CATL Q3 net profit up 14.5% to $3.16 billion as profit growth trails 58.6% revenue surge

• Third-quarter net profit rose 14.54% year-on-year, while revenue increased 58.58%.
• Gross margin for the first 9 months was 22.72%, down from 25.31% a year earlier.

CATL (HKEX: 3750), the world's largest electric vehicle battery maker, reported higher third-quarter net profit from a year earlier, but earnings fell from the second quarter as profit growth failed to keep pace with its business expansion.

Net profit attributable to shareholders rose 14.54% year-on-year to 21.25 billion yuan ($3.16 billion) in the third quarter, according to financial results CATL released on Tuesday.

That was down 5.77% from 22.55 billion yuan in the second quarter, CnEVPost calculations show.

Third-quarter revenue rose 58.58% year-on-year to 165.22 billion yuan. Net profit attributable to shareholders excluding non-recurring gains and losses increased 14.86% to 18.86 billion yuan.

For the first 9 months of the year, CATL's net profit attributable to shareholders rose 31.60% year-on-year to 64.53 billion yuan, while revenue increased 56.19% to 442.14 billion yuan.

The company attributed its revenue growth over the period to business expansion. However, cost of sales rose faster than revenue, increasing 61.61% to 341.7 billion yuan.

Gross margin for the first 9 months was 22.72%, down about 2.59 percentage points from 25.31% a year earlier, according to calculations based on revenue and cost of sales in the financial report.

Research and development expenses rose 22.89% year-on-year to 18.52 billion yuan over the same period. Investment income increased 73.11% to 9.07 billion yuan, which the company said mainly reflected its share of investee companies' net profits.

Despite the earnings growth, net cash generated from operating activities fell 23.60% year-on-year to 61.63 billion yuan in the first 9 months.

As of the end of September, CATL's accounts receivable had risen 47.78% from the end of last year to 112.91 billion yuan, while inventories increased 53.15% to 144.77 billion yuan. The company attributed both increases to business expansion.

CATL maintained its lead in the global EV battery market. Its global battery installations rose 25.2% year-on-year to 333.0 GWh in the first 8 months, according to South Korean market research firm SNE Research.

Its global market share increased to 39.4% from 37.7% a year earlier, ahead of second-place BYD (HKEX: 1211) at 15.1%.

China's battery market also continued to expand. Domestic power battery installations rose 14.7% year-on-year to 87.2 GWh in September, setting a new high for the year for the second consecutive month, according to the China Automotive Battery Innovation Alliance (CABIA).

Energy storage batteries grew faster. China's energy storage battery sales rose 104.4% year-on-year to 73.5 GWh in September, accounting for 33.0% of combined power and energy storage battery sales.

CATL ranked first in China's power battery market in September, with installations of 35.49 GWh and a market share of 40.92%.