CATL, the world's largest electric vehicle (EV) battery manufacturer, doubled quarterly profits despite margins being squeezed by rising prices of key metals such as lithium.
Based in the coastal province of Fujian, the company was helped in the second quarter as Chinese authorities boosted sales of EVs with incentives after a disastrous first quarter saw its sharpest ever quarterly loss.
With overseas clients including Tesla Inc (NASDAQ:TSLA), Volkswagen Group (XETRA:VOW), Ford, BMW and Mercedes-Benz, the companys' share of the EV battery market rose 6.2 percentage points to 34.8% at the end of June.
EV sales growth in the past quarter defied a trend of declining auto sales in major markets like China, Europe and the US, which were hit by Covid and supply chain issues.
However, rising metal prices impacted CATL's profit margin on EV batteries, which dropped to 15.04% from 22% at end-2021.
Among its measures to ease rising costs were long-term contracts with suppliers, recycling materials, and negotiating dynamic battery pricing schemes with automakers.
With contracts to supply batteries in Europe and the United States, where government incentives drive EV demand, the company is expanding overseas.
A US$7.6bn battery plant is to be built by the company in Hungary, the largest in Europe.
The company recorded a 164% increase in its first-half net income, recording a net profit of 6.68 billion yuan (US$974.61mln) from April to June, recovering from a disastrous first quarter in which the company reported its sharpest quarterly loss ever.
Revenue reached 64.29 billion yuan in the second quarter, and earnings for the six months to June jumped 82% to 8.17 billion yuan (US$1.2bn), as CATL weathered ongoing volatility in raw material prices.