BYD Co., backed by Warren Buffett, saw its Hong Kong and Shenzhen-listed shares drop sharply before bouncing back after the car and battery maker posted worse-than-expected first-half results and warned profit may fall by as much as a fifth in the first nine months of the year.

    The Shenzhen-based firm’s Hong Kong-listed shares slid to a two-month low of HK$44.90 (US$5.79) yesterday morning, before regaining the lost ground to end the day up 2.24 percent at HK$50.30, while its shares in Shenzhen were down almost 3 percent in the morning session before bouncing back to close down 0.22 percent.

    BYD, which is 9.1 percent owned by MidAmerican Energy Holdings Co., a unit of Buffett’s Berkshire Hathaway Inc., said yesterday that its net profit during the first six months fell 15.5 percent to 360.7 million yuan (US$59 million) from 426.9 million yuan a year earlier, dragged down by a 27 percent slump in vehicle sales volume.

    The firm also forecast a 12-22 percent drop in net profit in the first nine months of the year.

    The decline in earnings comes as BYD continues to struggle with weak traditional gasoline car sales and intensifying competition from local and foreign rivals.

    BYD and other Chinese carmakers are losing market share to foreign rivals Volkswagen AG, General Motors Co. and Ford Motor Corp. as competition grows in the lower-end of China’s auto market.

    JL Warren Capital LLC, a New York-based, China-focused equity research firm said in a research report published yesterday that BYD’s earnings forecast translates into a 27-31 percent fall in 2014 net profit.

    One bright spot in BYD’s first-half results was the explosive growth in its business selling vehicles powered by new forms of new energy, principally electric cars. That division saw revenue surge more than 10-fold to 2.7 billion yuan on the back of government incentive policies.

    But some analysts said such growth is unsustainable. “Without local government support in the form of subsidies, the demand simply isn’t there for electric vehicles,” said JL Warren Capital, which has a “strong sell” rating on the stock.

    BYD raised HK$4.2 billion in May through a share placement in Hong Kong to fund mainly its electric vehicle business. (SD-Agencies)