Shanghai (ZXZC)- CATL, the global leading EV battery manufacturer, reported a 29.14% year-on-year decline in net profit for the first quarter of 2020 (Q1) as the COVID-19 pandemic hit the new energy vehicle (NEV) market.

In a filing to Shenzhen Stock Exchange on April 28, CATL said the Q1 net profit attributable to the shareholders of the listed company reached RMB742,043,183.20, versus RMB1,047,233,226.95 for the year-ago period. Excluding the impact of certain no-recurring gains and losses, the net profit stood at RMB428,196,075.68, a year-on-year slump of 53.24%.

Meanwhile, the company stated the gross revenue for the Jan.-Mar. period slid 9.53% over a year ago to RMB9,030,794,052.46. During the same period, the net cash flow generated by operation activities amounted to RMB3,146,750,315.68, tumbling 36.77% from the previous year due to the increase in the cash paid for the product procurement.

(CATL's CTP battery pack, photo source: CATL's WeChat account)

In respect to the profit downturn, much of the blame has been laid on the decrease in the Q1 sales of power batteries, which stemmed from the plunge in installed capacity of NEV power battery led by the impact of coronavirus outbreak and overall market downturn.

“We will be watching closely to the coronavirus spread and market conditions, and strive to alleviate the impact of the disease and the volatility in market on company's operation and profitability by conducting industrial cooperation, tapping new resources of supply, reducing consumption, cutting and controlling costs, etc.,” said CATL.

The company warned of the risks from the growing volatility in macro economy, the changeable policy environment and the intensifying market competition. To cope with the stress, it will proactively move forward with the work resumption amid the fight against the coronavirus, and continue to improve its product performances so as to tone down the impact of subsidy phase-out on the sale of power batteries. Besides, a professional management team with talents from various fields and different countries will keep investing in R&D business, as part of efforts to sustain the company's core competitive power.

The strengthened R&D investment is also expected to help CATL develop batteries with higher energy density and better performance, in a bid to achieve greater automation level and lower unit production level. It is one of methods for CATL to handle the possible drop in gross margin, which may be caused by the fiercer market rivalry and policy adjustments.