BYD Co. Sees Stronger 1st-Quarter Profit After 22% Decline in 2014 Net

   By Joanne Chiu 

HONG KONG--BYD Co. (1211.HK, 002594.SZ) expects stronger earnings in the first quarter on the back of the launch of new car models and China's support for green cars, after the Warren Buffett-backed Chinese battery and car maker reported a 22% decline in 2014 net profit.

The company, which is 9.1%-owned by Berkshire Hathaway Energy, a unit of Warren Buffett's Berkshire Hathaway Inc. (BRKA, BRKB), said Sunday that net profit for the 12 months ended Dec. 31 totaled 433.5 million yuan (US$69.8 million), down from CNY553.1 million a year earlier, as increased competition in the market for conventional cars combined with a slowdown in China's auto market to take a toll on earnings.

The decline in earnings was in line with the company's earlier forecasts of a 21% drop in full-year net profit of CNY437.9 million. Its full-year revenue rose 11% to CNY55.37 billion from CNY49.77 billion.

Despite the weak 2014 earnings, BYD said in a statement to the Hong Kong exchange that it expects a first-quarter net profit of CNY100 million to 150 million, sharply higher from the CNY11.97 million of net profit it reported in the previous year, benefiting from China's support for green cars in a bid to curb pollution as well as the launch of several new traditional gasoline-powered car models that would help drive car sales.

"The Group's new energy vehicle business is expected to sustain its strong growth momentum," it said.

The company's revenue from green-car operations increased by about six times to around CNY7.25 billion in 2014, accounting for nearly 28% of BYD's automobile business revenue.

Sales volume of BYD's plug-in hybrid car, the Qin, grew by nine times in 2014, the company added, without giving exact figures. The Chinese car maker and Daimler AG (DAI.XE, DDAIY) also in September launched their jointly developed electric-car brand Denza.

China's passenger-car sales rose 9.9% last year, a solid result but a marked slowdown from 2013 when sales grew 16%. About 19.7 million cars were sold in China in 2014, according to the China Association of Automobile Manufacturers.

   Write to Joanne Chiu at [e-mail] 

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