China's CATL tops quarterly profit forecasts on robust energy storage business

A CATL sign stands outside its research and development hub and the Chinese battery maker's headquarters in Ningde, Fujian province, China November 8, 2024. REUTERS/Kevin Krolicki Purchase Licensing Rights, opens new tab

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• CATL Q2 net profit rose 36.5% y/y, revenue up 56.9%
• Stronger-than-expected profit boosted by energy storage business growth
• CATL to buy back A-shares worth 20 billion to ​40 billion yuan

BEIJING, July 24 (Reuters) - Chinese battery giant CATL (300750.SZ), opens new tab reported stronger-than-expected second-quarter profit, ‌driven by robust growth in its energy storage business that helped offset softer demand in the electric vehicle market.Net profit rose 36.5% year-on-year to 22.5 billion yuan ($3.32 billion) in the April-June quarter, according ​to a stock exchange filing on Friday, topping analysts' expectations for a ​29.7% increase, based on LSEG SmartEstimate data.

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Still, it was the weakest quarterly ⁠profit growth in over a year. Revenue rose 56.9% to 147.8 billion yuan in ​the second quarter, compared with a 52.5% increase in the January-March period.CATL has identified ​energy storage as a main growth driver as the EV industry matures and battery makers grapple with intensifying competition and margin pressure.The supplier to automakers including Tesla (TSLA.O), opens new tab, BMW (BMWG.DE), opens new tab and Volkswagen (VOWG.DE), opens new tab held a 40.2% share ​of the global EV battery market in the January-May period, according to SNE Research.Growth ​in the EV market has slowed, particularly in China, where a prolonged price war has pressured ‌automakers and ⁠suppliers alike.CATL has accelerated its expansion in energy storage to capture rising demand from power grids and renewable energy projects. Its lithium-ion energy storage battery shipments nearly doubled in the first quarter, lifting its global market share to 29.9% from 26.9% a year ​earlier, SNE Research said.The ​company has also ⁠stepped up its overseas expansion. In addition to battery plants in Germany and Hungary, CATL raised $5 billion in a Hong Kong listing ​in May, with proceeds earmarked largely for international expansion.CATL's gross margin ​for energy ⁠storage batteries fell to 24.0% in the first half from 25.5% a year earlier, while gross margin for EV batteries, still the company's largest business segment, decreased by 1.8 percentage ⁠points ​to 20.6%.The company also said on Friday that it ​plans to buy back its A-shares worth 20 billion to 40 billion yuan.($1 = 6.7719 Chinese yuan renminbi)

Reporting by ​Qiaoyi Li, Zhang Yan, Xiuhao Chen and Ju-min Park; Editing by Joe Bavier, Kirsten Donovan

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