BYD's second-quarter net profit rose 29.8% to 8.2 billion yuan ($1.22 billion), its first quarterly increase in more than a year. The comparison that matters is the one three months earlier, when the same line collapsed 55.4%.
The first half is still ugly. Revenue for the six months through June fell 7.13% to 344.82 billion yuan ($50.9 billion), and net profit attributable to shareholders dropped 20.54% to 12.33 billion yuan. Automotive and related products brought in 275.34 billion yuan, down 8.98% and still 79.85% of group revenue. The electronics arm managed 0.96% growth to 69.41 billion yuan.
The Recovery Happened On Ships, Not In Showrooms
BYD sold 1,808,511 new energy vehicles in the first half, down 15.72%. Almost all of that damage was domestic, and it narrowed fast: first-quarter sales fell 30.01%, second-quarter sales fell 3.24% to 1,108,048 units.
Exports closed the gap. Roughly 792,000 vehicles went overseas in the first half, up 67.8% and equal to about 44% of total volume. Second-quarter overseas sales alone hit 471,091 units, up 82.46% year-over-year and nearly 47% above Q1.
Twenty-nine percent profit growth on lower sales is not a recovery in China. It is a recovery in freight.
The margin data backs that up. First-half gross profit slipped only 2.81% to 64.99 billion yuan while gross margin climbed to 18.85% from 18.01%. Export cars are worth more than price-war cars. Premium brands Denza, Fang Cheng Bao and Yangwang grew 61% and now account for 12.8% of passenger-vehicle sales, which pulls the average in the same direction.
Net profit per vehicle in Q2 works out to roughly 7,400 yuan, about $1,040. For a company selling more than a million cars a quarter, that is a thin plate to eat from.
R&D Spending Never Slowed Down
BYD put about 28.9 billion yuan into research and development in the first half, roughly 2.3 times its net profit for the period, taking cumulative R&D past 270 billion yuan. Operating cash flow rose 17.3% to 37.34 billion yuan.
The cost of the export strategy shows up in inventory turnover, which stretched to 109 days from 79 a year ago. Those extra 30 days are cars sitting in containers on the water. BYD also blamed part of the revenue decline on foreign-exchange losses, which is the other bill that arrives with international expansion.
Beijing Is Now Trying To End The Price War It Allowed
Chinese regulators have started pressuring automakers to stop the involution of endless price cuts that flattened margins across the industry. BYD was both the biggest instigator and, judging by a 20.54% half-year profit decline, one of the more expensive casualties.
Volume-wise it is still the largest EV maker on the planet. Second-quarter battery-electric deliveries reached 557,090 against Tesla's 480,126 total deliveries, and that ignores BYD's plug-in hybrids entirely.
The Number To Watch Is 708,000
July sales rose 21.76% to 419,211 units, a third consecutive month of year-over-year growth, with overseas passenger vehicle and pickup sales at a record 179,841, up 124.3% and about 43% of the month's total.
BYD has told analysts it is targeting 1.5 million exports for the full year. With 792,000 booked in the first half, that leaves roughly 708,000 for the second, or about 118,000 a month. July already ran well past that pace, which suggests the target is a floor rather than a stretch, and that the company would rather beat a modest number than miss an ambitious one in front of a market that just watched four quarters of declining profit.