Haier Smart Home 2020 annual results above market expectations

Haier Smart Home 2020 annual results above market expectations

- Revenue increased 4.5%, profit up 8.2% year-on-year

- Significant cost reduction in Q4 through digital transformation

- Overseas markets with record high

Qingdao / Shanghai / Hong Kong / Frankfurt, 30 March 2021 - Haier Smart Home Co., Ltd. ("Haier Smart Home" or "the Company", stock code: 690D.DE, 600690.SH, 6690.HK), today published its 2020 annual results. The financial report shows the Company performed above market expectations, with an increase in revenue of 4.5% to RMB 209.7 billion. Net profit attributable to owners of the Company increased by 8.2% to RMB 8.9 billion. Operating cash flow increased by 16.7% to RMB 17.6 billion.

Performance in Q4 was outstanding with significant year-on-year revenue growth of 20%. Net profit attributable to owners of the Company increased to RMB 2.6 billion. In Q4 2020, operating cash flow exceeded RMB 11.8 billion, representing a strong growth rate of approximately 80% year-on-year.

Affected by the coronavirus pandemic, the consumer demand in the Chinese home appliance market decreased in 2020. Consequently, the domestic retail sales of white goods and kitchen appliances industry fell by 11.9% to RMB 448.7 billion. In contrast, Haier's domestic and overseas businesses achieved superior development through great efforts.

Significant cost reduction by 3.8 pct in Q4 through digital transformation in China

In 2020, in line with the accelerated digital transformation of the home appliance industry across its home market, Haier Smart Home embraced the trend and fully implemented a digital platform. On the distribution channel side, the Company improved supply chain and logistics efficiency through unified warehouse allocation to realize order-based production and inventory reduction. On the management side, the Company actively built an online digital operation system and promoted efficient interconnection between departments to further reduce marketing costs as well as completely restructure the process.

The full implementation of the digital platform improved the Company's operational efficiency and led to a year-on-year reduction of the selling and administrative expense ratio by 0.98 pct, in the second half of the year alone, the reduction was 2.8 pct.

It is worth noting that the Company has benefited greatly from digital marketing. In 2020, the average daily active users of Haier Smart Home APP were 1.2 million, up 546% year-on-year, and the monthly active users were 24.8 million, up 803%.

In the era of IoT, the company has continued to increase its investment in AI, 5G, IoT and other technologies to achieve technology leadership. During the reporting period, the R&D investments increased by 9.47% year-on-year. The Company achieved a number of results: more than 2,000 smart home patents, 80% of China's proposals on international standards come from Haier.

Enhanced results from overseas expansion with record-high revenue over RMB 100 billion and operating profit increased by 27%

The overseas home appliance industry was significantly affected by the pandemic in the second half of 2020. Although Haier Smart Home faced double challenges of blocked offline sales and enormous pressure from international shipping, the Company was able to quickly adapt to market, distribution and production under the pandemic conditions by relying on the comprehensive global supply chain layout and localized business teams in overseas as well as flexible independent management mechanisms. In 2020, revenues from Haier Smart Home's overseas business marked an all-time high of RMB 100 billion. Operating profit increased by 27%. As a result, Hair Smart Home has consistently ranked first in global market share for major home appliances for 12 consecutive years, according to Euromonitor. From a retail volume perspective, Haier achieved a market share of 18.6% in Asia ranking first and second in North America with 22%. With the deepening of globalization, overseas business, which accounts for nearly half of Haier Smart Home's operating income, has entered the harvesting period.

Casarte's annual revenue reached RMB 8.7 billion with revenue growth of 35% in Q4

With improving domestic income and the continuous growth of middle-class population in China, consumer demand for home appliances also showed high-end structural characteristics and the domestic high-end home appliance market continued to expand.

In 2020, Haier Smart Home continued its strong performance in the high-end market. According to China Market Monitor, Casarte occupied an absolute leading position in China's high-end major home appliance market with its sub-categories such as refrigerators, washing machines and air conditioners ranking first in retail sales market shares. In terms of offline retail sales, Casarte washing machines and refrigerators accounted for 76.7% and 37.1% of the market above RMB 10,000 in China. Air conditioners accounted for 46.9% of the market above RMB 15,000 in China. In 2020, Casarte's revenue reached RMB 8.7 billion, of which revenue in Q4 increased by 35%.

According to Zheshang Securities, the penetration rate of high-end products in the domestic home appliance market is only about 2% currently. Compared with the penetration rate of high-end brands of more than 10% in developed overseas markets, there is still much room for growth in the domestic high-end home appliance market in the future. As the leading brand in the domestic high-end home appliance market, Casarte has promising development prospects.

Eco-system sales increased by 116% and launch of future-leading Three Winged Bird smart scenarios

Technologies such as IoT, big data, cloud computing and AI have led to a profound revolution in the home appliance industry in recent years. User needs show a trend of transformation from single household appliances to smart scenario solutions for entire processes. According to industry institutes, the volume of the global smart home market is expected to exceed USD 135.3 billion in 2025. Leading user needs through scenario marketing will become the key to win the evolving market for home appliance brands.

In 2020, Haier Smart Home achieved a breakthrough in scenario marketing and IoT eco-system innovation. In doing so, the Company launched the "Three Winged Bird" scenario-based brand, which provides full-scale smart home scenario solutions for consumers in relation to balcony, kitchen, living room, bathroom and bedroom, opening up a new track from product sales to scenario sales. By the end of 2020, Haier Smart Home's showrooms for experiencing scenarios amounted to over 1,000 while 325 Three Winged Bird stores were available for all core cities in China. At the same time, the Company's investments in the smart eco-system layout of the internet of apparel and the internet of food paid off with a year-on-year increase of 116% in eco-system revenues.

The performance of Haier Smart Home in 2020 exceeded expectations, mainly due to its focus on global brand creation, high-end brands, smart home and other forward-looking strategic layouts. As Haier Smart Home steps into the new track of scenario eco-system, its potential value will be further activated. From the perspective of the Company's internal strategy and the external market opportunities, Haier Smart Home is entering a brand new stage, accelerating the global implementation of smart home strategy.

The complete 2020 Annual Report of Haier Smart Home Co., Ltd. has been published on the Company's Website at https://smart-home.haier.com/en/gpxx/.

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: y.sun@haier.de