Hisense Home Appliances has disclosed its financial report for the first quarter of 2026. The delayed results have intensified pressure from both public opinion and capital markets on this established home appliance company during its critical transformation phase.
During the reporting period, the company achieved operating revenue of 23.06 billion yuan, a year-on-year decrease of 7.16%. Net profit attributable to shareholders was 1.035 billion yuan, down 8.22% compared to the same period last year. Notably, the net profit after deducting non-recurring items was 840 million yuan, reflecting a significant decline of 16.60%, which far exceeded the drop in overall profit and indicates a clear weakening in profit quality.
This is not the first time Hisense Home Appliances has reported declining financial results. Throughout 2025, the company experienced a simultaneous decrease in both revenue and net profit, marking a rare annual "double decline" trend in recent years. Entering 2026, the downward trend has persisted instead of abating.
The market finds it particularly difficult to accept that these weak results coincide with the nearly one-year mark since a new management team took office. In late July 2025, the company underwent a major personnel reshuffle. The former president, Hu Jianyong, stepped down, and Chairman Gao Yuling, who has a financial background and is from the post-80s generation, concurrently assumed the role of president. Yin Bitong, a former core executive from Midea's air conditioning division, joined to lead the Air Solutions Business Unit. Fang Xueyu, the head of overseas business, was appointed as an executive director. This new team, structured around "financial stewardship, strengthening air conditioning operations, and deepening globalization," was officially formed, raising market expectations for a turnaround amidst slowing growth, structural imbalances, and profit pressure.
However, nearly nine months later, the anticipated revitalization and rebound have failed to materialize. Instead, the company faces continued revenue decline, pressure on both domestic and international air conditioning operations, overseas gross margins persistently below half of domestic levels, and lagging product competitiveness and brand presence compared to the industry.
From the annual report slump to the continued decline in the quarterly report, a series of adjustments and strategies by the new management have not halted the downward trend. Instead, the company finds itself in an awkward situation where adjustments lead to increased passivity.
Once a stable mid-to-upper-tier player in the home appliance industry with strong global momentum, Hisense Home Appliances is now seeing the gap widen with competitors like Gree, Midea, and Haier. Under multiple pressures from a sluggish real estate market, weak consumption recovery, and intensifying industry competition, the company is gradually sliding towards the边缘 of falling behind.
As a leading enterprise with a complete portfolio of major appliances, one of the earliest global layouts, and a central air conditioning business firmly positioned at the industry's forefront, Hisense Home Appliances' consecutive declines are not accidental.
Since the new management took office, the strategic focus has leaned towards financial control and cost contraction. Progress has been slow in product development, brand upgrading, breakthroughs in the domestic market, and optimization of the overseas structure. This, combined with the drag from the main air conditioning business, the difficulty escaping the low-margin trap overseas, and internal磨合 challenges in authority and responsibility, has ultimately led to the predicament of consecutive performance declines. This transformation, initiated by the personnel change, is turning into a war of attrition with no visible turning point.
**Financially-Driven Cost Control Prioritized, New Management's Dilemma**
The personnel adjustment in late July 2025 was seen as a critical step for Hisense Home Appliances to break the deadlock. Gao Yuling, a financial expert who grew within the Hisense system and held key positions such as group financial controller and chief accountant, is skilled in capital operations, cost control, and overseas mergers and acquisitions. Upon assuming the presidency, she was tasked with "improving efficiency, stabilizing profits, and maintaining the base." Yin Bitong, from Midea, brought mature air conditioning operational experience and was seen as the key to strengthening the weak air conditioning segment. Fang Xueyu, long in charge of overseas marketing, aimed to stabilize the global foundation.
The logic behind this combination was clear: use financial control to protect profits, leverage external talent to revitalize the air conditioning business, and rely on experienced hands to stabilize overseas operations, attempting to achieve an operational reversal in the shortest possible time.
However, judging by the first-quarter results, the new management's approach over the past nine months has clearly fallen into an imbalanced state of "excessive cost control and insufficient攻坚 efforts." Gao Yuling's financial background dictates an operational philosophy centered on stability, contraction, and risk control. After taking office, the sales expense ratio, administrative expense ratio, and R&D expense ratio all declined to varying degrees. The company focused more energy on compressing accounts receivable, improving cash flow, and reducing expenses. Operating cash flow saw significant year-on-year improvement in Q1 2026, but the cost was a markedly weakened offensive capability on the business front.
