On March 29, BYD released its 2021 financial report showing that its operating income in 2021 was 216.142 billion yuan, an increase of 38.02% year-on-year.
Among them, the revenue of automobiles and automobile-related products was about 112.489 billion yuan, an increase of 33.93% year-on-year; the revenue of mobile phone parts and assembly was about 86.454 billion yuan, an increase of 43.99% year-on-year; the revenue of secondary rechargeable batteries and photovoltaic business was 16.471 billion yuan, an increase of 36.27% year-on-year. The three major businesses accounted for 52.04%, 40.00% and 7.62% of ATD's total revenue, respectively.
The revenue data is generally good, but BYD has fallen into the embarrassment of "increasing revenue without increasing profits". In 2021, BYD's net profit attributable to shareholders of listed companies was 3.045 billion yuan, down 28.08% year-on-year; net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses was 1.255 billion yuan, down 57.53% year-on-year.
This profit data, in the eyes of the industry, seems to be a less passing report card than BYD itself or compared with other competitors in the industry.
Why doesn't increasing revenue increase profits?
If you look at it quarterly, from the first quarter to the third quarter of 2021, BYD's net profit increased from 237 million yuan to 1.270 billion yuan, but in the fourth quarter, it plummeted to 602 million yuan, and the net profit fell by 52.58% month-on-month. That is to say, the fourth quarter became the main time point for BYD's net profit to decline.
However, in the fourth quarter of last year, BYD's operating income was 70.95 billion yuan, an increase of 30.65% from the previous quarter. In terms of sales, BYD's sales in October, November and December last year were 89,935 units, 98,340 units and 99,112 units, respectively, showing a month-on-month increase, and the total sales volume in the fourth quarter increased by 39.47% compared with 206,100 units in the third quarter.
In this regard, BYD said that the decline in net profit in 2021 is partly due to the rapid contraction of BYD's epidemic prevention product business as the epidemic is effectively controlled; on the other hand, due to the soaring prices of raw materials, BYD has encountered unprecedented cost pressure.
In addition, the 2021 annual report shows that BYD's overall gross profit margin was 13.03%, down 6.36 percentage points year-on-year, and the gross profit margin hit a new low in nearly 14 years; among them, the gross profit margin of mobile phone parts and assembly was 7.57%, down 3.62 percentage points year-on-year; the gross profit margin of automobiles and related products was 17.39%, down 7.81 percentage points year-on-year.
Among them, BYD's automobile business covers related products such as vehicles, batteries and parts, but in the case of batteries, the gross profit margin of BYD's automobile business is less than 20%, and weilai and ideal, which does not include batteries and annual sales of only close to 100,000 vehicles, maintain a gross profit margin of about 20%, and the gross profit margin of Tesla's automobile business with large sales volume is 30%.
From this point of view, the profitability of BYD's auto business does need to be improved.
How did gross margins fall?
Some insiders speculate that the main reason for the decline in BYD's gross profit margin is that in addition to the price increase of upstream raw materials from the cost side, it is also affected by the change of the model structure on the revenue side and the aggressive pricing strategy.
In 2020, the average bicycle price of BYD new energy passenger cars was 156,000 yuan, but by 2021, the average bicycle price of BYD new energy passenger cars was only 143,000 yuan, down 8.26% year-on-year.
The reason for this is the change in the sales structure of BYD's products. WITH A PRICE RANGE OF 216,800-322,800 YUAN, BYD HAN ACCOUNTS FOR A RELATIVELY HIGH PROPORTION OF SALES IN 2020, ALTHOUGH IT HAS ONLY BEEN ON THE MARKET FOR 5 MONTHS, BUT THE CUMULATIVE SALES HAVE REACHED 40,556 UNITS, ACCOUNTING FOR 21.38% OF NEW ENERGY VEHICLES, WITH A LARGE PROFIT MARGIN.
In 2021, the Qin and Song series priced at about 100,000 yuan accounted for half of BYD's annual sales, reaching 395,000 vehicles, accounting for 54.12%, while the sales of 80,000-150,000 yuan Pro EV and Qin Plus DMi increased. The Han and Tang series with higher pricing accounted for a relatively small proportion of BYD's total sales, 16.12% and 7.4% respectively. The sales structure is dominated by low-end models, which makes BYD's profit margin smaller.
In addition, BYD's profit fell sharply last year, and another reason is that the delivery pressure of orders is too large, ANDD will use part of the money it earns to invest in power batteries and new energy vehicle production lines to rapidly expand production capacity.
According to the data, in 2021, BYD invested 10.627 billion yuan in research and development, of which the capitalization investment was 2.637 billion yuan, accounting for 24.8% of the total research and development investment. At the same time, for several factories put into operation in the first quarter of this year, in advance reserves, BYD added a large number of employees last year and paid more than 1 billion yuan in compensation.
At the end of 2021, BYD had a total of 285,684 employees. In 2021, BYD added 63,906 employees, of which production staff increased by 68,206, technicians increased by 8,542, sales staff increased by 5,248, and administrative staff decreased by 18,486.
From the perspective of compensation, the fourth quarter of 2021 spent about 1.56 billion yuan more than the third quarter, of course, the increase in this part of the compensation is not all new recruits, there are also some incentives in advance. But most importantly, these reserve new employees can not directly produce benefits in 2021, but will play the greatest role in ensuring the commissioning and capacity climbing of new factories in the first half of 2022.
It is understood that the problem of insufficient production capacity faced by BYD will not be alleviated in the first half of this year. "At present, the company has accumulated 400,000 units of orders in hand, and it is still increasing." Wang Chuanfu, chairman of BYD, said that the biggest problem in 2022 is not the order problem, but the production capacity problem, conservative estimates, the output in 2022 will reach 1.5 million units, but in the case of a healthy supply chain, it is also willing to impact 2 million units.
Looking forward to 2022, BYD believes that China's economy is facing the triple pressure of demand contraction, supply shock and weak expectations, superimposed on uncertainties such as the spread of the epidemic, high fluctuations in international commodity prices, and geopolitical conflicts, and the economic situation is still complicated. In this case, whether BYD can reverse the phenomenon of increasing revenue and not increasing profits this year is still a question mark.
However, it is worth looking forward to the information disclosed in BYD's financial report, the corresponding revenue amount of BYD's performance obligations that have signed contracts at the end of the reporting period in 2021, but have not yet performed or have not yet been fulfilled, is about 14.933 billion yuan, of which 14.308 billion yuan is expected to be recognized in 2022.