China battery giant CATL reports slower Q4 profit growth

SHANGHAI (Reuters) – Chinese battery giant CATL posted sharply slower growth in fourth quarter net profit, after COVID-19 outbreaks and consumer caution hit electric vehicle (EV) demand in the worlds largest auto market.

The world‘s largest battery maker’s profit during October to December increased 60.6% from the same period in 2021, according to Reuters calculations based on a company filing. That compares to 130.9% and 164% growth in the third and second quarters, respectively.

EV sales growth in China largely slowed in the fourth quarter as the economy was heavily disrupted by efforts to curb the spread of COVID-19 and then the sudden ending of the virus prevention policy, which unleashed a massive wave of infections across the country.

Tesla, CATLs largest client by volume, cut output in its Shanghai plant by more than a third in December from November, China Passenger Car Association data showed, as the U.S. automaker grappled with rising inventory.

The trend has extended to the first quarter even though Tesla and its Chinese rivals have started slashing prices of their best-selling models to boost sales in what analysts have described as a price war.

CATL offered discounts to some Chinese automaking clients, Reuters reported last month, reflecting a downturn in the price of lithium and a bid to win more orders.

CATL recorded full year profit of 30.7 billion yuan ($4.41 billion), according to the companys filing to the Shenzhen Stock Exchange, largely in line with its estimates in January.

The gross profit margin of its battery products to power electric vehicles, which contributed the majority of CATLs revenue, stood at 17.2% in 2022, down 4.8% from a year ago, according to the filing.

(Reporting by Zhang Yan and Brenda Go; Editing by Bernadette Baum, Kirsten Donovan)