HONG KONG, April 25 BYD Co Ltd
, a Chinese carmaker backed by U.S. billionaire
Warren Buffett, posted a 90 percent slide in quarterly profit as
it was hit by a slowdown in the world's largest car market and
losses in its solar business.
China's once-sizzling auto industry has succumbed to
softening economic growth, further exasperated by new vehicle
offerings in the fiercely competitive market.
Shenzhen-based BYD reported a net profit of 27 million yuan
for the first three months of 2012, down from 266.74 million
yuan t h e previous year, in line with a forecast drop of 65-95
percent the company made last month.
"As the domestic macro economy grew mildly and the growth in
GDP declined in the consecutive 5 quarters, confidence of
domestic consumers and consumption willingness were affected,"
the company said in a filing to the Hong Kong bourse.
BYD's auto sales fell 4 percent in the first quarter to
114,000 vehicles, but March sales outperformed the industry, up
8 percent on the year, helped by new model ramp-ups, such as
the S6 and G6.
Analysts believe BYD faces a tough 2012 as its core auto
business lags many domestic rivals. The company also makes
batteries, handsets and other components.
Shares of BYD lost about 60 percent of their market value
last year but have rebounded 25 percent so far this year.
BYD's earnings will have limited upside in the short term as
it switches to new models and due to continued losses in its
solar business, analysts said. A recent stock rally, which
boosted its shares, likely only reflected market enthusiasm over
potential policy support for electric vehicles, they said.
"BYD's execution in auto line-up upgrade and renewable
business holds the key to success," Morgan Stanley analysts Tim
Hsiao and Jasmine Lu wrote in a report before the earnings.
BYD, which attracted investment from Buffett's Berkshire
Hathaway because of its battery technology, has started
selling pure electric cars and buses in China.
It has also starting exporting a small number of electric
vehicles on a trial basis.
BYD, which debuted its new generation of plug-in sedans at
the Beijing auto show on Monday, is betting on new car models to
boost sales after it was badly hit by competition and the end of
tax incentives for small cars in China.
(Reporting by Alison Leung and Kelvin Soh; Editing by
Jacqueline Wong and Elaine Hardcastle)