China’s Hisense Kelon posts 10.6pc interim profit growth amid sluggish sales in home market

China’s white goods giant Hisense Kelon posted a 10.59 per cent growth in net profit for the first half of the year, buoyed by a growing overseas market despite sluggish refrigerator and air conditioner sales on the mainland.

The company reported a net profit of 559.28 million yuan, up from 505.71 million yuan, although revenue slipped 3.59 per cent to 13.12 billion yuan from 13.61 billion yuan in the same period last year.

Hisense Kelon, which manufactures refrigerators and air conditioners, is one of two publicly listed companies controlled by Hisense Group. Shanghai-listed Hisense Electric Company, which makes TVs, is the group’s largest subsidiary.

Gross profit margins were improved by introducing a new, high-end range of Beiduofen refrigerators, as well as the result of increased sports and marketing in its overseas markets, Hisense Kelon said in its results announcement.

Overall, revenue from its core segments comprising refrigerators and washing machines slipped 1.55 per cent, while the air conditioner segment declined 6.59 per cent.

Demand for white goods on the mainland remained sluggish, with revenue from domestic sales falling 10.36 per cent to 7.5 billion yuan.

In contrast, the overseas market has picked up, with revenues of 4.63 billion yuan, a 13.32 per cent increase in the last six months. Export volumes for Hisense Kelon’s air conditioning products grew 30.9 per cent compared to the first six months of 2015, according to the company, which was quoting Chinese customs export statistics.

While domestic demand was slow in the first half of 2016, the company expects the pace to pick up in the second half following high temperatures over July and August in China.

Hisense Kelon said that it plans to enhance its online operations and scale up e-commerce operations, while also expanding into overseas markets.

The company’s stock traded down 0.36 per cent to close at HK$5.50 on Thursday, ahead of its results. Hisense Kelon’s stock has gained 47.5 per cent since the beginning of the year.

No interim dividends are to be paid out, similar to the same period last year.