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Published 21:51 IST, July 26th 2024

CATL records profit growth in Q2 amid declining revenue

CATL's revenue decline deepened from a 10.4 per cent drop in the first quarter, highlighting ongoing challenges despite strong profit growth.

Reported by: Business Desk
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Representative | Image: X Photo

CATL profit in Q2: Chinese electric vehicle (EV) battery manufacturer CATL has reported a 13.4 per cent increase in net profit for the second quarter of 2024, reaching 12.36 billion yuan ($1.70 billion). This profit growth counters with a 13.2 per cent drop in revenue, which fell to 87 billion yuan. The revenue decline marks the third consecutive quarter of falling sales for the company.

The reported profit exceeded UBS estimates of 10.41 billion yuan, which anticipated a 4.5 per cent decline in quarterly profit. In the previous quarter, CATL had seen a 7 per cent profit increase.

The company's revenue decline deepened from a 10.4 per cent drop in the first quarter, highlighting ongoing challenges despite strong profit growth. This mixed performance comes as EV sales in China slow down due to a poor economic recovery. EV sales growth fell to 9.9 per cent in June from 27.4 per cent in May, while total car sales declined for the third consecutive month despite government and automaker incentives.

Despite these challenges, CATL has maintained its dominance in the Chinese EV battery market, holding a 46.4 per cent share of batteries used in domestically produced EVs during the first half of the year. This represents a 3 percentage point increase from the previous year. In contrast, competitors BYD and CALB saw their combined market share shrink to 32 per cent.

CATL's international expansion faces hurdles due to geopolitical tensions. Recent developments include calls by US lawmakers to add CATL to the import ban list, alongside Gotion High Tech, due to concerns over geopolitical risks and potential losses in the US lithium battery market. Morningstar has adjusted its revenue and profit forecasts for CATL downward, citing these risks.

Additionally, CATL is expanding into the stationary energy storage market, which is essential for balancing renewable energy supply and demand. The company's energy storage batteries generated 28.82 billion yuan in revenue during the first half of the year, a 3 per cent increase year-over-year. However, revenue from EV batteries fell by 19.2 per cent to 112.65 billion yuan.

(with Reuters inputs)

Updated 21:51 IST, July 26th 2024