BYD to report 44% fall in 2011 profit

Chinese car and battery maker BYD (1211.HKG, 002594.SZ) said it will report a 44% drop in net profits for 2011 amid increasing competition in the domestic market, The Wall Street Journal reported. The company, part-owned by investor Warren Buffet, faces a tough market after the withdrawal of government auto purchase subsidies last year. “BYD’s focus on the low-end automobile market will mean rising competition from rivals such as Sino-foreign joint ventures that have launched homegrown brands in China,” said Charlene Gu at Yuanta Securities. Revenue for 2011 rose 1.2% to US$7.79 billion, and the firm’s Hong Kong stock rose 2.4% to US$3.29 after the announcement. The news threatens BYD’s business model of using sales of traditional gasoline-powered cars to finance its R&D on electric cars, solar panels and other sustainable technologies.