CATL: Turning Point in Growth Sees First Revenue Declines

Shares of the world's largest battery manufacturer, CATL, suffered a nearly 4% drop on Wednesday. The reason for the price drop is a warning announcement from the Chinese company, which stated that its annual revenue declined last year for the first time, and profit growth showed the slowest pace since 2019. According to a statement released on Tuesday evening, revenues fell by 8.7% to 11.2% after product prices were adjusted to lower raw material costs such as lithium carbonate. This led to a decline in operating income, even though sales volume increased. This marks the first drop in annual revenue since the publication of operating figures began in 2015. Net profit rose in 2024 by 11.1% to 20.1% compared to the previous year, marking the smallest growth increase since 2019. CATL plans to publish the full annual report on March 15, although Chinese firms often voluntarily disclose estimates, especially in cases of significant changes. The 3.8% loss during the Wednesday morning session was the largest intraday decline since October 11, while the ChiNext market in Shenzhen fell by 0.6%. CATL intervened in the lithium sector in 2022 when battery material prices were rising by setting up a large lithium hub in the southern Chinese province of Jiangxi. Since then, lithium prices have dropped by almost 86% from their peak at the end of 2022. According to founder Robin Zeng, the target has been achieved, and production at the mine has been halted. CATL is extending its reach beyond the battery market by launching a new EV chassis in December and strategically moving towards power grids. Overseas investments, including a 100 GWh battery factory in Hungary to supply Mercedes-Benz and BMW, and a new joint plant with Stellantis in Spain, are also planned. At the World Economic Forum in Davos, Co-Chairman Pan Jian expressed hope to announce more major joint ventures in Europe with other car manufacturers. According to a report by Reuters, CATL is working with banks on an IPO in Hong Kong, possibly one of the city's largest issuances in 2025. Last year, the company held a market share of 45.1% in China-manufactured EV batteries, an increase of 1.9 percentage points from the previous month. The combined market share of second-placed BYD and third-placed CALB dropped by 4.3 percentage points to 31.4%, reported the China Automotive Battery Innovation Alliance.