A research report from Gf Securities Co., Ltd. indicates that the home appliance sector recorded total operating revenue of 400.5 billion yuan in Q2 2026, a year-on-year decline of 0.6%. Net profit reached 34.5 billion yuan, down 9.4% from the prior year period, with gross margin contracting 0.5 percentage points to 25.5% and net margin easing 0.8 percentage points to 8.6%.
White goods posted steady earnings growth, underpinned by stable return on equity and high dividend yields, positioning them well to benefit from trade-in subsidy policies. Leading black electric appliance makers are experiencing a triple convergence of benefits: product iteration advantages, improving domestic competitive dynamics, and expanding overseas market share. The logic of improving competitive dynamics in the cleaning appliance segment remains intact, with expectations for profit margin recovery elasticity in 2026. The two-wheeler industry is seeing domestic repair combined with accelerating Southeast Asian export volumes.
Where the pressure sits
Revenue growth turned negative on a comparable basis, with Q1 and Q2 2026 revenues declining 0.1% and 0.6% year-on-year respectively. Splitting domestic and export sales, Q2 retail sales of home appliances fell year-on-year, weighed down by last year's high comparison base and diminishing marginal effects of national subsidy programs. On the export front, North American shipments recovered in Q2 while Asian markets remained under pressure, creating notable divergence across sub-sectors.
Profitability metrics weakened across the board, with Q2 gross margin and net margin slipping 0.5 and 0.8 percentage points year-on-year respectively. The decline was primarily driven by rising raw material costs and appreciation of the renminbi. However, leading companies generally mitigated the impact through disciplined expense control, offsetting raw material and currency headwinds from a high base, thereby limiting the severity of net margin erosion.
White goods: resilient core
White goods recorded Q2 revenue and net profit declines of 1.8% and 9.3% year-on-year respectively, with net margin easing 0.8 percentage points. Despite this, the sector demonstrated resilience, with domestic sales revenue and gross margins outperforming pessimistic market expectations. Export sales showed mixed results, primarily reflecting varying exposure to the US market and brand-specific alpha. Raw material costs and foreign exchange were the key cost-side constraints, with currency effects being the more significant factor. Raw material headwinds to gross margins are expected to remain manageable in H2, while currency pressures are likely to ease during the period.
Kitchen appliances lag, small appliances advance
Kitchen appliance companies faced a challenging quarter, with Q2 revenue and net profit plunging 15.2% and 57.9% year-on-year respectively, and net margin down 5.0 percentage points. The property market downturn, compounded by reduced economies of scale, weighed heavily on near-term results.
In contrast, small appliance makers delivered Q2 revenue and net profit growth of 5.9% and 6.1% year-on-year respectively. Strong overseas demand for robot vacuums persisted, though gross margins were pressured by higher input costs.
Black electric appliances: structural improvement
The black electric appliance segment saw Q2 revenue rise 5.0% year-on-year while net profit slipped 1.4%, with net margin down 0.3 percentage points. Domestic industry volumes contracted but prices increased, while Chinese companies continued to expand global share. Structural improvements drove stable growth for brand players in the sector.
Key risks
Potential headwinds include sharp increases in raw material prices, significant currency fluctuations, weakening industry demand, and intensified competitive pressures.
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