The home appliance industry has long entered a stage of fierce competition where stagnation means falling behind. Overemphasis on defense and cost control inevitably leads to comprehensive lag in product iteration, brand investment, channel expansion, and end-market initiatives.
Most criticized by the market is the new management's delayed effectiveness in boosting the air conditioning business. As the company's largest business segment, the HVAC division reported revenue of 38.829 billion yuan in 2025, down 3.61% year-on-year, making it the core variable dragging down overall performance. Even with the introduction of a market-oriented executive like Yin Bitong, internal mechanisms, product competitiveness, and channel shortcomings have not been quickly resolved. In Q1 2026, household air conditioners faced pressure in both domestic and export sales. Domestic sales were squeezed by rising raw material costs and industry price wars, while export sales declined significantly due to geopolitical conflicts, with profit margins also falling, becoming the main driver of the profit decline. The promised turnaround in the air conditioning business has yet to materialize.
The continued contraction in R&D investment further sows seeds of worry for long-term competitiveness. Against an industry backdrop of increased investment in AI appliances, smart technology, and energy-saving technologies, Hisense Home Appliances' R&D expense ratio decreased instead of rising in the first quarter. The pace of launching new technologies, products, and scenarios is noticeably slower than that of competitors. The refrigerator and washing machine business barely maintains its base relying on the Ronshen brand but lacks growth momentum and is slow in pushing premiumization, making it difficult to compensate for the shortfall in the air conditioning segment. Although the central air conditioning business maintains growth, it struggles to single-handedly support the overall performance and faces limited growth空间 due to the低迷 in real estate and public construction projects.
The anticipated "new broom sweeps clean" effect of the new management has ultimately turned into cautious and conservative defense. Internal磨合, division of responsibilities, and strategic pacing within the new team have shown significant misalignment. Cost pressure from finance, lack of offensive drive in business units, merely holding the overseas base, and losing domestic market share – the叠加 of these multiple factors has trapped the company in a negative cycle where more cost control leads to greater passivity, and more conservatism leads to further decline.
Several home appliance industry analysts have直言 in research reports that Hisense's new management focuses too much on stabilizing short-term financial indicators, neglecting the long-term reshaping of business structure, product strength, and brand power. This has resulted in a transformation where only cost reductions are visible, without a rebound in revenue or competitiveness. The cost of short-term profit stability is the exhaustion of long-term growth momentum.
**Dual Structural Traps: Air Conditioning Drag and Overseas Margin Inversion**
If the conservative approach of the management is the direct cause of the decline, then the持续 pressure on the core air conditioning business and the long-standing issue of overseas gross margins being less than half of domestic levels are the two major structural deadlocks confining Hisense Home Appliances. These are also the core challenges the new management has failed to resolve in their nine months in office.
The underperformance of the air conditioning business is the first to breach the company's fundamental performance base. As one of the few domestic companies with a complete air conditioning industry chain, Hisense owns both Hisense and Kelon brands, coupled with the Hisense-Hitachi central air conditioning segment. This should theoretically create synergistic advantages across residential and commercial, domestic and export markets. However, the reality is that both domestic and export sales of household air conditioners are mired in difficulties.
In Q1 2026, sales of Hisense-brand air conditioners declined sharply both online and offline. Even with relative stability in the overall industry, the company significantly underperformed. Problems such as low proportion of premium products,被动 involvement in price wars, and insufficient push at the retail level erupted集中.
On the export front, affected by geopolitical conflicts in the Middle East, high channel inventory, and透支 demand, air conditioner exports saw a double-digit decline, directly pulling down the overall revenue growth rate and becoming the primary drag in the first quarter.
The疲软 of the air conditioning business exposes long-standing accumulated issues at Hisense: ambiguous product positioning, insufficient brand investment, and weak channel capabilities. Faced with Gree's technological barriers, Midea's full-industry-chain efficiency, and Haier's scenario-based ecosystem, Hisense air conditioners have始终徘徊 in the mid-range price-performance segment. Attempts at premium突破 have failed, mid-range market share is being squeezed, and the new management's introduction of external executives has not brought disruptive changes in product definition, marketing strategies, or channel reform. Instead, they have merely continued patching up the existing path, naturally unable to reverse the decline. As the largest single product category in major appliances, once air conditioning loses momentum, the entire company's growth and profits are deeply affected.
