Buffett's BYD visit comes as sales slide, disputes hurt profits

When Warren Buffett visits Chinese carmaker BYD Co. next week, he’ll find a company facing sliding sales and legal disputes with the government and Foxconn International Holdings Ltd.

Berkshire Hathaway Inc.’s $232 million investment in Shenzhen-based BYD was worth about $2.5 billion last year as the company became the fastest-growing Chinese carmaker. That stake is now valued at about $1.6 billion after BYD’s shares plunged 18 percent this year. Its sales fell 19 percent last month while rivals Dongfeng Motor Group Co., General Motors Co. and SAIC Motor Corp. gained at least 19 percent.

BYD chairman Wang Chuanfu also may not deliver electric cars to California this year as promised. The company’s share decline this year compares with a 0.6 percent increase in Hong Kong’s benchmark Hang Seng Index.

“No company can live up to the hype BYD’s received” after Buffett’s investment, said John Casesa, managing partner at New York-based Casesa & Co. “It would have to do everything absolutely perfectly to live up to the expectations of the market at the peak stock price, and no company does everything perfectly.”

Forecast Slashed

Buffett, 80, makes his first visit to BYD next week to inspect a plant in Changsha. He will be accompanied by Microsoft Corp. founder Bill Gates to promote philanthropy among wealthy Chinese.

The company posted a second-quarter profit of 717 million yuan ($107 million), less than the 962 million-yuan average estimate of four analysts surveyed by Bloomberg. At least nine analysts lowered stock ratings on BYD.

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