2011/06/29

Buffett-backed BYD's profit tumbles 84%

HONG KONG, June 29, 2011 (AFP) - Chinese car maker BYD, backed by US billionaire Warren Buffett, said Wednesday that its first-quarter net profit shrank 84 percent because of increased costs and falling auto sales.

The firm earned $266.7 million yuan ($41.2 million) in the three months ended March 31, well below its $1.7 billion yuan net profit in the same quarter last year.

The Hong Kong-listed company also said its operating revenue fell almost 12 percent to $11.7 billion yuan in the quarter, down from $13.25 billion a year ago.

"This was mainly due to a decline in automobile sales performance coupled with an increase in management and finance expenses," BYD said in a statement.

The firm's A-shares will make their trading debut in the southern Chinese boomtown of Shenzhen on Thursday after BYD raised a lower-than-expected $1.4 billion yuan in a share sale earlier this month.

BYD's latest results come as China's auto sector -- which overtook the United States in 2009 to become the world's largest car market -- has lost steam after the government phased out most sales incentives implemented to ward off the worldwide economic downturn.

Sales fell 3.98 percent from a year earlier to 1.38 million units in May, declining for the second straight month.

BYD's Hong Kong shares were 5.2 percent lower at HK$23.75 ($3.05) in morning trade Wednesday.