CATL made a net profit of 15.9 billion yuan in 2021, with Tesla as its largest customer

On the evening of April 21, CATL released its 2021 annual report. Data showed that CATL achieved operating income of 130.356 billion yuan in 2021, a year-on-year increase of 159.06%; and achieved net profit attributable to shareholders of 15.931 billion yuan, a year-on-year increase of 185.34%.

CATL's main financial data from 2019 to 2021; Image source: Screenshot of CATL's 2021 financial report

Previously, the average profit forecast of multiple institutions for CATL in 2021 was 11.23 billion yuan, a year-on-year growth rate of 101.14%. The release of this annual data means that CATL's performance exceeded market expectations, and the operating income of 130.356 billion yuan is the first time that it has exceeded 100 billion yuan.

On the same evening, CATL also announced that it plans to invest in the construction of the Xiamen CATL New Energy Battery Industrial Base project in Xiamen, Fujian Province. The total investment in the project will not exceed 13 billion yuan, and the construction content will be power battery system and energy storage system production lines.

Influenced by the above news, as of the midday break on April 22, CATL's share price was 417.5 yuan, up 2.05%, with a total market value of 973.1 billion yuan.

Power batteries account for more than 70% of the total, and energy storage is growing rapidly

Judging from the proportion of CATL's revenue in 2021, its main business, power battery systems, accounted for more than 70% of total operating income; the operating income of lithium battery materials and energy storage systems achieved a significant growth rate, with the two increasing by more than 3.5 times and 6 times year-on-year to 15.46 billion yuan and 13.62 billion yuan respectively.

In terms of products, power battery systems achieved sales revenue of 91.491 billion yuan in 2021, a year-on-year increase of 132.06%, accounting for 70.19% of total revenue. According to SNE Research statistics, the global installed capacity of power batteries in 2021 was 296.8GWh, a year-on-year increase of 102.3%. Among them, CATL's global installed capacity reached 96.7GWh, with a market share of 33%, leading LG New Energy by 11 percentage points. So far, CATL's installed capacity of power batteries has ranked first in the world for five consecutive years (2017-2021).

The sales revenue of energy storage systems and lithium battery materials both showed a rapid growth trend, accounting for 10.45% and 11.86% of the total revenue respectively. Among them, the sales revenue of lithium battery materials was 15.457 billion yuan, a year-on-year increase of 350.74%; the sales revenue of energy storage systems was 13.624 billion yuan, a year-on-year increase of 601.01%, the highest year-on-year growth rate among all business segments, becoming a new engine for CATL's performance growth.

Image source: Screenshot of CATL's 2021 financial report

By region, in 2021, CATL's overseas business revenue increased significantly, with overseas revenue of 27.87 billion yuan for the whole year, a year-on-year increase of 252%, and its share in the company's operations increased to 21.38%.

The 2021 annual report shows that the company has reached long-term strategic cooperation with global customers such as Tesla , Hyundai, Ford, and Daimler, and Tesla has become CATL's largest customer, accounting for 10% of sales.

Cost pressure is high, and gross profit margin has declined for five consecutive years

It should be pointed out that although CATL's overall revenue continued to grow, its gross profit margin continued to decline.

Image source: Screenshot of CATL's 2021 financial report

In 2021, CATL's gross profit margin was 26.28%, down 1.48 percentage points year-on-year. This is the fifth consecutive year since 2017 that CATL's gross profit margin has declined. Its highest gross profit margin was in 2016, reaching 43.7%.

Among the specific business segments, the gross profit margin of its power battery system in 2021 was 22%, a year-on-year decrease of 4.56 percentage points; the gross profit margin of the energy storage system was 28.52%, a year-on-year decrease of 7.51 percentage points; in contrast, the gross profit margin of lithium battery materials was 25.12%, a year-on-year increase of 4.66 percentage points.

CATL stated in its financial report that the main raw materials required for the company's production and operation include positive electrode materials, negative electrode materials, diaphragms and electrolytes, which are greatly affected by the prices of bulk commodities or chemical raw materials such as lithium, nickel and cobalt. Affected by the price changes of related materials and the market supply and demand situation, the company's raw material procurement price and scale have also fluctuated to a certain extent. At the same time, the price of raw materials represented by lithium carbonate has risen sharply, which has put great pressure on costs.

Financial report data shows that in 2021, CATL's operating costs were 96.094 billion yuan, a year-on-year increase of 164.36%. This growth rate exceeded the growth rate of operating income, which also led to CATL's gross profit margin decreasing by 1.48 percentage points year-on-year to 26.28%.

In response to the rise in raw material prices, CATL has established an information system to timely track the market supply and demand and price changes of important raw materials, and has taken measures such as advance procurement to ensure the supply of raw materials and control procurement costs. In addition, CATL has taken measures such as signing long-term contracts, investment cooperation, recycling, and self-mining to ensure the security of the supply chain, and has dynamically adjusted the prices of some battery products accordingly, transmitting the pressure of raw material price increases to a certain extent.