Hengan International Group (1044) H2 2024 earnings summary

Executive summary

• Revenue declined 4.6% year-over-year to RMB22.67 bn, with core business revenue down 3.9% to RMB20.36 bn and gross profit margin down to 32.3% from 33.7%.

• Profit attributable to shareholders fell 17.9% to RMB2.30 bn, and EPS dropped 16.6% to RMB2.015.

• Maintained a solid net cash position and improved gearing ratio to 62.6% from 69.8%.

• E-commerce and new retail sales grew 8.0%, now comprising 34.1% of total revenue.

• Dividend per share remained stable at RMB1.4.

Financial highlights

• Gross profit decreased 8.6% to RMB7.32 bn; operating profit down 15.7% to RMB3.35 bn.

• Net cash inflow from operations was RMB3.07 bn, down from RMB3.88 bn.

• Interest income was RMB838.9 mn; interest expense reduced to RMB479.1 mn.

• Government grants received totaled RMB464.6 mn.

• Capital expenditure was RMB1.69 bn, mainly for production capacity expansion.

Outlook and guidance

• Expects stable revenue and gross profit margin in 2025, driven by premiumization, omni-channel strategy, and product upgrades.

• Plans to expand tissue paper capacity and launch new hygiene product facilities in 2025.

• Focus on controlling promotional expenses and increasing high-end product mix.

• Aims to further grow e-commerce and new retail channel sales.

• Will continue to invest in production capacity and technological upgrades.