China’s BYD projects up to 90% plunge in Q1 net profit, shares drop almost 10%

China’s BYD projects up to 90% plunge in Q1 net profit, shares drop almost 10%

In a recent warning, China’s BYD Co Ltd has said that it expects a year-on-year plunge of up to 90 percent in its net profit for the 2018 first quarter. The projected plunge in the company’s quarterly net profit is evidently a result of subsidy cuts for new-energy vehicles (NEVs) in the country.

According to BYD’s projections, the net profit of the company -- which is backed by Warren Buffett’s Berkshire Hathaway Inc -- will likely record a drop of between 75.2 percent and 91.8 percent, as compared to the same-quarter net profit figures last year.

The warning by BYD about the projected net-profit plunge in the 2018 January-March quarter implies that the company is expecting a net profit in the range of 50 million yuan to 150 million yuan during the quarter. In comparison, the company’s net profit in the same quarter in 2017 was 605.8 million yuan.

Due to BYD’s projections of a significant drop in its net profit for the first quarter, the shares of the company have plummeted nearly 10 percent.

Highlighting the fact that the company has made heavy investments in battery-electric and plug-in hybrid vehicles because of China’s push for greener transport, BYD said that its overall profit has come under immense pressure because “the profitability of the business, especially for electric buses, has declined substantially” owing to a reduction in NEVs subsidies.

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