CATL Posts 23% Net Profit Drop in Delayed Q1 Report

The market value of the Tesla battery supplier plunged by almost $9 billion earlier after it delayed its quarterly report.
May. 02, 2022 19:45
CATL Posts 23% Net Profit Drop in Delayed Q1 Report

(CapitalWatch, May 2, Hong Kong) The world's largest lithium-ion battery producer CATL (SHE:300750) reported a 24% year-on-year decrease in net profit in its first quarter earnings report.

The release of the report on Sunday came after a two-day delay. The company said the pushed deadline was necessary to ensure accuracy, but did not explain further. CATL took an $8.9 billion hit to its market value after the announcement.

The battery giant operates in an industry that's been particularly battered by the fallout of pandemic lockdowns and surging costs of materials. The shutdowns have put China's auto manufacturing at risk of freezing entirely due to supply chain disruptions.

Tesla (Nasdaq: TSLA) and XPeng (Nasdaq: XPEV; HKEX: 9868), two of CATL's clients, halted production at the beginning of the lockdown. The results were seen in the significantly declined delivery figures for April, as reported by the EV makers on May 1.

CATL started delivering batteries to Tesla's Shanghai Gigafactory in January, six months after the battery manufacturer's facility opened in August last year.

Tesla's factory closed at the beginning of the lockdown in March but resumed operations last week. Reuters estimated that the production pause is expected to result in a loss of 50,000 vehicles.

XPeng CEO He Xiaopeng said on social media earlier last month that if supply chain companies in Shanghai aren't able to resume work, all original equipment manufacturers might have to stop production in May.

In the first quarter of 2022, CATL reported $226.69 million in net profit attributable to shareholders, down nearly 24% from $295 million in the same period of 2021. That marked the supplier's first decline in two years.

Despite the drop in net profit, CATL's revenue saw an almost 154% year-on-year increase to $7.3 billion.

The skyrocketing costs of raw materials CATL needs have driven the company's expenses up drastically. The sales volume of lithium-ion batteries topped 133.41 GWh in 2021, up 184.82% year-on-year. While battery sales have been surging, the cost of essential materials for them such as lithium has nearly doubled in the first three months of this year. 

In the first quarter, CATL's operating costs rose by almost 200%. Expenses for sales and R&D both surged over 100% year-on-year, and management expenses went up 74%. The company's investment income reached $69.7 million, a 7,247% year-on-year increase.

Although the company reported a net profit loss, it's still performing well on the Shenzhen Stock Exchange, up 6% on Monday and about 3% higher over the past week.