CATL posted over 550% rise in profit in 1Q23

CATL, the world's largest battery manufacturer, posted stronger-than-expected financial performance as the company kept ramping up R&D expenses to solidify its leadership.

According to Chinastarmarket and Shenzhen Securities Times, CATL reported sales for the first quarter to be CNY89 billion (US$12.95 billion), up 82.91% year-on-year and beating Bloomberg's estimated CNY75 billion by 18.45%, with net income rising by 557.98% to CNY9.8 billion, more than the combined profit of the first half of 2022. CATL's gross margin and profit margin for the first quarter was 21.27% and 11.32%, respectively.

Bloomberg analysts Steve Man and Joanna Chen said in a research note ahead of the earnings release that higher battery sales and falling lithium costs likely bolstered CATL's profit surge in the first quarter, especially when the battery demand remains resilient, and earlier prices cuts by Tesla boosted EV sales and demands for CATL's batteries. Bloomberg Intelligence analysts forecasted CATL's battery sales volume might rise 40-50% in 2023.

Global battery demand is still growing rapidly, with consumption of power batteries rising by 71.8% to 517.9 GWh and that of storage batteries increasing by 175.2% to 122.2 GWH, according to SNE Research. CATL grabbed 37% of global power and storage batteries in 2022, up four percentage points from a year ago.

CATL said in March in the annual report that its strong competitiveness could be partly attributed to aggressive R&D and innovations. According to the reports, CATL's R&D expenses for the first quarter of 2023 rose by 81% to CNY4.6 billion, an 81% growth from a year ago. CATL primarily provides NMC and LFP batteries and is developing sodium-ion, condensed, and M3P batteries. CATL announced mass production of Qilin batteries in March and on April 19 unveiled condensed batteries that can power aircraft thanks to the energy density of up to 500 WH/kg.

Source: Bloomberg, April 2023