In the first half, CATL's gross margin was 18.68 percent, up 4.2 percentage points from 14.48 percent in the first quarter.
Chinese power battery giant Contemporary Amperex Technology Co Ltd (CATL, SHE: 300750) saw significant revenue and profit growth in the first half of the year, as well as a recovery in previously depressed gross margins.
In the first half, CATL posted revenue of 112.97 billion yuan ($16.5 billion), up 156.32 percent from a year earlier, according to a financial report released Tuesday.
The company's net profit attributable to shareholders of the listed company in the first half of the year was RMB 8.17 billion, up 82.17 percent year-on-year.
Considering CATL's revenue and net profit in the first quarter were RMB 48.68 billion and RMB 1.49 billion, respectively, its revenue and net profit were RMB 64.29 billion and RMB 6.68 billion in the second quarter, up 158 percent and 164 percent year-on-year, respectively.
In the first half of the year, CATL's gross margin was 18.68 percent, up 4.2 percentage points from 14.48 percent in the first quarter.
As raw material prices have continued to rise in recent years, CATL's earnings performance has been under pressure.
From 2019 to 2021, CATL's gross margin was 29.06 percent, 27.76 percent, and 26.28 percent, respectively. By the first quarter of this year, the figure dropped to 14.48 percent, a record low.
The declining gross margin had caused CATL shares to plunge earlier this year. The company said in early May that it bore major pressure from raw material price increases in the first quarter to maintain the healthy development of the new energy vehicle (NEV) and power battery industries, which was the main reason for the gross margin declines.
In the minutes of an investor relations event released yesterday evening, CATL said it had largely completed negotiations with most of its power battery customers on price increases for the second quarter, and was still negotiating price adjustments with some clients in the energy storage sector.
In the first half of the year, CATL's gross margin in its main business of power battery systems was 15.04 percent, a decrease of nearly 8 percentage points year-on-year. Its gross margin in the energy storage systems business fell by more than 30 percentage points to 6.43 percent.
The energy storage segment has a different business model and customers than the power battery segment, with the former's slow price pass-through and greater sensitivity to cost changes resulting in low gross margins in the first half, CATL said in its meeting minutes.
CATL's battery business outside of China saw revenue rise 123.35 percent year-on-year in the first half, but gross margins fell 18.6 percentage points to 15.15 percent from a year ago. Its battery business in China posted a gross margin of 13.42 percent.
Qilin Battery's Progress
CATL officially unveiled its highly anticipated CTP (cell to pack) 3.0 Qilin Battery on June 23, claiming to bring battery system integration to a new level.
Qilin Battery allows volume utilization to exceed 72 percent and energy density to reach 255Wh/kg, which can support vehicles to have a range of 1,000 kilometers, the company said in its financial report on Tuesday, repeating what it previously announced.
Separately, local media China Securities Journal reported Tuesday that CATL will officially announce the first models equipped with Qilin Battery at the 2022 World New Energy Vehicles Congress, which will be held from August 26 to August 28.
Previously, car brands including Li Auto, Neta, and Lotus have indicated that they will use CATL's Qilin Battery.
The launch of Qilin Battery is a milestone in CATL's new product development that will help it seize more say in the industry, according to a team from Guosheng Securities cited by China Securities Journal.
With the launch of the innovative technology standard, the company extends its lead, while intense R&D investment and efficient R&D conversion efficiency are expected to maintain its competitiveness, the team said.
CATL unveils Qilin Battery, says it can easily achieve 1,000 km vehicle range