Rising copper prices and fierce price competition dealt a double blow to the air conditioning industry in 2025, with industry leader Gree Electric Appliances, Inc. of Zhuhai (Gree) also affected. On the evening of April 28, Gree released its 2025 financial results, showing a nearly 10% year-on-year decline in both revenue and net profit attributable to shareholders. Interestingly, Gree's stock price rose 5.28% the following day, and on April 30, it dipped slightly by 1.05% to close at 40.05 yuan.
The relative calm in the capital market can be partly attributed to Gree's timely announcement of a generous share buyback and dividend plan. The newly released first-quarter report for the current year also indicates a return to growth. However, the recent "copper vs. aluminum" debate between Gree and Hisense signals that the air conditioning market will continue to face challenges this year.
Gree has long been a benchmark for profitability in the air conditioning and major home appliance sector. However, in 2025, it succumbed to pressure. According to its financial report, Gree's revenue was approximately 170.4 billion yuan, with net profit attributable to shareholders around 29 billion yuan, both down 9.89% year-on-year. This marks the steepest decline in Gree's performance over the past three years.
In terms of revenue, Gree has reverted to its 2020 scale. That year, impacted by the pandemic, revenue fell nearly 15% to 1.70497 trillion yuan. Revenue subsequently recovered to over 2 trillion yuan in 2023 before entering a decline again.
With competitors Midea Group and Haier Smart Home both reporting growth in their 2025 annual reports, the revenue gap among the three major appliance giants has widened: Midea's revenue last year was approximately 4.585 trillion yuan, about 2.7 times that of Gree, while Haier Smart Home's revenue was 3.02347 trillion yuan, about 1.77 times that of Gree.
Compared to revenue, the decline in Gree's net profit attributable to shareholders drew more attention. As a profitability benchmark in the home appliance industry, Gree's 2025 net profit of 29 billion yuan was only comparable to its 2023 level.
In fact, 2023 was a peak year for Gree, with revenue hitting a five-year high and net profit attributable to shareholders increasing 18.41% year-on-year to 29 billion yuan. Public information suggests this was due to high demand from summer heatwaves and relatively lower copper costs: the average price of the main copper futures contract on the Shanghai Futures Exchange was about 67,760 yuan per ton in 2023, with an annual increase of about 4%. In contrast, the average price in 2025 was about 82,000 yuan per ton, rising over 20% for the year. On January 29 of this year, the main copper contract even surpassed 110,000 yuan per ton intraday.
Copper prices are crucial for Gree's profitability. According to the 2025 financial report, raw materials accounted for 87.52% of Gree's cost of sales, 1.5 percentage points higher than in 2024. Public data indicates copper comprises over 20% of air conditioning raw material costs, making it the largest single material expense. Gree's CMO Zhu Lei, responding to questions about the "copper vs. aluminum" debate in April, stated that using genuine copper is a product standard advocated by Gree, which continues to use copper in four core components. Gree no longer discloses air conditioning revenue separately; for reference, its last disclosure in the 2024 interim report showed air conditioning business accounted for about 78% of total revenue.
Simultaneously, Gree faced a saturated market last year with continuously declining average selling prices for air conditioners. Data from AVC (All View Cloud) indicates China's air conditioning market retail sales value reached 235.66 billion yuan in 2025, down 0.4% year-on-year.
It is worth noting, however, that Gree's net profit margin attributable to shareholders remained the highest among the three major appliance giants at 17.02% last year. The comparable figures for Midea Group and Haier Smart Home were 9.58% and 6.47%, respectively.
Despite the decline in revenue and net profit, Gree's stock market performance was relatively stable. This is partly due to its timely share buyback and dividend plans.
On April 28, Gree announced plans to use its own funds to repurchase shares within one year, with a total value between 5 billion and 10 billion yuan, at a price not exceeding 56.55 yuan per share. Over 70% of the repurchased shares will be canceled to reduce registered capital and increase earnings per share, with the remainder used for employee stock ownership or equity incentive plans.
Additionally, Gree proposed a 2025 annual profit distribution plan of 20 yuan cash dividend per 10 shares, totaling approximately 11.17 billion yuan. Combined with the 2025 interim dividend, total cash dividends for 2025 are expected to reach about 16.755 billion yuan, representing 57.77% of its 2025 net profit attributable to shareholders.
Another reason is capital market expectations for Gree's future.
Also disclosed on April 28 was Gree's first-quarter report for the current year. Revenue was approximately 43 billion yuan, up 3.52% year-on-year, while net profit attributable to shareholders was 6.082 billion yuan, an increase of about 3%. In comparison, Midea Group reported roughly 2% growth in both revenue and net profit for the first quarter, while Haier Smart Home experienced a year-on-year decline in both metrics.
However, the recent "copper vs. aluminum" dispute between Gree and Hisense signals intensified competition in the air conditioning industry this year. Unlike 2025, which saw volume growth but value decline in the domestic air conditioning market, the first quarter of this year witnessed declines in both volume and value. AVC data shows China's air conditioning market's full-channel retail sales value fell 13.8% year-on-year in the first quarter of 2026, with retail volume down 13%. In March alone, full-channel retail sales value dropped 17.3%, and volume declined 18.4%.
An analyst from industry research firm ChinaIOL, Long Fei, stated that competition in the domestic air conditioning market will be fiercer this year. With weak terminal sales and companies setting high growth targets, pressure is significant, leading to increased emphasis on product marketing. "The price competition in the domestic market is currently severe; everyone is competing on quality at similar price points," the analyst said.
Yang Chao, Deputy General Manager of the Major Home Appliance Division at AVC, also noted that competition in this year's air conditioning market will undoubtedly be more intense than last year. Looking at 2025, national subsidy policies positively impacted the home appliance market overall, but price wars significantly affected air conditioning manufacturers' profits. Therefore, this year, companies will focus on both "improving product mix" and "competing for market share" simultaneously.
Yang Chao further believes the second quarter will be a critical period for air conditioning companies to achieve their annual targets. A potentially hot summer this year could aid market recovery in the second quarter. However, with new demand largely exhausted over the past few years, achieving substantial growth is unrealistic.
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