NIO Financial Report 2019: Revenue of 7.82 billion yuan, Gross Profit Expected to Turn Positive in Q2 2020

Li Bin said that one of the core goals of 2020 is to increase the gross profit margin, to achieve a positive gross profit margin in the second quarter and reach double digits by the end of the year.

Electric vehicle manufacturer, NIO Automobile, released its fourth-quarter and full-year performance reports for 2019 on March 18, 2020.   According to the report, the company reached 7.825 billion yuan in revenues last year (up 58% year-on-year); net loss of 11.296 billion yuan (up 17.19% from the same period of the previous year); and a gross profit rate of -15.3%.

Fourth-quarter of 2019 results showed the following: vehicle sales revenue was 2.68 billion yuan (up 54.8% month-on-month); quarterly net loss was 2.86 billion yuan (down 18.2% on year-on-year); 8,224 vehicles were delivered during the fourth quarter period (up 71.4%) – 244 more units as compared to the same period in 2018.   A total of 20,565 vehicles were delivered in 2019, up 81.2% on year-on-year.

While revenue and gross profit declined to owing to changes in the composition of the vehicles, NIO’s corporate operations in reducing costs and increasing efficiency were reflected in the financial report.  The cost of main operations decreased by 9.3% year-on-year while achieving sales growth.  Research and development expenses went down by 32.3% year-on-year, while sales and management expenses decreased 20.5% year-on-year.  The company significantly improved both its supply chain costs and operating efficiency.

Chairman Li Bin expressed his optimism for 2020 in a conference call, pointing out that NIO’s third-quarter financial report had a clear plan for the 2020 gross profit conversion target.  He said, “Improving gross profit margin is NIO 2020 One of the core goals is the optimization of the supply chain, the continuous reduction of battery pack costs, the increase in production scale and the reduction in average vehicle manufacturing costs caused by management optimization. This gives us the confidence to achieve a positive gross margin in the second quarter and a gross margin of the number of goals. “

Li Bin also said that with the outbreak of NCOVID 19, production and sales in China’s automotive industry have been severely affected with a retail volume of vehicles from January to February 2020 dropping by 41%.    This has not spared NIO with only 2,305 vehicles delivered during the first two months of the year, lower than the target set before the outbreak.

On the subject of the improvement of production capacity after the resumption of work, Lin Bin pointed out that the speed of recovery has accelerated since mid-March and expressed confidence that production capacity will be restored to normal levels by April.

Affected by the epidemic, the production recovery of partners in Hubei Province is still in flux.   Limited by supply chain capacity, total deliveries for the first quarter of 2020 are expected to be from 3,400 to 3,600 units.   Li Bin said “We are paying close attention to the recovery of the supply chain in Hubei. At present, we are seeing some positive changes every day, especially the recovery rate has accelerated significantly since mid-March, giving us the confidence to restore production capacity to normal levels in April.”

Since 2020, NIO has carried out several rounds of financial financing.  The total amount has reached 435 million US dollars.   Feng Wei, Chief Financial Officer (CFO) of NIO, said: “We issued a total of US $ 435 million in convertible bonds in February and March 2020, which will support the company’s daily operations and business development in 2020.  On May 25, we signed a cooperation framework agreement with the government of Hefei, Anhui Province. Hefei City will provide resources and financing support for NIO to establish NIO China headquarters in Hefei and long-term development. The two parties are currently working on the final agreement document to be signed.”

On February 25, NIO announced it had signed a cooperation framework agreement with NIO China’s headquarters in Hefei.   Under the preliminary agreement, the company will set up NIO Automobile China Headquarters in Hefei; establish R & D, sales, and production bases; and build a China headquarters operating system centered on Hefei.  The project is planned to raise 10 billion yuan for company R & D, market system establishment and operation.