(Yicai) July 29 -- Shares of Contemporary Amperex Technology fell despite the world's biggest battery maker reporting its strongest first-half profit since going public six year ago thanks to surging demand from the electric vehicle and energy storage sectors.

CATL [SHE: 300750] closed 2.6 percent lower at CNY184.53 (USD25.43) a share today. The benchmark Shenzhen Component Index came off 1 percent.

Net profit jumped 10.4 percent to CNY22.9 billion (USD3.2 billion) in the six months ended June 30 from a year earlier, CATL said in an earnings report released late on July 26. That was the Ningde-based firm’s best performance since its initial public offering in June 2018. Second-quarter profit was CNY12.4 billion, exceeding CNY10 billion for the fourth straight quarter.

Operating revenue fell 11.9 percent to CNY166.8 billion (USD23 billion) in the first half, with income from overseas markets dropping 25 percent to CNY50.5 billion. Gross profit margin widened 8.2 percent to 29.7 percent.

CATL's German factory is still increasing its capacity and aims to break even this year, the firm noted, adding that its Hungarian plant has been upgrading and improving in production line design and operations, drawing from the experience of the base in Germany. 

In addition, because the Hungarian factory is large, the cost is expected to be advantageous compared with the German plant, CATL pointed out. The company is also promoting tie-ups with overseas customers on the License Royalty Service, which does not require capital spending for constructing production bases and has a relatively low risk, it added.

CATL's revenue from power battery systems was CNY112.6 billion in the first half, down 19 percent from a year earlier, but because of the decline in operating costs, the gross profit margin widened 6.6 percent to 26.9 percent, it said. Income from energy storage battery systems climbed 3 percent to CNY28.8 billion, with a gross profit margin of 28.9 percent.

Despite the decline in unit prices, gross margins remain solid thanks to the cost slump, CATL executives said on an earnings conference call, adding that the unit gross profit will likely stay steady as commodity prices stabilize.

Regarding fluctuations in raw material prices and supply risks, CATL has taken measures, including carrying out mining itself, investment cooperation, and long-term orders, to ensure the safety and stability of the supply chain, the company said 

Battery-grade lithium carbonate prices fell to CNY85,000 (USD11,720) per ton from CNY100,000 (USD13,790) at the beginning of this year, according to data from Shanghai Metals Market.

CATL's capacity utilization was 65.3 percent in the first six months, up 4.8 percent from a year ago. The company has a tight production schedule and abundant orders for this half, and that is expected to increase, it said.

The power battery and energy storage businesses are still experiencing high-speed growth, according to a report by Sinolink Securities. CATL's net profit will likely reach CNY50 billion this year, it said. Minsheng Securities predicts profit will come in at CNY53 billion for 2024, a more than 20 percent increase on last year.

Editor: Martin Kadiev