DGAP-News: Haier Smart Home publishes Third Quarter Report: Results far beyond Expectations

Haier Smart Home publishes Third Quarter Report: Results far beyond Expectations

- Profit increased by 38% in third quarter

- Operating Revenue and Profit outperformed its Peers

- Significant increase in growth of overseas market

Qingdao / Shanghai / Frankfurt, 30 October 2020 - Haier Smart Home Co., Ltd. (D-Share ISIN CNE1000031C1, A-Share ISIN CNE000000CG9, "Haier Smart Home" or the "Company") one of the listed subsidiaries of Haier Group, published its third quarter report for fiscal 2020 on 29 October 2020. In the first three quarters of 2020, the Company achieved a revenue of RMB 154.4 billion and a net profit attributable to owners of the Parent Company of RMB 6.3 billion. The net profit attributable to owners of the Parent Company after deduction of non-recurring profit or loss amounted to RMB 4.1 billion.

In particular, the performance in the third quarter was outstanding. The revenue of the Company amounted to RMB 58.7 billion, representing an increase of 17% YoY; the net profit attributable to owners of the Parent Company increased by 38% to RMB 3.5 billion compared to the third quarter of last year. Furthermore, net profit attributable to owners of the Parent Company after deduction of non-recurring profit or loss amounted to RMB 1.5 billion. This was an increase of 43% YoY.

The Company experienced a heterogeneous development throughout the first three quarters of 2020. Due to coronavirus pandemic, the growth rate slowed down in the first quarter. On the other side, the rapid adjustment of the corporate strategy in the second quarter ushered in a turning point of the business results. The fast recovery in the second quarter accelerated significantly in the third quarter. As a result, Haier Smart Home showed a much higher growth in sales than the industry on average. At the same time, both profit growth and earning quality far exceeded the market expectations.

China: improved efficiency and reduced expenses

In the domestic market, the Company focuses on establishing a retail system to reach users efficiently. By optimizing its goals, processes, organization and mechanisms, and through further digital transformation, Haier Smart Home improves operational efficiency in the Company and on the platforms for "products, marketing, services, logistics and services ".

In the third quarter, the Company's domestic revenue increased by 16.3%, and the expense to sale ratio optimized by 1.4 percentage points. The online and offline retail market share of refrigerators, washing machines, household air conditioners, water heaters and kitchen appliances realized comprehensive growth and continued to expand the leading advantages. In particular, the online and offline retail market share of refrigerators was 35.1% and 38.9%, representing correspondingly an increase of 1.3 and 2.3 percentage points. The online and offline retail market share of washing machines was 39.4% and 39.9%. This means an increase of 4.6 and 3.8 percentage points respectively, which underlines the solid leading position of refrigerators and washing machines.

In the air conditioning business, the Company has adjusted its development strategy and boosted its performance by focusing on improving the whole-process operation capacity and the market-side channel innovation. The revenue of air conditioners increased by 27% in the third quarter of 2020. From January to September 2020, the online market share was 11.2%, while the offline was 14.5%, representing an increase of 2.5 and 2.3 percentage points respectively. In particular, the market share of Casarte Air Conditioner increased from 1.2% to 3.7%, realizing tripled growth and a revenue increase of more than 20%, with continuously leading position in high-end market share across all categories.

Overseas market: significant growth and operating profit increased by 58%

For the overseas market, Haier's management model of RenDanHeYi ensures a quick and flexible reaction at a local level to the challenge of the pandemic in different regions, relying on global procurement, supply chain and R&D platforms to take full advantage of global access to resources, aiming to a sustainable development of the business.

The Company recorded a growth of 17.5% in revenue generated from overseas market for the third quarter, as well as a growth of 58% in operating profit. In the third quarter, the Company's brands in the three main sectors of refrigerators, washing machines and air conditioning rank among the TOP 3 in more than 20 countries and have strengthened their leading in an all-round way. In view of the serious pandemic challenges overseas, Haier Smart Home relies on both prevention measures and resumption of work and production in global factories to avoid risks such as shortage of spare parts and labor and to fully meet the market demand.

