CATL reports 130.79% year-on-year surge in first-half net profit

Shanghai (Gasgoo)- Chinese power battery giant CATL said its first-half revenue surged 116.5% from the previous year to roughly RMB20.264 billion, and the semi-annual net profit attributable to shareholders of the public company reached around RMB2.102 billion with an impressive year-on-year jump of 130.79%.

（Photo source: CATL)

For the first half of 2019, the revenue came from CATL's three major business sectors—power battery system, energy storage system and lithium battery material—reached RMB16.892 billion (+135.01%), RMB240 million (+369.55%) and RMB2.309 billion (+32.14%) respectively.

Power battery system, the arm that accounted for 83% of the company's total revenue, consists of battery cell, module and battery pack. Its revenue leap to some degree mirrored the blooming market demands for the overall NEV market in China. According to the China Automotive Technology & Research Center (CATARC) and the China Insurance Regulatory Commission, China’s Jan.-Jun. NEV outputs and sales volume amounted to 609,000 units and 601,000 units, zooming up 60.1% and 85.6% from a year ago,

The vigorous rise of NEV sales volume greatly boosted the installed capacity of NEV power battery. The CATARC's statistic showed that the China's installed power battery capacity for the first six months totaled 30.0GWh, soaring 93.6% year over year. Of that, 13.8GWh was generated from CATL.

The battery manufacturer also stated that its sales of lithium power battery are expected to be further increased with increasingly more capacity becoming operational.

During the reporting period, CATL pumps around RMB1.413 billion into R&D, a remarkable growth of 96.75% over the prior-year.

Nevertheless, the company is still confronted with diverse threats despite an expanding production and operation scale, CATL said.

First of all, if the NEV subsidy phase-out was beyond expectation or any adverse changes hit relevant industrial policies, the company's operational performance may be negatively impacted correspondingly.

Besides, CATL will face a more fierce competition in the future as new companies are flocking to the power battery area in forms of direct investment, industrial transformation and acquisition & merger, and existing battery makers are ramping up their capacities.

Moreover, its market competitiveness and profitability are likely to be harmed if CATL failed to maintain a leading level and keep a continuous progress with the fast upgrades of lithium-ion power battery technology that features uncertainty in development direction.

After all, CATL should face up to the risk caused by sliding gross margin.