BYD shares sink as profits plunge 99%

BYD plunged to a two-year low in Hong Kong after profit fell 99 per cent, extending a slump that has erased $7 billion (Dh25.71 billion) in market value from the Chinese automaker part-owned by Warren Buffett\'s Berkshire Hathaway. Net income fell to 8.62 million yuan in the second quarter from 717 million yuan a year earlier, according to figures derived by subtracting first-quarter from first-half figures. The Shenzhen-based automaker\'s vehicle sales have declined every month in the 12 months to July as the popularity of its best-selling model, the F3 sedan, has waned. BYD fell 14 per cent to HK$16.18 Tuesday, the lowest close since April 15, 2009. The stock has tumbled 81 per cent from its record close on October 23, 2009, reversing a more than 10-fold surge after Berkshire Hathaway unit MidAmerican Energy Holdings agreed to buy a 9.9 per cent stake in September 2008. \"We keep frequent contact with Buffett and he can see our various operational data,\" BYD Chairman Wang Chuanfu said in Hong Kong yesterday when asked whether Buffett plans to reduce his holdings. \"I believe we will maintain a good relationship with him.\"Buffett\'s stake in BYD has lost about $2 billion of value since its peak. By comparison, he booked a $3.5 billion profit in 2007 selling a stake in PetroChina, the country\'s largest oil producer, that he acquired for about $500 million. BYD\'s slump adds to losses for Berkshire Hathaway, which has dropped 15 per cent in US trading this year as global equity markets retreated.Berkshire Vice-Chairman Charles Munger said July 2 that BYD has the ability to recover from missteps because its executives \"just put their head down and try harder\" when they fail. Rivals General Motors and Honda Motor added new models, and China\'s government phased out buying incentives and imposed purchase restrictions to curb congestion. \"They need to figure out a way to revive sales,\" said Chen Xiaoxia, a Hong Kong-based analyst at First Shanghai Securities, which has a \"hold\" rating on the stock. \"BYD didn\'t have another best-selling model like the F3 to beef up sales.\" Wang said he\'s confident of selling more vehicles in the second half because more models will be on the market. The automaker will introduce the G6 sedan in September and may step up production of its S6 sport-utility vehicle from 6,000 units in August to 15,000 units a month by year\'s end to meet demand that is outpacing supply, he said. Profit in the first six months of the year dropped 89 per cent to 275.4 million yuan as the end of preferential taxes for small cars led to a drop in sales, the company said on Monday in a statement to the Shenzhen Stock Exchange. From / Gulf News