To: Business Editor [For immediate release] HAIER ELECTRONICS GROUP CO., LTD (STOCK CODE: 1169) ANNOUNCES INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012 TURNOVER UP 8.4% TO RMB 26,303,993,000 PROFIT ATTRIBUTABLE TO OWNERS OF THE COMPANY UP 21.0% TO RMB 712,426,000 DILUTED EARNINGS PER SHARE UP 20.3% TO RMB 28.06 CENTS ************ Further Enhance Its Integrated Channel Services Business Promote the Sustained and Stable Development of the Group's Businesses ************ For the six months ended 30 June (RMB 000) Financial Highlights 2012 2011(Restated) Changes Turnover 26,303,993 24,274,880 +8.4% Gross profit (Gross profit margin) Profit attributable to owners of the company Diluted earnings per share (RMB) 3,927,165 (14.9 %) 2,849,249 (11.7 %) +37.8% (+3.2 pts) 712,426 588,546 +21.0% 28.06 cents 23.32 cents +20.3% (Hong Kong, 21 August 2012) Haier Electronics Group Co., Ltd. (Stock Code: 1169) (the Company ), a leading white goods manufacturer and an integrated channel services provider, is pleased to announce the interim results of the Company and its subsidiaries (collectively the Group ) for the period ended 30 June 2012 (the Period ). By means of customer-oriented product innovation and a service model characterized with rapid sales turnover with a low capital outlay, the Group achieved high-quality revenue growth and a robust increase in profitability for its overall business. The Group s total revenue amounted to RMB26,303,993,000 during the Period, representing an increase of 8.4% as compared to a revenue of RMB24,274,880,000 (restated) in the first half of 2011. The increase was due to stable growth of the washing machine and water heater businesses, as well as the significant increase in revenue from the integrated channel services business. During the Period, profit attributable to owners of the Company was RMB712,426,000, representing an increase of 21.0% from RMB588,546,000 (restated) in the first half of 2011. Diluted earnings per share attributable to owners of the Company was RMB28.06 cents, representing an increase of 20.3% as compared to RMB23.32 cents in the same period last year.
Page 2 During the Period, the Group s gross profit margins for the washing machine and water heater businesses were 27.8% and 41.9% respectively, representing an increase of 0.7% and 1.3% respectively as compared to the first half of 2011. The increase in gross profit margins was mainly attributable to the following two reasons: firstly, product innovation catering to diverse customer needs, the adoption of a modular approach to the manufacturing system and the increasing productivity of the high end products; secondly, the Group also benefited from the decrease in the market price of certain raw materials in the first half of 2012. The Group s integrated channel services business recorded a gross profit margin of 8.0%, representing an increase of 3.3 percentage points as compared to 4.7% (restated) in the first half of 2011. The remarkable increase in gross profit margin of the integrated channel services business was mainly attributable to the fact that in order to improve and enrich services of the integrated channel services business, the Group strengthened part of the sales function in the 3rd and 4th tier markets, and undertook more marketing and promotion support initiatives, which correspondingly led to an increase in the gross profit margin and at the same time increases in the selling and administrative costs ratios of this segment. Business Review For the six months ended 30 June (RMB 000) Turnover Business Segments 2012 2011(restated) Changes Washing Machine Business 5,529,427 5,161,067 +7.1% Water Heater Business 1,938,158 1,753,616 +10.5% Integrated Channel Services Business 24,320,002 22,431,660 +8.4% Washing Machine Business The Group s washing machine business continued to maintain its leading market share in the domestic market. According to the China Market Monitor Report, the Group s washing machines enjoyed a domestic market share of 31.3% in terms of sales volume during the Period, an increase of 5.9% as compared to the same period of 2011. During the Period, the Group continued to enhance its development in new products and implemented a multi-brand strategy of Casarte, Haier and Leader to fulfill customer needs in different market segments. Moreover, the Group also strived to develop highly efficient and value-for-money energy saving products to meet the continuously increasing market demands for energy saving home appliances. In June 2012, the National Development and Reform Commission ( NDRC ), Ministry of Industry and Information Technology of the People s Republic China ( MIIT ) and Ministry of Finance ( MOF ) jointly announced the Energy-Saving Product Promotion Project. Haier s washing machine products, including top-loading automatic washing machines, top-loading twin-tub washing machines and front-loading washing machines were all included in the promotion list of energy efficient washing machines. 398 models of Haier washing machines have won the tender, accounting for 28.2% of overall bid-winning models. Among which, Haier s first-class energy consumption models with over RMB200 subsidy per unit accounted for 78.0% of bid-winning products of the Haier brand.
