BYD H1 2026 Earnings: Profit Falls 20.5% as Overseas Sales Pass Half of Revenue

BYD's profit attributable to owners of the parent fell 20.54% to RMB 12,325 million in the six months to 30 June 2026, on revenue down 7.13% to RMB 344,815 million. It is the company's first interim profit decline since 2021. Underneath the drop sit two different companies. At home, revenue from mainland China, Hong Kong, Macau and Taiwan fell 31% to RMB 163,547 million. Abroad, revenue rose 34% to RMB 181,268 million, so 52.6% of BYD's sales now come from outside China. And the half hides a turn: take out the first quarter the company had already reported, and second-quarter profit rose about 30% year on year.

The Headline Numbers​

Six months ended 30 June 2026 versus the same half of 2025, from the 2026 Interim Results Announcement filed on HKEX on 28 August 2026 (consolidated income statement, pp. 64–65). BYD's H-share filings use the PRC Accounting Standards for Business Enterprises (ASBE, sometimes written CASBE), not IFRS. That is the basis stated in Note 2 of the interim financial statements, and it is the basis of every period in our ledger. All money cells are RMB millions as filed, with no USD conversion.

Revenue fell 7%, yet gross profit fell only 3%. Gross margin actually improved, from 18.01% to 18.85%, and management credits "the growth of overseas new energy vehicle business" for that (MD&A, p. 41). So the profit drop did not come from the cars. It came from two lines lower down.

The first is finance expenses. A year ago BYD booked RMB 3,247 million of net finance income. This half it booked a RMB 5,096 million cost, a swing of RMB 8.3 billion. Interest expense (RMB 1,915 million) and interest income (RMB 1,697 million) nearly cancel out, so most of the swing is what the MD&A calls "foreign exchange losses from changes in foreign exchange rates" (p. 41). That is the price of earning more than half of revenue in currencies other than the renminbi.

The second is a line that went the other way. Expensed R&D fell 21% to RMB 23,307 million. The MD&A reports total R&D investment of "approximately RMB28.9 billion" for the half (p. 13). The gap is capitalised development: the development-expenditures asset rose from RMB 5,971 million to RMB 6,484 million, and more spending sits in intangible assets. Without that shift, the profit decline would have been deeper.

There are also two net-income figures. Net income of RMB 12,334 million includes non-controlling interests, and it is the figure our Beancount transaction balances to. RMB 12,325 million attributable to owners of the parent is the headline BYD reports. This half the two differ by only RMB 9 million. A year ago they differed by RMB 528 million.

One correction to the story going around. The claim that this is BYD's first interim profit drop "in six years" does not match the filings. BYD's 2021 interim results announcement reported attributable profit of RMB 1,174 million, down 29.41%. According to the 2022–2025 interim announcements, interim profit then rose in each of the four years after: RMB 3,595M in 2022, RMB 10,954M in 2023, RMB 13,631M in 2024 and RMB 15,511M in 2025. H1 2026 is the first decline in five years.

Revenue Deep Dive: Two Markets Moving in Opposite Directions​

The geographic split comes from segment note 3 of the interim financial statements (p. 77), which attributes revenue to the customer's location:

A year ago overseas customers were 36.5% of revenue. Now they are 52.6%, more than half. The shift is large: RMB 72 billion of domestic revenue disappeared, and RMB 46 billion of overseas revenue replaced most of it.

Management describes both sides plainly. On the home market, it calls the first half "sluggish domestic demand and robust export growth, alongside the phasing-out of legacy capacities and the rise of emerging segments" (MD&A, p. 8). It cites the phase-out of purchase-tax exemptions for NEVs and the winding-down of the trade-in subsidies, and says consumers "remained cautious about automobile purchases." According to CAAM data quoted in the filing, China's total vehicle sales fell 4.1% in the half.

Abroad, the language is a market expansion signal. "Its overseas business maintained robust growth momentum, delivering strong results across Europe, Latin America, Asia-Pacific, and the Middle East and Africa," and overseas business "has grown into a core growth driver" (MD&A, p. 23). The volume behind it: exports of 792,000 units, up 67.8% year on year, out of about 1.81 million NEVs sold in the half (MD&A, pp. 6, 14).

By product segment (revenue disaggregation, note 4, pp. 80–81):

(These are the note's contract-revenue totals of RMB 344,511 million, RMB 304 million below operating revenue.)

