SHANGHAI (Reuters) – CATL, a Chinese electric vehicle (EV) battery giant, forecast its net profit in the July-September quarter to nearly triple from a year-ago period, buoyed by rapid expansion in production to power the growth of EVs worldwide.
The company is the world’s biggest battery maker and accounts for more than a third of global EV battery sales.
CATL, a supplier to U.S. carmaker Tesla Inc, expects its third-quarter net profit to increase to between 8.8 billion yuan ($1.23 billion) and 9.9 billion yuan, up from 3.3 billion yuan last year, CATL said in a stock exchange filing late Monday.
It expects net profit for the first nine months of the year to more than double from a year-ago period.
“The company … has ramped efforts in market expansion in addition to the capacity planned earlier,” CATL said in the filing. “Production and sales significantly increased, which helped to secure its persistently leading position in the global market and result in the rapid profit growth.”
CATL has accelerated its expansion into overseas markets with contracts to supply batteries to major carmakers including Mercedes Benz Group and BMW in Europe and Ford Motor Co in the United States, where government incentives are driving demand for EVs.
The Chinese firm announced in August that it would build a $7.6 billion battery plant in Hungary, Europe’s largest so far.
To offset rising costs of battery materials, CATL has taken measures including signing long-term contracts with suppliers, recycling materials and negotiating a dynamic battery pricing scheme with automakers.
CATL’s shares rose as much as 4% on Tuesday following its strong outlook. The company’s shares lost more than 30% so far this year.
($1 = 7.1665 Chinese yuan)
(Reporting by Zhang Yan and Brenda Goh in Shanghai; Editing by Sherry Jacob-Phillips)