BYD now sells over 40% of its cars outside China

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Overseas shipments jumped 71% in the first half to more than 790,000 vehicles, accounting for 44% of total sales

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BYD reported Friday that second-quarter net profit reached 8.2 billion yuan ($1.22 billion), up 30% year-on-year, snapping a losing streak that had stretched across four consecutive quarters. The result marked the first time in over a year that the Chinese automaker has grown quarterly profit, with international EV demand providing the lift that its sluggish home market could not.

The profit rebound fell short of analyst expectations, however. Analysts at Morgan Stanley $MS, UBS, Citi, Deutsche Bank, and CMBI had collectively penciled in a roughly 48% second-quarter profit gain, making the actual outcome a meaningful shortfall. On the top line, revenue came in at 194.6 billion yuan, a 3.2% year-on-year decrease that marked the fourth straight quarter of contracting sales.

Overseas shipments were the primary driver of the earnings recovery. First-half exports climbed 71% to more than 790,000 vehicles, accounting for 44% of total sales. BYD's overseas business, which accounted for 53% of total revenue, saw its gross profit margin climb to 22% in the first half—up 1.9 percentage points—as a 34% year-on-year gain in operating revenue outpaced a 31% rise in operating costs. The company's overall gross profit margin expanded to 18.85% in the first half, up from 18.01% in the year-ago period, a gain BYD credited to its growing overseas vehicle business.

BYD's Hong Kong-listed shares have gained 26% since the start of the quarter, a run that has added close to $20 billion in market capitalization as investors trained their focus on the company's expanding export business.

"Exports are really where the carmaker is finding some relief," Zavier Wong, an analyst at trading platform eToro, said, according to Bloomberg. "Selling overseas gives them cleaner pricing, away from China's intense discount war, lifting their average car price naturally."

At home, conditions remain difficult. Passenger car sales across China fell 20% in the first half, according to Bloomberg, and BYD has not escaped the relentless pricing pressure bearing down on the industry. Yale Zhang, managing director at Shanghai-based research firm Automotive Foresight, said domestic vehicle sales are declining and price competition remains fierce, while higher tariffs in some countries, alongside rising marketing and research costs, could limit profit gains from overseas markets.

BYD's results come after the company posted a 55% drop in first-quarter net income to 4.08 billion yuan, as repeated price cuts driven by competition from rivals including Xiaomi and Geely eroded per-vehicle margins. Overseas shipments had already been outpacing domestic deliveries in that period, with international shipments making up roughly 45% of first-quarter deliveries.

Among domestic rivals also reporting this earnings cycle, Geely Auto posted a 46% increase in first-half core profit, while SAIC Motor's core attributable net profit rose 72% year-on-year to 7.87 billion yuan in the first half.

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