Haier profit growth slows, sees industry rebound in 2016

BEIJING / Bloomberg

Haier Electronics Group Co.’s earnings grew last year at the slowest pace since 2008 as sales fell at the China-based maker of washing machines and water heaters, and it predicted industry growth will be restored this year despite a tough 2016.
Net income rose 10 percent to 2.7 billion yuan ($416 million) in the year, in line with the 2.7 billion yuan average analyst estimate, the Hong Kong-listed subsidiary of Haier Group said in a statement on Tuesday. Sales dropped 6.4 percent, the first decline since 2005.
The appliances unit of Haier Group, which agreed in January to buy General Electric Co.’s appliance business for $5.4 billion, has been investing in an effort to capture more of China’s e-commerce sales and to develop more appliances users can control by smartphone. The company already sells smart heaters you can turn on with your mobile phone and washing machines that automatically adjust to clothing load.
While this year will be a “tough period” for companies as the Chinese economy goes through a structural shift, “if we keep ourselves abreast of the needs of the consumers and the customers, we will be able to grasp the opportunities presented by China’s consumption upgrade,” Haier Electronics Chairman Zhou Yun Jie said in a statement.

Growth Restored
In 2016, in view of “continual economic growth and stabilised property market” of China, it is anticipated that the overall growth of the white goods sector will be restored, according to Haier Electronics.
“The market will still be challenging in 2016 as the industry is facing fierce competition and the white appliance sector is still under destocking pressure,” said Andrew Song, an analyst from Guotai Junan Securities Co. The property market has been improving since the second quarter of 2015, but the market may only start to show some recovery in the second half of this year, he said.
Washing machines contributed to 43 percent of Haier Electronics’s earnings in 2015, followed with 39 percent from integrated channel services, the company’s businesses comprising distribution, e-commerce and logistics. Among the industry’s top three segments in China, namely air-conditioners, refrigerators and washing machines, only washing machines saw marginal retail sales growth of 2.5 percent, the company said, citing industry research.