Byd Company Limited has released a first-quarter report showing significant divergence: net profit was halved, while revenue declined year-over-year but slightly exceeded expectations. Positive signals are also emerging, including a more than 50% surge in overseas sales and over 30,000 pre-orders for the new "Tang" model within 24 hours.
According to a Hong Kong Stock Exchange announcement from BYD COMPANY, the company achieved revenue of 150.225 billion yuan in the first quarter of 2026, down 11.82% year-over-year, but higher than the Bloomberg consensus estimate of 140.4 billion yuan. Net profit attributable to shareholders was 4.085 billion yuan, a sharp decline of 55.38% year-over-year, largely in line with the Bloomberg average estimate of 4.1 billion yuan from five analysts. Basic earnings per share fell from 1.04 yuan in the same period last year to 0.45 yuan, while the weighted average return on equity narrowed from 4.37% to 1.65%.
The decline in profit was mainly dragged down by non-operational factors. Financial expenses surged 210% year-over-year to approximately 2.1 billion yuan, as foreign exchange gains of about 1.9 billion yuan in the same period last year turned into losses. Additionally, R&D expenditure was 11.34 billion yuan, down about 20% year-over-year and slightly below the market estimate of 11.93 billion yuan. Selling expenses were 5.83 billion yuan, compared to 6.18 billion yuan in the same period last year.
Prior to the earnings release, Macquarie Capital analyst Eugene Xiao noted in a report that first-quarter margin pressures appeared underestimated but were expected to ease in the coming quarters.
Overseas sales surged and new vehicle pre-orders released positive signals. Stimulated by soaring oil prices boosting electric vehicle demand, overseas sales jumped more than 50% in the first quarter, with exports accounting for about 45% of Byd Company's total deliveries. The company is on track to achieve its target of selling 1.5 million vehicles overseas this year.
Furthermore, the new "Tang" SUV, unveiled at the Beijing Auto Show, received over 30,000 pre-orders within 24 hours, boosting the company's stock price on Monday. The model is equipped with Byd Company's latest blade battery, offering a range of nearly 1,000 kilometers on a single charge, with an expected starting price of 250,000 yuan.
Before the earnings release, Bloomberg Intelligence analyst Joanna Chen pointed out that a recovery trend appears to be forming in the second quarter. New models featuring the second-generation blade battery are attracting more foot traffic to showrooms, while global energy shocks due to Middle East conflicts have brought strong orders for the company's overseas electric vehicle and energy storage businesses.
A reversal in foreign exchange gains and losses led to a 210% surge in financial expenses. The core reason for the sharp profit decline was the dramatic fluctuation in foreign exchange gains and losses. In the same period last year, Byd Company recorded approximately 1.9 billion yuan in foreign exchange gains under financial expenses; this quarter, it turned into a loss, causing financial expenses to surge 210.04% year-over-year to about 2.1 billion yuan. This single item alone dragged down profits by approximately 4 billion yuan.
At the same time, the fair value of derivative financial instruments shifted from a profit of 246 million yuan in the same period last year to a loss of 101 million yuan, with fair value change losses down 141% year-over-year. Investment income also shrank significantly from nearly 700 million yuan to less than 100 million yuan, a decrease of 87.68%. The combined impact of these non-operational factors was the main driver behind the halving of net profit.
R&D expenses declined, while the capitalization rate increased. On the expense side, a notable change was the accounting treatment of R&D investment. R&D expenses for the quarter were 11.344 billion yuan, down approximately 20.2% from 14.223 billion yuan in the same period last year. However, the development expenditure balance on the balance sheet increased from 5.971 billion yuan at the beginning of the year to 8.285 billion yuan, a rise of 38.75%. This indicates that some R&D investment has shifted from being expensed to capitalized, reducing current period expenses and providing some support to profits.
This change does not inherently reflect a decline in R&D intensity but rather adjustments in the pace of the company's R&D projects and accounting estimates.
Operating cash flow decreased, while financing demand rose. Net cash flow from operating activities was 2.79 billion yuan, a significant decrease of 67.48% year-over-year, mainly due to a reduction of approximately 35.4 billion yuan in cash received from selling goods and providing services. This change may be related to extended downstream payment cycles, intensified industry price competition, and shifts in sales structure.
On the balance sheet, the inventory balance increased from 138.421 billion yuan at the beginning of the year to 160.414 billion yuan, a rise of about 15.9%, creating some capital occupation pressure amid declining revenue. Short-term borrowings rose from 38.485 billion yuan to 66.296 billion yuan, an increase of 72.27%, indicating a clear rise in the company's financing needs.
From an investment perspective, capital expenditure moderated. Cash paid for the acquisition and construction of fixed assets, intangible assets, and other long-term assets was 22.063 billion yuan, down about 40% year-over-year, which partly explains why the balance of construction in progress increased from 48.294 billion yuan to 59.318 billion yuan but at a slower growth rate.
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