*

BYD's Q2 profit drops 29.9% y/y, 1st fall in over 3 years

*

Working capital deficit expands

*

Outlook for 2025 sales target pessimistic, analyst says

(Adds details, context and quote)

BEIJING, Aug 29 (Reuters) -

Chinese electric vehicle maker BYD's

quarterly profit fell for the first time in more than three

years, as its expansion hit a speed bump amid a government

campaign against price wars.

Net profit at the world's biggest EV producer totalled 6.4

billion yuan ($894.74 million) in the second quarter, it

reported on Friday, down 29.9% from a year earlier, after rising

100.4% in the first quarter. Revenue increased 14% to 200.9

billion yuan in the three months to June 30.

First-half profit was up 13.8% on revenue up 23.3%.

The biggest Chinese rival to Tesla has faced

challenges in recent months as Chinese authorities have called

for a halt to a bruising price war in China that has pressured

profit margins across the entire industry.

BYD has set a target to sell 5.5 million cars globally

this year, but it sold 2.49 million in the first seven months of

the year, meeting 45% of its goal.

"The outlook for BYD meeting its ambitious full-year targets

appears pessimistic," said Rosalie Chen, analyst at Third

Bridge.

Nomura analysts said on August 12 that they expect BYD

to sell 5 million to 5.2 million cars this year.

BYD, which generates nearly 80% of its sales in China, saw

vehicle sales fall in its home market for the third straight

month in July, while its production slid for the first time in

17 months.

The automaker has slowed production and delayed capacity

expansions at factories in China, Reuters reported in June.

BYD was among major automakers that pledged in June to make

payments to suppliers within 60 days after Chinese authorities

ordered carmakers to make payments more promptly and to stop a

price war.

The pledge has led analysts to scrutinise the working

capital of BYD and other automakers more closely. Working

capital is the difference between a company's current assets and

current liabilities and shows how much the business has

available for day-to-day expenses.

BYD's working capital deficit expanded to 122.7 billion

yuan as of June 30, from 95.8 billion yuan at the end of March.

It stood at 125.4 billion yuan at the end of 2024.

Its debt to asset ratio rose to 71.1% by the end of June,

from 70.7% at the end of the first quarter.

($1 = 7.1529 Chinese yuan renminbi)