The electronics arm, which assembles phones and now builds servers and liquid-cooling products for AI data centres, was flat. The whole revenue decline came from autos. Within autos, the overseas half of the business is more profitable than the domestic half. The note's cost disaggregation, by place of operation, puts overseas automotive revenue at RMB 129,487 million against cost of RMB 92,712 million, a 28.4% gross margin. Domestic automotive is RMB 145,581 million against RMB 120,836 million, just 17.0%. So every car that moves from the domestic column to the export column raises the group's margin, and that is the mechanism behind the 84-basis-point gross-margin gain.

The Margin Story​

Gross margin peaked at 20.2% in FY2023 (as originally filed). It fell for two years as the domestic price war spread, and it recovered in this half only because the export mix improved. Net margin did not recover with it: it went from 4.3% in H1 2025 to 3.6% in H1 2026. The difference is below gross profit: the FX swing, heavier asset impairments (RMB 1,537 million against RMB 1,254 million), and a RMB 953 million loss on derecognising receivables measured at amortised cost, up from RMB 48 million. That loss comes from selling receivables early to raise cash.

The release has no selling-price language, and that absence tells you something. The closest line is a cost-side claim: "With the continuous optimization of its product mix, the Group effectively offset the impact of upstream raw material price fluctuations" (Highlights, p. 5). BYD is not saying prices went up. It is saying the product mix absorbed cost inflation. The ledger agrees: operating costs fell 8.1% while revenue fell 7.1%.

The One Big Question: Is the Second Quarter the Turn?​

The interim report covers the half as one period. BYD's A-share listing also requires quarterly reports, and the 2026 First Quarterly Report (filed on HKEX on 28 April 2026) gives the first three months on the same ASBE basis. Subtracting Q1 from H1 gives an implied second quarter:

Sources: H1 figures from the 2026 and 2025 interim results announcements. Q1 figures from the 2026 First Quarterly Report (revenue RMB 150,225 million, down 11.82%; attributable profit RMB 4,085 million, down 55.38%) and that report's comparative column for Q1 2025 (RMB 170,360 million and RMB 9,155 million). These quarters are derived, not filed. BYD does not publish a standalone Q2 statement, so our ledger records the half-year (FY2026H1) and no Q2 period.

Read this way, the half was one very bad quarter followed by a better one. Q1 profit fell by more than half. Q2 profit rose about 30% and roughly doubled from Q1, on revenue down only 3%. That fits the MD&A's account of "temporary challenges to domestic demand in the first quarter" and a "month-on-month sales recovery" (p. 14).

The balance sheet tempers the optimism:

Inventory grew by RMB 51.6 billion in six months. Inventory turnover stretched to about 109 days from about 79 a year earlier, which the MD&A puts down "mainly" to "the increase in overseas business and the long shipping cycle" (p. 42). An export business carries cars on ships and in foreign dealer networks, so more of its working capital is tied up in transit. BYD is financing part of that with its suppliers' money. Bills payables (notes issued to suppliers) more than doubled, while plain trade payables fell. Customers are funding part of it too, since contract liabilities rose by RMB 28 billion. Note 2 records net current liabilities of RMB 64,782 million at 30 June 2026, and it explains why the directors still regard BYD as a going concern (p. 73). That is ordinary disclosure for a manufacturer this size, but it shows how much of the business runs on other people's working capital.

So the question the second half has to answer: can exports keep growing fast enough to lift profit while the domestic business shrinks, when each exported car ties up more inventory for longer and earns revenue in currencies that just cost RMB 8 billion in FX?

Tracking a RMB 345B Half-Year in Plain Text​

Modeling BYD in double-entry makes every renminbi reconcile: the income statement has to sum to zero, and every balance sheet has to tie total assets to total liabilities plus equity. We follow how we model every company. The unit is MRMB (millions of renminbi), and the ledger states the accounting standard (ASBE) in its header. Income postings are credits (negative), and expenses are debits (positive). The net-income offset is the RMB 12,334 million net profit including non-controlling interests. Tax and surcharge, finance expenses, government grants (other income), investment results, impairments and non-operating items net into one Expenses:OtherNet posting of RMB 4,179 million, and the comment lists what it holds.

