Li Auto reports no growth in Q2 net earnings, predicts a weak Q3 financial outlook
Li Auto, a leading electric vehicle (EV) manufacturer in China, has released its second-quarter results, shedding light on the company's performance and future expectations.
In the second quarter, Li Auto delivered 111,074 vehicles, marking a 2.30 percent increase year-on-year and a 19.61 percent rise from the first quarter. However, the company's second-quarter revenue was RMB 30.2 billion, below Wall Street's forecast of RMB 32.47 billion. The second-quarter net income was RMB 1.1 billion ($153 million), which is lower than analyst expectations.
Li Auto's vehicle margin for the second quarter was 19.4 percent, a slight decrease from the 19.8 percent achieved in the first quarter. The gross margin also saw a dip, standing at 20.1 percent compared to the 20.5 percent in the previous quarter. The company's SG&A (selling, general and administrative) expenses for the second quarter were RMB 2.7 billion, up 7.4 percent from the first quarter.
Despite the positive year-on-year growth in deliveries, Li Auto's year-to-date deliveries are 2.21 percent lower than the same period last year. The company's R&D expenses for the second quarter were RMB 2.8 billion, a 7.2 percent decrease from the same quarter last year but an 11.8 percent increase from the first quarter.
The second-quarter results represent a 0.4 percent year-on-year decline in net income and a 4.5 percent year-on-year decline in revenue. This performance is a cause for concern, as the company's second-quarter earnings report indicates potential pain ahead this quarter.
Looking forward, Li Auto expects third-quarter vehicle deliveries to range between 90,000 and 95,000 units, representing a year-on-year decline of 41.1 percent to 37.8 percent. This shortfall is expected to lead to a significant miss in revenue estimates, with projected revenue at 24.8 to 26.2 billion RMB versus analyst expectations of about 41.15 billion RMB.
Despite the challenging outlook, Li Auto remains optimistic about its long-term prospects. The company has reportedly adjusted its sales system amid intensifying competition, aiming to improve efficiency and maintain growth in the face of adversity.
As of June 30, Li Auto held a cash position of RMB 106.9 billion, providing a strong financial foundation for the company to navigate through the current challenges and invest in future growth opportunities.
In conclusion, while Li Auto's second-quarter results were mixed, the company's strong cash position and ongoing efforts to adapt to the evolving market conditions offer a glimmer of hope for the future. The third quarter is expected to be a challenging period, but with resilience and innovation, Li Auto aims to continue its growth trajectory in the competitive EV market.
