Chinese battery and carmaker BYD Co Ltd reported on Sunday that it saw a record decrease in its profits and vehicle sales in its 2011 financial year, which ended on Dec 31.
That aroused concerns that the company will have a difficult time achieving its goal of having the most automobile sales by any Chinese company by 2015.
Statistics from the company's financial report showed that BYD's revenues decreased by no more than 1 percent from a year earlier, coming in at 46.31 billion yuan ($7.3 billion). Even so, its gross profit dived by 17 percent, falling to 6.87 billion yuan, and its profits attributed to equity holders declined sharply by 45 percent to 1.38 billion yuan.
The company's shares on the Shenzhen Stock Exchange gained 1.81 percent to close at 26.47 yuan on Monday, while its stock price dropped by 4.82 percent to hit HK$19.94 a share in Hong Kong.
The Shenzhen-based company, which the US billionaire Warren Buffett has invested in, blamed the profit decrease on its waning battery business, which has been harmed by a slowdown in demand for traditional mobile phones and on its shrinking share of the market for notebook computers. The company's rechargeable batteries and new-energy businesses were also harmed by the decline in demand in the European market for photovoltaic equipment.
BYD also said its automobile sales decreased by 13.33 percent in 2011 from the previous year, declining to 437,000 vehicles. For the year before, the company had set an ambitious target of selling 800,000 vehicles but eventually sold 520,000.
Despite the sales decline, BYD said in the financial report that its vehicle business had 22 billion yuan in revenue in 2011, a slight increase year-on-year.
Analysts also said the company lacks technologies and products that can compete with those of its domestic and foreign rivals. They said that situation will make it impossible for BYD to meet its goal of having the most sales of any Chinese automaker by 2015.
Wang Chuanfu, company chairman, said he is still optimistic about BYD's future in the biggest automobile market in the world. He said "the growth in sales in China's vehicle market is expected to reach 10 percent this year and BYD's will increase faster than that".
He said his confidence comes from the company's being a step ahead in the electric vehicle industry.
In March 2010, BYD formed a 600-million-yuan joint venture with the German automaker Daimler AG and began working to develop an electric vehicle specifically suited to the Chinese market. The companies plan to release the vehicle later this week, and the first of the new models is expected to be introduced at the Beijing auto show next month.
Analysts, though, said much must still happen before electric vehicles are widely used. BYD has only sold about 1,000 electric vehicles since it introduced them more than two years ago.