Even more棘手 than the air conditioning drag is the长期严重 inversion of gross margins in overseas operations. 2025 financial report data shows that Hisense Home Appliances' domestic gross margin was close to 30%, while the overseas gross margin was only 12.59%—a gap of over 17 percentage points. Overseas revenue already accounts for over 40% but has become the biggest累赘 dragging down the overall profit level. This gap is significantly higher than peers like Haier and Midea. Haier's domestic-overseas gross margin gap is only about 4 percentage points, while Midea even achieves higher gross margins overseas than domestically. Hisense's globalization has effectively become a "volume without profit" loss-making endeavor.
The root cause of this situation lies in the overseas business adopting a buy-out distribution model. Hisense sells its products to overseas distributors at the factory price, with subsequent retail profits taken by the channel. Furthermore, overseas sales primarily rely on mid-to-low-end models for volume, with a high proportion of OEM manufacturing, weak pricing power, and the叠加 of high tariffs, logistics, and marketing costs. These multiple factors keep the overseas business perpetually徘徊 in low-margin territory.
After the new management took office, they did not undertake a systematic重塑 of the overseas profit model, product structure, or channel模式. They continued with a volume-expansion-first strategy, trading low margins for scale, resulting in a paradox where the larger the overseas business becomes, the more it drags down the overall gross margin – "the more they go global, the less profitable they become."
Under this dual internal and external pressure, Hisense Home Appliances is trapped in a typical structural dilemma: domestically, it depends on air conditioning, but air conditioning is weak; globally, it looks to overseas markets, but overseas operations are unprofitable.
In nearly nine months, the new management has neither lifted the air conditioning business out of its trough nor changed the low-margin困境 overseas. Furthermore, they have failed to achieve breakthroughs in premiumization of refrigerators and washing machines, innovation in AI appliances, or a counteroffensive in domestic channels. They have merely relied on expense control to勉强维持 a narrowing profit margin but cannot stop the continuous decline in revenue and adjusted net profit. This symptomatic approach without addressing the root causes is causing the company to gradually lose market share and industry standing.
**Defensive Transformation Reaches a Dead End, Hisense Needs Thorough Self-Renewal**
Having delivered declining report cards for two consecutive reporting periods, and with the new management failing to reverse the situation in nine months, Hisense Home Appliances'困境 is clearly exposed. This established major appliance giant, which built its foundation on globalization and central air conditioning, is gradually sliding towards the掉队 lane due to strategic conservatism,疲软 in its core business, structural imbalance, and lack of offensive capability.
The Q1 decline is not the endpoint. If the current mindset continues, performance pressure will further manifest. The core of the problem lies not in the weak external environment but in the internal失速 of transformation.
The new management relies too heavily on financial cost control to achieve short-term profit stability, neglecting the long-term development of products, brand, channels, and technology. Efforts to strengthen the air conditioning business show no effect, the overseas low-margin trap remains unbroken, domestic market share continues to be eroded, and the transition to AI and smart technology lags. This ultimately results in a situation where defending the base fails, and ground is instead lost.
The home appliance industry has no faith in gentle改良. Faced with the强势挤压 from Gree, Midea, and Haier, and amidst accelerating consumption upgrading and technological iteration, defensive management is注定 without a way out.
Hisense Home Appliances is not without cards to play for a turnaround. The central air conditioning business remains stable, the refrigerator and washing machine business has a solid base, the overseas channel network is well-established, and brand heritage persists. These are the foundations for a rebound from the bottom.
However, to truly escape the downward curve, the company must abandon the current conservative mindset that prioritizes cost control and shift towards an offensive growth path. It needs to make determined efforts in the air conditioning business, accelerating product and机制 reform. In overseas markets, it should promote structural upgrades, increase the share of自有品牌 and high-margin products, and change the low-margin buy-out model. Domestically, it must increase R&D and brand investment to seize opportunities in AI appliances, premium suites, and scenario-based solutions. Management must transition from a financial defense-oriented mindset to a business攻坚-oriented one, using more determined reforms to激活 organizational vitality.
The market does not offer many chances for error to established enterprises. The磨合 window for the new management is nearing its end. Continuing to respond to fierce competition with a steady, conservative, cost-controlling approach will only solidify the downward trend further.
For Hisense Home Appliances to halt the consecutive decline, it must demonstrate the determination for radical reform, shifting its strategic focus from "protecting profits" to "recapturing growth," reorienting management from "financial control" to "business offense," and transforming globalization from "volume without profit" to "volume and profit rising together." A thorough, albeit belated, renewal has become the only way out for Hisense Home Appliances. Otherwise,持续下滑 performance will continue to erode the last vestiges of confidence from the market and investors.
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