June period, behind analyst estimates of 1.82 billion yuan.
China, which has been aggressively promoting green vehicles to combat urban pollution, has cut back subsidies to the sector this year and imposed stricter requirements on electric carmakers after a subsidy cheating scandal in 2016.
BYD said net profits would continue to face challenges later in the year, predicting a 20.04-25.22 percent fall for the first nine months of the year due to the reduction of subsidies and increasing market competition.
BYD, which saw net profit shoot up 78.9 percent last year, said in April it expected the subsidy cuts for green vehicles to drag down first-half profits by up to 31.4 percent to between 1.55 billion and 1.8 billion yuan.
BYD’s overall vehicle sales, those of gasoline cars and electric battery plug-in vehicles, fell 14.8 percent to 183,637 vehicles in January-June compared to the same period last year, according to Shanghai-based consultancy Automotive Foresight.
Yale Zhang, head of Automotive Foresight, said BYD’s new-energy vehicle (NEV) sales volume had been “basically flat”, while petrol engine car sales had fallen faster.
Bill Russo, managing director at consultancy Gao Feng Advisory Co, added BYD could benefit from a broader green transport push into monorail, buses and batteries, as well as supportive policies including an NEV credit scheme.
“We have seen a sales recovery trend for BYD during the past few months, especially in Q2,” Russo said. “In addition, BYD is pushing green public transportation in China and globally.”
Reporting by Norihiko Shirouzu in BEIJING and Twinnie Siu in Hong Kong; Editing by Adam Jourdan and Dale Hudson