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22/06/2024
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Contemporary Amperex Technology reports strong Q1 profits on lower raw material costs, eyes break-even for German factory

Contemporary Amperex Technology (CATL) has disclosed a 7 percent increase in net profit for the first quarter compared to the previous year, credited to reduced raw material expenses. Additionally, the Chinese battery giant anticipates its German facility to reach a break-even point this year.

In the three months ending March 31, net profit reached CNY10.5 billion (USD1.5 billion), while profit, excluding one-time gains and losses, surged by 19 percent to CNY9.2 billion (USD1.3 billion), as per CATL’s latest earnings report. Despite this, revenue experienced a consecutive decline for the second quarter, dropping by 10.4 percent to CNY79.8 billion (USD11 billion).

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Although battery shipments soared by over 25 percent, revenue took a hit due to decreased product prices linked to the decline in raw material costs, the Ningde-based company explained. Operating expenses also saw a substantial decrease of 16 percent, amounting to CNY58.7 billion.

Remaining bullish on overseas markets, CATL highlighted the expansion of its inaugural overseas plant in Arnstadt, Germany, which boosted production capacity last year. Despite short-term fluctuations in European demand, the company expressed confidence in the market, citing the ongoing enhancement of regional infrastructure and the launch of new-generation electric vehicle models by European automakers.

Moody’s Ratings raised CATL’s credit rating from Baa1 to A3, with the outlook shifting to ‘stable’ from ‘positive,’ attributing it to “consistent earnings, low leverage, and an increasing net cash position,” despite revenue growth constraints from price competition. Moody’s forecasts a 4 percent revenue increase to CNY417 billion (USD57.6 billion) for CATL this year.

Morgan Stanley revised its share price target for CATL to CNY230, following an upgrade in rating from ‘equal-weight’ to ‘overweight’ last month.

CATL’s shares [SHE: 300750] closed unchanged in Shenzhen at CNY197.15 (USD27.23) each, marking a more than 20 percent climb since the beginning of the year.

Maintaining its dominance in global battery shipments for seven consecutive years, CATL experienced a 45 percent surge in shipments to 35.5 gigawatt hours during January and February compared to the previous year. Its global market share also rose from 33.4 percent to 38.4 percent, according to data from South Korean consultancy SNE Research.

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