Survey and Analysis of Popularization of Household Appliance Subsidy Policy in 2012

In the first half of 2012, the home appliance industry was neither good nor bad. Affected by the deceleration of domestic economic growth, sales in the home appliance industry declined, but benefiting from the decline in raw material prices, the home appliance industry’s net profit did not decline significantly. In the long run, with the country launching a new round of home appliance subsidy policies and the promotion of state-owned housing construction, the home appliance industry still has growth opportunities.

In the first half of this year, home appliance listed companies realized operating revenue of 261.7 billion yuan, slightly lower than the value of 275.7 billion yuan in the same period of 2011. Among them, with the exception of Gree's revenue growth of nearly 20%, TCL Group, Sichuan Changhong and Hisense Electric's revenue was flat with the same period of last year, and US electrical revenue fell sharply to only 39 billion yuan, a decrease of 37% year-on-year. However, in the context of declining revenue, the net profit of home appliance listed companies has not dropped significantly. Among them, in the first half of the year, the decline in the United States's electrical appliances, net profit did not fall, an increase of 5.6% over the same period last year.

Many analysts in the industry stated that the decline in raw material prices is an important factor in the decline in the profitability of the home appliance industry. Taking air-conditioning as an example, air-conditioners are most sensitive to copper prices and crude oil prices. This year, the price of copper and crude oil and other commodities have been weak, resulting in a rise in the gross profit margin of air-conditioning products.

According to Wind statistics, in the middle of 2012, the overall sales margin of the home appliance industry was 20.4%, which was an increase of 2% compared with 18.4% in the same period of last year. The gross profit margin of air conditioners rose from 16.4% last year to 22.1% in the middle of this year.

Gao Zhen, an analyst at Donghai Securities, believes that despite the fact that the economic downturn has not stopped, in the long run, the entire industry is still worth looking forward to.