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AsianFin -- Chinese battery giant Contemporary Amperex Technology Co., Ltd. (CATL) reported a 15.01% jump in net profits for 2024, although revenues in the same period fell significantly.
The company's annual revenue dropped to 362 billion yuan (about US$ 52 billion), a decrease of 9.7%, marking the first negative growth in its operational track record . However, CATL's net profit surged by 15.01% year over year to 50.7 billion yuan, which translates to approximately 140 million yuan in daily earnings.
Operating cash flow for the year was robust at 97 billion yuan, and the company's monetary funds exceeded 300 billion yuan, allowing CATL to declare a cash dividend of 45.53 yuan per 10 shares, with total dividends nearing 20 billion yuan.
Despite a decrease in revenue, CATL maintained its dominance in the electric vehicle (EV) battery market in 2024 by securing a 37.9% global market share for EV batteries, marking its eighth consecutive year in the top spot. Additionally, its energy storage battery shipments accounted for 36.5% of the global market, holding its leadership position for the fourth straight year.
The decline in revenue was primarily driven by the significant drop in raw material prices, which led to a reduction in product prices. Lithium carbonate, a key material for battery production, saw its price fall from 100,000 yuan/ton in early 2024 to 75,000 yuan/ton by year-end. This price reduction contributed to a 25.26% decrease in the average selling price of CATL's power battery systems from 0.889 yuan/Wh in 2023 to 0.664 yuan/Wh.
Despite a solid increase of 18.85% in electric vehicle (EV) battery sales to 381 GWh, the drop in unit prices in 2024 more than offset the growth in sales, leading to an 11.29% decline in revenue from the EV battery business. The EV battery business accounted for nearly 70% of CATL's total revenue last year. The competition in the domestic market has intensified, with second-tier EV battery manufacturers like CALB and EVE Energy gaining market share as automakers adopt a multi-supplier strategy.
The overall slowdown in the new energy vehicle market, particularly in the latter half of 2024, also contributed to the reduced revenue. The market's penetration rate had peaked at over 50% in July but fell below 50% by December, signaling a shift to more stable, slower growth for the industry.
CATL's net profit growth highlights its ability to manage costs effectively. The company capitalized on its investments in upstream material suppliers such as Tianhua Super Clean and CMOC, benefiting from reduced raw material prices. Additionally, CATL's efficient inventory management helped minimize risks from inventory impairment, with provisions for inventory write-downs staying well below the industry average.
CATL has focused on technological innovation to bolster its market share. In 2024, the company introduced several new products, including the Shenxing, Kirin, and Xiaoyao series, which are tailored to diverse market needs. The company anticipates that by 2025, the shipment proportion of these advanced battery products will rise from 30%-40% to 60%-70% of its total product range.
Notable launches included the Shenxing Plus battery, which boasts over 1,000 km range and 4C ultra-fast charging, the Kirin high-power battery with over 1,300kW discharge power, and the Xiaoyao hybrid battery with a 400 km range and ultra-fast charging. These innovations underscore CATL's strategy of strengthening its technological moat by focusing on high value-added products, ensuring better margins amid ongoing price pressures in the market.
As CATL faces challenges in the EV battery sector, the company is actively pursuing a "second growth curve" focused on energy storage, battery swapping, and expanding its presence in overseas markets.
The company has made significant strides in the battery swapping business, securing a strategic partnership with NIO to develop a global network of swapping stations. By 2025, the companies aim to establish 1,000 "chocolate" battery swapping stations, with plans to expand to 30,000-40,000 by 2030. Industry experts see this as part of CATL's broader strategy to leverage its battery technology to drive the energy service ecosystem, potentially positioning the company as a leader in global energy infrastructure.
CATL's energy storage business also emerged as a key growth driver in 2024, with sales reaching 93 GWh, a 34.32% year-on-year increase. The company's market share in global energy storage was 36.5%, maintaining the top position for four consecutive years. Energy storage revenue grew 34.32% to 57.29 billion yuan, now accounting for 15.83% of total revenue. CATL's energy storage products, including the Tianheng energy storage system and PU100 energy storage product, have seen strong demand in overseas markets, particularly in the U.S. and Europe.
In addition to its focus on innovation and diversification, CATL is also seeking to raise money through a listing on the Hong Kong Stock Exchange. On March 25, the company received approval from the China Securities Regulatory Commission to issue up to 220 million shares for its Hong Kong listing. CATL plans to raise approximately $5 billion (36.5 billion yuan), which will primarily be used to fund its overseas expansion and international business development.
The Hong Kong listing is seen as a strategic move to support CATL's extensive global operations. With over 11 billion euros invested in projects worldwide, the funds raised will provide much-needed financial support for its international initiatives. Analysts predict that the listing could elevate CATL's valuation, especially as it seeks to transition from a "battery supplier" to an "energy ecosystem leader."
This capital expansion aligns with CATL's long-term vision of solidifying its position as a global leader in the energy revolution, with its technology and services playing a pivotal role in the transformation of the global energy landscape. The move also positions CATL to better mitigate geopolitical risks and deepen ties with global automakers and resource giants, potentially transforming its business model from manufacturing to technology services.
As CATL looks to the future, its ability to successfully execute its second growth curve in energy storage, battery swapping, and international markets will be crucial in shaping the next phase of its growth and maintaining its leadership in the global energy sector.
(Note: 1 USD equals 7.18 yuan)
