Buffett-backed Chinese automaker BYD's 1H profit soars as auto sales recover

HONG KONG - Chinese automaker BYD, which counts U.S. billionaire investor Warren Buffett among its investors, says half-year profit soared from its poor showing a year earlier, helped by the release of a new midrange sedan.

BYD, which also makes batteries for smartphones and other devices, said Sunday that January-June profit of 427 million yuan ($70 million) was 26 times higher than 16 million yuan profit a year earlier. Revenue climbed 13 per cent to 24.2 billion yuan.

Auto sales rose by 25 per cent to 250,000 vehicles, outpacing the 12 per cent rate of growth in the broader China auto market. China's auto sales growth has decelerated since mid-2012 as economic growth in the world's No. 2 economy slowed and some major cities tried to cut congestion and smog by limiting new vehicle registrations.

BYD had pinned its hopes on new models including the Si Rui midrange sedan, which it said "enjoyed great popularity among consumers" after launching in April.

The company had grand ambitions to be a leader in electric vehicles after Beijing announced a plan to make China a global power in electric car manufacturing. But those dreams have been scaled back because of technological hurdles and lack of buyer interest. BYD's sales were also hit after a fire in one of its electric taxis last year.

The company forecasts profitability will reach a "low level" in the third quarter, which it said was the weakest part of the year for auto sales.

"Against the backdrop of the decline in macro-economic growth and the adverse influence brought by the purchase and drive restriction order from the government, the automobile industry will still be faced with uncertainties," the company said in a statement.

Battery revenue rose 11 per cent as it sold more lithium-ion batteries to smartphone makers. But the company said the nickel cell business weakened as demand for electric tools and toys shrank because of the sluggish global economy. The solar cell business faced pressure from intense competition.

The telephone handset division's sales rose 6.6 per cent but BYD warned of "fierce market competition."

Buffett's MidAmerican Energy Holdings owns 10 per cent of BYD.