Meanwhile, the Company is taking full advantage of the local "three-in-one" integration of research and development, smart creation and marketing, speeding up the upgrade of offline touch points, expanding online channels and driving the development of new online sales models to create an omni-channel distribution, all of which is accompanied by a significantly improved reputation and coverage. In the European market, Haier Smart Home, for example, is present in the TOP 3 e-commerce channels of several countries. In the Australian market, the Company has entered the TOP 5 mainstream online channel brand section, showing a doubled increase in online sales.

Scenario-based brand Three Winged Bird leads the industry to open up a new track

In order to adapt to the consumption trend of scenario experience, Haier Smart Home has been exploring the transformation from "selling products" to "selling scenarios", striving to bring user experience and industry development into a new dimension while achieving differentiated competition. In September, the Company launched the first scenario-based brand around the world, with the logo of a three winged bird, working with the ecology to promote the Internet of Things for families into thousands of households. Not only could the Company provide users with balcony, kitchen, living room, bathroom, bedroom, whole-house air and other smart home full-scenario solutions, but also innovative services for self-installation throughout the home.

In the first three quarters of 2020, the Company sold 687,000 sets of scenario-based solutions, representing an increase of 24.5% YoY. Relying on smart scenarios, the ecological income contributed to the Company growth, reaching RMB 3.4 billion in the third quarter, representing an increase of 138%. At the same time, the Company currently covers more than 30,000 offline networks, 6,000 service housekeepers and 9,000 resource providers so far to ensure user experience. On the Experiential Cloud platform, the network appliance binding volume increased by 116% YoY, while the daily active amount of Smart Home APP increased by 225% in September.

In order to promote full-scenario solutions and upgrade services of the Company faster and better, the Company has established Smart Home experience stores in the cities around the world. So far, the Company has 260 Haier Smart Home boutiques. By the end of the year, 1,000 Smart Home experience shops will be converted, with the possibility of implementing "Three Winged Bird" brand solutions.

Privatisation of Haier Electronics Group

On the other hand, the Company has constantly been fostering the privatization of Haier Electronics Group. On 31 July 2020, Haier Smart Home officially announced the privatization proposal. The General Meeting of Haier Smart Home passed the privatization resolution on 1 September. On 10 September 2020, it officially filed an application of issuance of H-Share to the Hong Kong Stock Exchange while publishing the application proof of listing on the website of Hong Kong Stock Exchange.

The privatisation enables an optimisation of the structure of the household appliances division, which goes hand in hand with the development towards integrated and intelligent set solutions of household appliances in the age of the Internet of Things. This development will help Haier Smart Home to accelerate the transformation from a product into a scenario provider.

Haier Smart Home is focusing on the Smart Home Experience Cloud for the intended transformation to achieve even greater effectiveness in the global market. Through the space scene brand "Three Winged Bird", Haier Smart Home is opening up new ways to drive the smart home with compelling solutions in response.

About Haier Smart Home Co., Ltd.:

Haier is one of the world's leading manufacturers of household appliances with a focus on smart home solutions and customized mass production. Haier Smart Home Co., Ltd. develops, produces and distributes a wide range of household appliances. These include refrigerators, freezers, washing machines, air conditioners, water heaters, kitchen appliances as well as smaller household appliances and an extensive range of intelligent household appliances. The Company distributes its products through leading household brands such as Haier, Casarte, Leader, Candy, GE Appliances, AQUA and Fisher & Paykel. Haier Smart Home Co., Ltd. has launched Smart Home Experiential Cloud, which connects homes, users, enterprises and ecosystem partners, and facilitates the integration of Haier's online, offline and micro-store businesses and supports user interaction to further optimize the user experience.

IR contact:

Yao Sun (Sophie) - Haier Smart Home Germany

T: +49 6172 9454 143

F: +49 6172 9454 42143

M: +49 160 9469 3601

Email: [email protected]