Summary of Key Points
In the first half of 2026, Gree Electric's revenue (89.398 billion yuan, a decrease of 8.15%) and net profit (13.278 billion yuan, a decrease of 7.87%) both declined, reflecting the overall pressure on the air conditioning industry. At the industry level, there was a double drop in domestic household air conditioner sales, a decline in exports, and sluggish performance in the commercial air conditioner sector. Within Gree's own business, household air conditioners remained the core segment (with their proportion increasing to 82.86%), while emerging businesses such as smart equipment saw growth, but industrial products experienced a decline. There was a divergence between domestic and international sales: domestic sales increased by 1.9%, while exports fell by 21.98%, although the market in Northwest Europe performed well, and the proportion of self-branded products increased. Although profits decreased in both areas, the profit margin rose slightly by 0.05 percentage points, and no semi-annual dividend was distributed this time.
Detailed Analysis
1. Industry Environment: Poor Sales and Low Prices
The air conditioning industry had a tough time in the first half of the year. Domestic household air conditioner sales fell by 13.1% (to only 40.96 million units), and sales revenue decreased by 15.9% (to 122.1 billion yuan). Moreover, 54.45% of online sales were for low-priced units priced below 2,100 yuan—consumers were more focused on saving money. Exports also struggled, with household air conditioner exports declining by 10.4% and commercial air conditioner sales dropping by 1.7%. The air conditioning industry was contracting both domestically and internationally, in both the household and commercial segments.
2. Gree's Business: Air Conditioners Remain the Pillar, with Mixed Results from Emerging Businesses
Gree's revenue mainly comes from air conditioners. Household air conditioner sales in the first half amounted to 74 billion yuan, a decrease of 2.89%, but their proportion of total revenue rose from 78% to 83%, making them the primary source of income. Emerging businesses, such as smart equipment (up 19%) and other main products (up 64.5%), showed promise, indicating progress in Gree's expansion into new areas. However, revenue from industrial products and green energy decreased by nearly 10%, dragging down overall performance. Overall, air conditioners remain Gree's mainstay, while new businesses have not yet become a significant source of growth.
3. Domestic and International Sales Divergence: Stable Domestic Market, Mixed International Performance
Gree performed well in the domestic market, with domestic sales increasing by 1.9% to 72.5 billion yuan, helping the company withstand industry pressures. Internationally, however, exports declined by 22%, mainly due to difficulties in the Middle East due to geopolitical conflicts. There were some positive developments, such as a 92% increase in sales to Northwest Europe (Norway, Denmark, etc.), and the proportion of self-branded products in exports reaching 70%, indicating growing brand recognition in these regions—Gree is no longer relying solely on OEM sales.
4. Profits: Decline in Both Revenue and Profit Margin, but with Cost Control Measures
Net profit decreased by 7.87%, mainly due to poor overseas sales and higher raw material costs. Nevertheless, the profit margin rose by 0.05 percentage points to 14.81%, suggesting that Gree has made efforts to improve efficiency. This could mean selling more high-end air conditioners (which generate higher profits) or reducing unnecessary expenses. In other words, although the total profit was lower, the profit per unit sold increased slightly.
5. No Dividend Distribution: Keeping Funds for Challenges
The decision not to distribute a semi-annual dividend is understandable given the industry's challenges and the decline in profits. The company needs to retain funds to navigate tough times, possibly for research and development of new air conditioners, expansion into new overseas markets, or as a reserve for uncertainties. With the industry in a difficult situation, having cash on hand provides more stability.
Overall, despite facing industry pressures, Gree has a solid core business, stable domestic sales, and positive results in certain international markets, along with a slight increase in the profit margin. However, as the industry environment does not improve, Gree will continue to face challenges in the future.