BYD Co. reported its first quarterly profit increase in more than a year on Friday, as export growth offset a shrinking business. The rebound still fell short of what analysts had modelled.
Second-quarter net profit rose about 30% to roughly 8.2 billion yuan ($1.2 billion), ending four consecutive quarters of decline.
Forecasts from Morgan Stanley, UBS, Citi, Deutsche Bank and CMBI had implied average growth of 48%, which would have produced about 9.4 billion. The company came in roughly 1.1 billion short, or 12% below that consensus.
Revenue for the quarter slipped 3.2% to 194.6 billion yuan ($29.0 billion), a fourth straight quarterly fall, though a marked easing from the 12% drop recorded in the first quarter.
The Half
For the six months, BYD reported revenue of 344,815 million yuan ($51.3 billion), down 7.13%, and net profit attributable to shareholders of 12,325 million ($1.8 billion), down 20.54%. Earnings per share came in at 1.35 yuan, down 21.05%.
Gross profit fell only 2.81% to 64,989 million ($9.7 billion). Because revenue fell faster than cost of sales, group gross margin rose to 18.85% from 18.01% a year earlier.
Automobiles, related products and other products contributed 275,341 million ($41.0 billion), down 8.98% and equal to 79.9% of group revenue. The segment was the principal drag on the top line.
Operating cash flow rose to 37,335 million ($5.6 billion) from 31,833 million, and Chinese press reporting the release put cash reserves at 167,400 million ($24.9 billion).
Research and development (R&D) spending reached 28,900 million ($4.3 billion) — more than double net profit — taking the cumulative total past 270 billion yuan.
Four Quarters Above the Trough
The gross margin improvement is not a single quarter’s mix effect. It is the fifth consecutive quarter of recovery from a specific low point.
Group gross margin ran at 20.1% in the first quarter of 2025, then collapsed to 16.3% in the second as China’s price war peaked.
It has held above that trough in every quarter since — 17.6%, then 17.4%, then 18.8% and now 18.9% — though the recovery paused in the fourth quarter of 2025, when margin slipped 0.2 points.
The quarterly path also shows how uneven the year has been. Revenue in the first quarter of 2026 fell 11.8% to 150,200 million with net profit down 55.4% to about 4.08 billion and net margin at 2.7%.
The second quarter recovered to a net margin of roughly 4.2%, and produced about two thirds of the half’s entire profit.
Exports Carried It
Group vehicle sales reached 1,808,500 units in the half, with overseas shipments of 789,000 — up 67.9% by the company’s count, or above 790,000 and up 71% on Reuters’ calculation from monthly reports. Either way, exports accounted for about 44% of volume.
June alone produced a single-month overseas record of 174,900 vehicles, and July set a new one at 179,841, up 124.3%.
Europe illustrates the shift, with a caveat that matters.
BYD registered 174,144 vehicles across the half against Tesla‘s 170,351, a lead of 3,793 where a year earlier it trailed by roughly 39,000.
The comparison is not like for like: BYD’s figure includes plug-in hybrids while Tesla sells only battery-electric cars, and ACEA data puts both at 2.4% market share. Tesla was also still ahead in June alone, 52,563 to 38,455.
Trial production has begun at its first European passenger vehicle plant, in Szeged, Hungary, and it now has plants open or under construction in Brazil, Hungary, Turkey, Thailand and Indonesia across a business spanning 119 countries.
Combined sales of the premium brands Denza, Fangchengbao and Yangwang at 227,900 for the half, up 61%. They took 14.8% of passenger volume in July against 14.2% in June.
Fangchengbao has been the engine: 41,213 units in July, up 190.6%, now outselling Denza by more than two to one.
All three carry materially higher average prices than the mainstream Dynasty and Ocean lines.
Why Volume Fell While Margin Rose
Group vehicle sales fell about 16% in the half, which sits oddly beside an improving margin until the production side is accounted for.
BYD spent the first half switching from its first-generation Blade battery to a second-generation pack with flash-charging capability.
The line overhaul lengthened delivery cycles on several core models, and the constraint eased only as the changeover wound down — which is the mechanism behind three consecutive months of improving year-on-year comparisons into July.
The domestic trajectory shows it. Chinese sales fell 39.6% across the half, then 22.0% in June, then roughly 9% in July. The decline is narrowing rather than reversing, and it is the narrowing rather than the export record that determines whether the margin improvement holds.
Group sales reached 419,211 in July, up 21.8% and the strongest month of 2026, though still marginally below December 2025’s 420,398.
The Annual Target
The half’s numbers leave BYD a long way from its own guidance.
The company has guided to 5.0 to 5.5 million new energy vehicles for the year, against 4.60 million in 2025 — growth of 8.7% to 19.6%. Sales across the first seven months reached 2,227,722, down 10.5%, which is 44.6% of the lower bound and 40.5% of the upper.
Clearing the floor would require an average of 554,456 vehicles a month across the remaining five months. Clearing the ceiling would require 654,456. Those are 32.3% and 56.1% above July’s total, and above any month BYD has recorded in 2026 or 2025.
The overseas half of the plan is the part running to schedule. Passenger vehicle and pickup exports reached 969,208 through July, 64.6% of a raised 1.5 million full-year target. Domestic guidance of 3.5 to 4.0 million is 31.5% to 36.0% complete.
BYD attributed the half’s profit decline principally to foreign exchange losses, saying its core operating profitability remained stable.
A reading of the results summary indicates a net finance credit of about 2.08 billion yuan for the half against a 1.38 billion charge a year earlier, helped by exchange gains.
The Longer Arc
The half sits inside a clear three-phase pattern.
Revenue grew 96.2% in 2022, 42.0% in 2023 and 29.0% in 2024, with net profit up 445.9%, 80.7% and 34.0% across those years. Profit peaked in 2024 at 40,254 million on revenue of 777,102 million and a 5.2% net margin.
Then 2025 broke it: revenue up just 3.5% to 803,965 million while net profit fell 19.0% to 32,619 million — the first year since the electric ramp began in which revenue rose and profit did not. Group gross margin dropped to 17.7% and the automotive segment margin fell 1.82 points to 20.49%, back to roughly 2022 levels after peaking at 23.02% in 2023.
Net margin has run 5.0% in 2023, 5.2% in 2024, 4.1% in 2025 and 3.57% in the first half of 2026.
Overseas Business
First-half overseas revenue at 181.3 billion yuan against 163.2 billion from China — meaning more than half of BYD‘s revenue would have come from outside its home market for the first time.
The two sum to within 0.1% of reported group revenue, which is consistent.