Page 3 Water Heater Business According to the China Market Monitor Report, the Group s water heaters reached a domestic market share of 20.5% in terms of sales volume during the Period, the clear leader of the industry. The market share of the Group s electric water heaters in terms of sales volume increased from 27.1% in the first half of 2011 to 27.4%, in the first half of 2012 continuing to rank first in the industry. In June 2012, in the promotion list of energy efficient water heaters from the Energy-Saving Product Promotion Project, jointly announced by NDRC, MIIT and MOF, 30 models of Haier s water heater products won the bidding and enjoyed a subsidy from the government of between RMB200 and RMB500 per unit. Among which, all of its gas condensing water heaters were included in the winning bid list. Integrated channel services business As at 30 June 2012, there were over 7,500 Haier Exclusive Stores at the county level, with coverage close to 100% and approximately 35,000 Haier sales points in total nationwide. In respect of its distribution business of third party brands, the Group has developed over 2,100 Goodaymart points of sales in total. During the Period, the Group intensified efforts to further expand its distribution channel even deeper and consolidate its logistics and after-sales services in order to better serve the rural market, with a growth of 699 direct selling points reaching town and village level rural customers. During the Period, the Group built three first-level distribution centres in Guangzhou, Shenyang and Zhengzhou; its parent company, the Haier Group, was also building distribution centres in Tianjin, Hefei and Chongqing for the Group s future utilization. The Group s self-owned warehouses had an area of 316,000 square metres and the total area of the first-level distribution centres that can be specifically utilized by the Group was increased to 454,000 square metres. Building on the strong foundation of its B to B logistics, the Group strived to enhance the competitiveness of its B to C logistics for last mile and focused on developing two new types of customers. Firstly, for seizing the enormous opportunity of e-commerce logistics, the Group provided one stop logistics services that combined delivery and installation components for platform websites and vertical websites. Secondly, the Group provided direct distribution services to town and village stores in the 3rd and 4th tier markets so as to capture the opportunity brought by the downward expansion of the third party home appliance brands. In addition, since the Group has completed the acquisition of Haier Group E-commerce Company Limited from Haier Group, the Group has undertaken the on-line business of Haier branded home appliance products, via the external online sale platforms and on its self-developed e-mall (www.ehaier.com). The sales revenue of this business reached RMB106 million in the first half of 2012. The Group has established unique business advantages in the following aspects for attracting customers: 1) good user experience of the one stop distribution with combination of delivery and installation; 2) realization of 24-hour delivery in approximately 1,200 counties nationwide; 3) premium home appliances total solutions and home appliance customization capability on e-haier. Outlook In May 2012, the State Council introduced the new purchase subsidies for energy-saving household electrical products. The subsidies are expected to amount to RMB26.5 billion which will promote
Page 4 technological upgrade in the Chinese energy-saving household electrical product industry and structural consolidation of consumer products. The Group s washing machine and water heater products have always been leading the industry in terms of energy efficiency and environmental protection. The Group believes that its market share in energy-saving household electrical products will be further enlarged by leveraging its product innovation abilities and research and development capabilities, which is based on the substantial investment over years as well as the prospective layout of international research and development centres of Haier Group, the parent company. With the gradual withdrawal of the Rural Area Subsidized Electrical Appliance Purchase Policy, demand in the 3rd and 4th tier markets might be affected, however, due to the acceleration of urbanization in China and the higher maturity level of customers consumption concepts, the Group is encouraged by the major growth drivers that are foreseeable in second half of the year. Firstly, the relatively lower penetration rate of washing machine and water heater products, the increased demand of high-end products and energy-saving products, and the additional demand of air source pump water heaters and industrial use hot water solutions. Secondly, the recovery in real estate market, gradual commissioning of social security housing combined with the demands from the new families; and thirdly, the development of new channels such as e-business is beneficial to enterprises with high brand influence and product competitiveness. In respect of cost structure, the Group expects the price of key components of raw materials will remain relatively low which will ensure the profit level of its washing machine and water heater businesses. In relation to distribution channels, new e-business channels have brought significant impacts to the home appliances industry in China. As a holding company with washing machine and water heater business and B to B distribution business, the Group is committed to enhancing its brand image and value, provide differentiated products to meet customer needs and also fully utilizing its own e-business channel and external platforms to boost its product sales. On the other hand, through its total services of logistics delivery, after-sales management and franchise management, the Group will continuously expand its distribution channel deeper and win the market through excellent total service cost effectiveness and better user experience, so as to become the first option for customers in purchasing home appliances in the 3rd and 4th tier markets. Moreover, the Group believes that there is a huge potential in developing third party logistics services for home appliances manufacturers. In the next three years, through the establishment of the logistics centres, the Group will focus on developing its logistics services capabilities for large home appliances and household related products, further enhancing user experience and promoting its third party distribution services business. - End- About Haier Electronics Group Co., Ltd. (Stock Code: 1169) Haier Electronics Group Co., Ltd. (Stock Code: 1169), a company listed on the Main Board of the Hong Kong Stock Exchange, is a subsidiary of Haier Group. The Group is currently engaged in the research, development, manufacture and sale of washing machines and water heaters in the PRC. The Group developed integrated channel service business from the second quarter of 2010. Through Goodaymart, the Group established channel distribution points in the third and fourth-tier nationwide markets and
Page 5 became the leading integrated channel services provider in the third and fourth-tier markets in the PRC. Haier Electronics was included in MSCI Global Standard Index (MSCI China Index) on 30 November, 2011, which is an important recognition of Haier Electronics as a leading company in the white goods manufacturing and integrated channel service industry by the investment community. About Haier Group Haier Group was incorporated in 1984, and is principally engaged in the production of various household electrical appliances. Over the past 20 years, Haier Group has witnessed significant prosperity and is one of the world s leading white goods home appliance manufacturers which owns a wide range of household electrical appliances. Haier Group s products are exported to over 100 countries. Released by Porda Havas International Finance Communications Group for and on behalf of Haier Electronics Group Co., Ltd., for further information, please contact: Porda Havas International Finance Communications Group Investor Relations Media Relations Mr. Jonathan Kiu Mr. Bunny Lee Tel:: (852) 3150 6706 Tel: (852) 3150 6707 Fax: (852) 3150 6728 Fax: (852) 3150 6728 Email: jonathan.kiu@ pordahavas.com Email: bunny.lee@pordahavas.com