; FY2026H1 Income Statement — six months ended 30 June 2026 (ASBE / CASBE)
; Operating revenue 344,815 | operating costs 279,827 | R&D 23,307
; Selling 12,523 + administrative 10,365 = SG&A 22,888
; OtherNet 4,179 (net other expense) = tax and surcharge, finance expenses (incl. FX), other income
;   (government grants), investment income, fair-value changes, credit and asset impairments,
;   disposal gains/losses and non-operating items — total profit 14,614
; Income tax 2,280 | Net profit 12,334 (attributable to owners of the parent 12,325, NCI 9)
; Check: (-344,815) + 279,827 + 23,307 + 22,888 + 4,179 + 2,280 + 12,334 = 0 ✓
 
2026-06-30 * "BYD Company Limited" "FY2026H1 Income Statement"
  Income:Revenue                          -344815 MRMB  ; operating revenue
  Expenses:CostOfRevenue                   279827 MRMB  ; operating costs
  Expenses:ResearchAndDevelopment           23307 MRMB
  Expenses:SellingGeneralAdministrative     22888 MRMB  ; selling + administrative expenses
  Expenses:OtherNet                          4179 MRMB  ; net other expense, see note above
  Expenses:IncomeTax                         2280 MRMB
  Equity:Adjustments                        12334 MRMB  ; net income offset — net profit incl. NCI (RE set by balance assertion)

The balance-sheet assertion that carries the story is the supplier line. BYD's bills payables and trade payables both go in Liabilities:Current:AccountsPayable, because both are money owed to suppliers:

2026-06-29 pad Liabilities:Current:AccountsPayable          Equity:Adjustments
2026-06-30 balance Liabilities:Current:AccountsPayable       -229769 MRMB  ; trade payables 176,356 + bills payables 53,413

At RMB 229.8 billion, that one line is larger than the RMB 190.0 billion of inventory it funds. The ledger covers five audited years and this half-year, every period from BYD's own HKEX filings:

The Multi-Year Arc​

FY2021 comes from the ASBE comparative column of the 2022 annual report, because BYD's own 2021 annual report was prepared under HKFRS. FY2023 is shown as originally filed. The 2024 report moves RMB 9,841 million of the 2023 comparative from selling expenses into operating costs, and net profit is unchanged.

Revenue nearly quadrupled in four years, from RMB 216 billion to RMB 804 billion, and profit grew tenfold. The build shows in fixed assets plus construction in progress, which quadrupled to RMB 341 billion. Then growth stopped. FY2025 revenue grew 3.5% and attributable profit fell 19.0%, so the interim decline is the second period in a row of lower profit, not a sudden break. The line still rising fastest is inventory, up 4.4× since FY2021 on a revenue base that grew 3.7×.

The Verdict: Bull vs. Bear​

Bull Case

• Overseas revenue rose 33.9% to RMB 181.3 billion and is now 52.6% of sales. Exports of 792,000 units rose 67.8%.
• Overseas automotive earns a 28.4% gross margin against 17.0% domestically, so the mix shift itself lifted group gross margin 84 bp even as revenue fell.
• Derived Q2 attributable profit rose about 30% year on year and roughly doubled from Q1. The Q1 collapse is behind it.
• Customer prepayments (contract liabilities) rose 55% to RMB 79.8 billion, a leading indicator of orders.
• Total R&D investment of about RMB 28.9 billion in one half keeps the technology lead funded, even with less of it expensed.

Bear Case

• Domestic revenue fell 30.7% to RMB 163.5 billion. The home market is shrinking faster than exports are growing, and group revenue fell 7.1%.
• The FX swing of RMB 8.3 billion in finance expenses is now a structural risk: more than half of revenue is earned in foreign currencies.
• Inventory rose 37% in six months to RMB 190.0 billion, and monetary funds fell 22% to RMB 58.7 billion. Working capital is being consumed, not released.
• The receivables-derecognition loss rose to RMB 953 million from RMB 48 million, a cost of turning receivables into cash early.
• The release makes no demand-exceeding-supply or rising-price claims. Its outlook concedes that "the momentum of domestic demand recovery in the second half of the year still needs to be consolidated" (p. 33).

Our Take

This is a company changing which country it is a car company in. The half-year profit decline is real, but the shift behind it is structural. Exports carry higher margins, and the derived second quarter shows profit growing again. The cost of that shift is on the balance sheet, not in the income statement: RMB 190 billion of inventory in transit, RMB 230 billion owed to suppliers, and a currency book that just cost RMB 8 billion. We would bet on the overseas margin over the domestic price war. The line to watch in the FY2026 ledger is inventory: if the export model works, inventory stops growing faster than revenue, and it hasn't yet.