Byd Company Limited posted a challenging first half of fiscal year 2026, with both revenue and net profit declining year over year, yet the company's underlying dynamics are shifting in a more constructive direction as gross margins improved and international operations gained momentum.
According to financial results released on August 28, the company generated operating revenue of RMB 344.815 billion during the period, a decrease of 7.13% compared to the prior year. Net profit attributable to shareholders reached RMB 12.325 billion, down 20.54% year over year. The automotive segment, including related products and other offerings, contributed RMB 275.341 billion in revenue, reflecting an 8.98% decline and serving as the primary drag on the overall top line.
However, the profit picture was not uniformly weak. Gross profit for the half year amounted to RMB 64.989 billion, declining 2.81% year over year, yet the gross margin improved to 18.85% from 18.01% in the same period last year. The company explicitly attributed this margin expansion to growth in its overseas new energy vehicle business. Additionally, operating cash flow reached RMB 37.335 billion, exceeding the RMB 31.833 billion recorded in the prior year period, indicating that cash generation capacity strengthened even as profits contracted.
Overseas markets are emerging as a pivotal growth engine for Byd's automotive operations. The company exported 792,000 vehicles in the first half, representing a robust 67.8% increase year over year. Revenue generated outside of China climbed to RMB 181.268 billion, up from RMB 135.358 billion in the corresponding period last year. Concurrently, the company's three premium brands 鈥?Fang Cheng Bao, Denza, and Yangwang 鈥?recorded combined sales growth of 61% year over year, with their share of total passenger vehicle sales rising to 12.8%. This demonstrates that globalization and premiumization strategies are advancing simultaneously.
Beyond its traditional automotive operations, Byd continues to invest aggressively in future growth avenues. Research and development expenditures reached RMB 28.9 billion for the half year, bringing cumulative R&D investment to over RMB 270 billion. The company is actively advancing technologies such as the second-generation blade battery, flash charging, intelligent driving systems, and AI computing infrastructure.
Revenue and profit declined, yet gross margin bucked the trend
From a financial standpoint, Byd's first-half performance pressure was primarily concentrated in its automotive division.
The company reported operating revenue of RMB 344.815 billion, a year-over-year decrease of 7.13%. Net profit attributable to shareholders fell 20.54% to RMB 12.325 billion, with earnings per share at RMB 1.35, down 21.05%. The automotive segment generated RMB 275.341 billion in revenue, an 8.98% decline, accounting for 79.85% of total revenue. Electronics and other products contributed RMB 69.405 billion, up 0.96% year over year, representing 20.13% of the total.
The steeper decline in profit relative to revenue was attributed by the company to two factors: reduced earnings from the new energy vehicle business and foreign exchange losses stemming from currency fluctuations.
However, the gross margin perspective paints a more constructive picture than the income statement suggests at first glance. Gross profit for the period totaled RMB 64.989 billion, down 2.81% year over year, yet the gross margin improved from 18.01% to 18.85%, an expansion of 84 basis points.
This indicates that despite lower revenue scale, the company has not resorted to simple price cuts to drive volume. Instead, improvements in product mix have provided meaningful support to profitability. The growth in overseas new energy vehicle sales was identified as the principal driver of the margin enhancement.
Overseas expansion emerged as the brightest spot in the automotive segment
While the domestic market remains intensely competitive, international markets have become Byd's most significant source of incremental growth in the first half.
Byd exported 792,000 vehicles during the period, a year-over-year surge of 67.8%, with the export share of total sales rising notably. Meanwhile, overseas revenue reached RMB 181.268 billion, an increase of approximately 33.9% year over year, now accounting for more than half of the group's total revenue.
This marks a critical structural shift within the interim report: Byd is actively reducing its dependence on the Chinese automotive market as its sole growth driver.
The company has already commenced production at facilities in Brazil, Thailand, and other locations, while continuing to develop additional overseas manufacturing capacity. By establishing a comprehensive localized ecosystem encompassing R&D, manufacturing, logistics, and sales, Byd aims to enhance its local capabilities. The company believes that localization abroad will serve as a new engine for sustained high-speed, high-quality growth.
Premiumization is also progressing in tandem. Fang Cheng Bao, Denza, and Yangwang collectively achieved 61% year-over-year sales growth, raising their combined share of total passenger vehicle sales to 12.8%. Notably, the Denza Z9GT and Denza D9 have already been launched in European markets, with the Z9GT's official starting price set at approximately EUR 115,000.
From a profitability perspective, this structural transformation deserves particular attention given the company's explicit confirmation that overseas new energy vehicle growth drove overall gross margin improvement. As international sales volume continues to expand, globalization represents not merely incremental unit sales but also a strategic lever for enhancing product mix and profitability.
Second-generation blade battery and flash charging technology target the refueling experience
In March, Byd officially unveiled its second-generation blade battery and flash charging technology, simultaneously launching its "Flash Charging China" initiative.
The company stated that the flash charging technology delivers capabilities including "5-minute preparation, 9-minute full charge, and 3-minute replenishment at minus 30 degrees Celsius," specifically addressing the long-standing challenges of charging speed and low-temperature charging performance in new energy vehicles.
The strategic rationale extends beyond introducing a single new technology; Byd is seeking to establish a comprehensive charging ecosystem centered on its core battery technology.
Should flash charging technology proliferate across more vehicle models and be supported by an expanded charging network, its significance would extend beyond individual vehicle competitiveness to enhance the overall user experience and brand positioning. The company's interim report identifies the second-generation blade battery and flash charging ecosystem as key pillars for driving the next phase of growth.
R&D investment remains elevated while cash flow improved
Despite earnings pressure, Byd has not curtailed its research and development expenditures.
R&D investment for the first half totaled approximately RMB 28.9 billion, bringing cumulative spending to over RMB 270 billion. For context, the company's attributable net profit during the same period was RMB 12.325 billion, meaning R&D expenditures exceeded net profit by a factor of more than two.
Cash flow metrics offer an alternative perspective on the company's financial health. Operating cash inflow reached RMB 37.335 billion for the half year, surpassing the RMB 31.833 billion recorded in the prior year period, which the company attributed primarily to reduced cash payments for goods purchased and services received.
As of the end of June, Byd held approximately RMB 167.4 billion in cash reserves against total borrowings of around RMB 120.055 billion. From a balance sheet and cash flow standpoint, the company retains substantial financial firepower to support overseas factory construction, sustained R&D investment, and the commercialization of new technologies.
For Byd, the first half of 2026 represents a transitional phase in its growth trajectory: domestic automotive operations are pressuring revenue and profit, yet overseas sales, premium brands, product mix, and gross margins are all showing improvement. Simultaneously, the company continues to deploy significant R&D resources toward flash charging, battery technology, intelligent driving, and AI computing infrastructure, positioning itself for the next wave of growth.
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