Chinese company CATL beat expectations for full-year earnings thanks to a strong fourth quarter. The company, a major battery supplier to Tesla and others, cited global demand for electric vehicles.
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Contemporary Amperex Technology, or CATL, revealed in a China regulatory filing Thursday that net profit rose 92.9% to 30.72 billion renminbi ($4.4 billion) in 2022. That topped analyst expectations of 28.8 billion RMB.
Its full-year revenue jumped 152% to a record RMB 328.6 billion ($47.3 billion), as estimated.
For the fourth quarter, CATL recorded revenue of RMB 118.25 billion ($16.98 billion). This marked an increase of 107.5% year over year and 21.4% from the third quarter.
Its fourth quarter net profit was RMB 13.14 billion, up 60.6% from a year ago and 39.5% from the third quarter.
CATL’s gross margin improved to 22.6% in Q4 after falling in Q1 and Q3 due to higher battery raw material prices.
“Global market demand for new energy vehicles continues to grow rapidly, leading to a rapid increase in the scale of the electric battery industry,” CATL said.
The world’s largest EV paste maker
The company supplies several Western automakers in addition You’re here (TSLA), including Mercedes-Benz (DAVIF), BMW (BMWYY) and volkswagen (VWAGY).
In February, Ford (F) announced that it would license CATL’s technology to manufacture lithium iron phosphate (LFP) batteries at a $3.5 billion factory in Michigan.
CATL also supplies Chinese EV makers, including US-listed startups Nio (NIO), XPeng (XPEV) and Li-Auto (LI).
The company, based in Fujian province, is the world’s largest electric vehicle battery maker, accounting for 37% of global sales in the first 11 months of 2022, according to SNE Research in South Korea.
China BYD (BYDFF) and South Korea’s LG Energy Solution won a joint second place with a share of 13.6% each.
Electric vehicle stocks in China
CATL shares jumped 2.2% on the Shenzhen Stock Exchange on Friday. Chinese electric vehicle stocks have sold off significantly as a series of steep price declines fuel fears of overcapacity.
CATL is one of the main holding companies in the KraneShares Electric Vehicles & Future Mobility Index ETF (CARS).
BYD shares, which trade over-the-counter in the United States, fell 5.4% to 25.82 on Friday.
US-listed shares of Li Auto rose slightly on Friday. Nio and Xpeng fell around 2% each.
Tesla stock rebounded 0.8% to nearly 174 after a four-day decline.
On Friday, CATL confirmed that it was negotiating new prices with electric vehicle customers.
The company already owns some mineral resources. But it does not want to reap windfall profits, management said, according to local media.
Earlier reports suggested it was offering reduced battery prices to select customers, including Nio, Li Auto and Huawei, in a bid to fend off growing competition, including from BYD.
Sales of so-called new energy vehicles (NEVs), which include all-electric, hybrid and hydrogen vehicles, rebounded in February after a seasonally weak January due to the Chinese New Year holiday.
NEV sales in China more than doubled in 2022.
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