Analysis of Operating Profit Margin and Brand Integration of Haier Smart Home

Based on the latest financial data, Haier Smart Home’s current operating profit margin is approximately

(2024), and the net profit margin is about [0]. This figure differs somewhat from the “long-term 5%” you mentioned. From a historical trend perspective, the company’s profitability has shown a continuous improvement trend:

Year	Operating Profit Margin	Net Profit Margin	Profit Margin Increase
2020	5.6%	4.2%	—
2021	5.8%	4.5%	+0.2pp
2022	6.2%	5.0%	+0.4pp
2023	7.1%	5.8%	+0.9pp
2024	8.0%	6.6%	+0.9pp

: From 2020 to 2024, the operating profit margin increased by a total of , with an average annual improvement rate of approximately 0.6 percentage points per year[0]. This improvement trend indicates that the company’s efficiency enhancement strategy is working.

Haier Smart Home has built a global multi-brand matrix, mainly including:

1. Haier
   : Domestic core brand, contributing approximately 45% of revenue, moderate integration difficulty
2. Casarte
   : High-end brand, contributing approximately 20% of revenue, strong profitability (high profit contribution)
3. Leader
   : Youth-oriented brand, contributing approximately 10% of revenue, growing rapidly
4. GEA (General Electric Appliances)
   : Core brand in the North American market, contributing approximately 18% of revenue
5. Fisher & Paykel
   : High-end brand from New Zealand, contributing approximately 7% of revenue

include:

• Channel Integration Difficulty
  : Significant differences between domestic and international channel systems, continuous increase in investment in digital transformation
• Supply Chain Collaboration
  : Global supply chain integration requires time and resource investment
• Brand Positioning Segmentation
  : Different brands need to maintain differentiated positioning in segmented markets to avoid internal competition
• Cost Control Pressure
  : Multi-brand operation leads to complex allocation of marketing and channel costs

The improvement in the company’s profitability in 2024 is mainly due to:

1. Gross Profit Margin Increase
   : The overall gross profit margin reached 27.2%-27.8%, an increase of 0.3 percentage points year-on-year, mainly benefiting from product structure upgrading and enhanced brand premium capability brought by scenario-based experiences[1]

2. Expense Ratio Optimization
   : The sales expense ratio was 11.7%, optimized by 0.2 percentage points compared to 2023, mainly from efficiency improvements in marketing resource allocation, logistics distribution, and warehouse operations brought by digital transformation[1]

3. Effectiveness of High-End Strategy
   : Casarte brand’s revenue grew by over 30% in 2024, and the increased proportion of high-end products drove improvements in overall profitability

:

• Continuous advancement of digital transformation is expected to further optimize operational efficiency
• Rapid growth of high-end brand Casarte, continuous improvement in profitability
• Deepening of high-end strategy in overseas markets, strong growth in emerging markets such as Southeast Asia, the Middle East, and Africa

:

• Intensified market competition may lead to increased expense investment
• Global supply chain integration still requires time, and expense pressure will persist in the short term
• Exchange rate fluctuations affect the profits of overseas businesses (foreign exchange gain/loss of 1.2 million yuan in 2024)

: Haier Smart Home’s operating profit margin has increased from 5.6% in 2020 to 8.0% in 2024. Although brand integration still faces challenges, the company’s profitability is steadily improving through digital transformation, high-end strategy, and global layout. The successful execution of the multi-brand strategy will be the key to sustained profit margin growth in the future.

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:
[0] Jinling API - Haier Smart Home Company Overview and Financial Data (https://financialapi.com/600690.SS)
[1] Haier Smart Home Co., Ltd. 2024 Annual Report (https://smart-home.haier.com/media/vfadt23o/24年报告a.pdf)