Haier Smart Home : 1Q 2022 Earnings Report

Haier Smart Home Co., Ltd.*

ऎဧ౽࢕ٰ΅Ϟࠢʮ̡

(a joint stock company incorporated in the People's Republic of China with limited liability)

2022 FIRST QUARTER REPORT

The financial data of the Company for the first quarter of 2022 have been prepared in accordance with the China Accounting Standards for Business Enterprises and are unaudited. Net profit attributable to owners of the parent company and equity attributable to owners of the parent company in the consolidated financial statements are not different from those financial data prepared under the International Financial Reporting Standards.

Important Notice

The board of directors (the "Board"), the board of supervisors, directors, supervisors and senior management of the Company hereby assure that the content set out in the quarterly report is true, accurate and complete, and free from any false record, misleading representation or material omission, and are individually and collectively responsible for the content set out therein.

The legal representative of the Company, chief financial officer of the Company and person in charge of accounting department hereby certify that the financial statement information set out in the quarterly report is true, accurate and complete.

Whether the first quarterly report has been audited or not

□Yes √No

I.

Key Financial Information

(I)

Major accounting data and financial indicators

Unit and Currency: RMB

Items	During the Reporting Period	For the corresponding period of last year	Year-on-year increase/decrease during the Reporting Period (%)
Before adjustment	After adjustment	After adjustment
Operating revenue	60,250,997,851.46	54,773,701,753.64	54,772,592,531.47	10.00
Net profit attributable to shareholders of the listed Company	3,517,044,899.45	3,053,933,589.63	3,055,155,689.55	15.12
Net profit after deduction of non-recurring profit or loss attributable to shareholders of the listed Company	3,190,978,313.06	2,823,027,182.06	2,823,027,182.06	13.03
Net cash flow from operating activities	1,154,796,354.40	2,863,386,935.66	2,868,305,560.21	-59.74
Basic earnings per share (RMB per share)	0.38	0.33	0.33	15.15
Diluted earnings per share (RMB per share)	0.38	0.33	0.33	15.15
Weighted average return on net assets (%)	4.28	4.38	4.38	decrease by 0.10 percentage points
At the end of the Reporting Period	At the end of last year	Increase/decrease at the end of the Reporting Period compared to the end of last year (%)
Before adjustment	After adjustment	After adjustment
Total assets	215,409,453,493.38	217,459,494,212.74	217,459,494,212.74	-0.94
Owner equity attributable to shareholders of the listed Company	84,082,609,436.94	79,810,927,325.55	79,810,927,325.55	5.35

Reasons for retroactive adjustments or restatement

In the fourth quarter of 2021, the Company completed the relevant matters in respect of the acquisition of Qingdao Haier Quality Testing Co., Ltd. (For details of the acquisition matters, please refer to the "Announcement on the Acquisition of Equity Interest in a Subsidiary from Haier Group Corporation by Haier Smart Home Co., Ltd. and Connected Transaction" disclosed on 30 October 2021 by the Company and relevant announcements) The transaction is a business combination under common control and the Company has subsequently restated the comparative statements for the corresponding period in accordance with relevant accounting standards.

During the Reporting Period, in light of the challenges arising from weak market demand, consistently high price of bulk raw materials and resurgence of COVID-19, the Company adhered to the strategic goal of becoming a smart home ecosystem brand in the Internet of Things era, continued to strengthen its high-end brand advantage through product upgrade and innovation, and implemented whole-process digital transformation to achieve cost reduction and efficiency improvement. We explored weak network business in domestic market while continuing our high-end brand building strategy in the overseas market, expanded the advantages in our core home appliances and tapped into new business areas to achieve sustainable and steady business development.

Performance of Key Indicators

I.

Revenue and profit

In the first quarter of 2022, the Company realized revenue of RMB 60.251 billion and net profit attributable to the owners of the parent company of RMB3.517 billion, representing an increase of 10.0% and 15.1% as compared to the corresponding period of 2021.

1.Smart Home and other Businesses in China

The Company delivered solid results through enhancing operational efficiency and improving user experience. On one hand, business operational efficiency and cost competitiveness were enhanced through digitalization, innovative operational model and establishment of whole process and full staff cost system. On the other hand, retail sales were

increased through integration of online and offline stores and establishment of end-to-end digital platform, which optimized the resource input with better performance and reduced the

proportion of underperforming regions, thus facilitating customer acquisition and boosting

the conversion efficiency. Furthermore, we accelerated expansion in home improvement channels by opening 120 new Three-Winged Bird 001 stores to capture increasing consumer demand for comprehensive built-in appliances packages.

In the first quarter of 2022, revenue from the smart home and other businesses in China increased by 16.0% as compared to the corresponding period of 2021 while Casarte's sales revenue increased by 32.3% year-on-year from 2021.

（1）

Household Food Storage and Cooking Solutions (Internet of Food) Refrigerator

According to CMM, by retail revenues, our leadership was strengthened with shares of online and offline refrigerator market were 38.6% and 42.8% respectively in the first quarter

of 2022.

During the reporting period, the Company focused on product mix upgrades, digital efficiency enhancement and smart manufacturing. Boguan refrigerators boasting cell-level freshness preservation was launched to fully meet more sophisticated demand of preserving

food ingredients, thus contributing to the increases of medium- and high-end products. We also developed dual-axis variable hinges and moved the cooling units to the bottom to further enhance the competitiveness of our built-in refrigerators. Through scenario solutions characterized by premium preservation and integrated design of cabinet and kitchen, we

pioneered the trend of home appliance and home furnishing integration. In addition, the publication of Built-in Refrigerator Standard established the installation standard of built-in units in order to further improve user experiences.

Kitchen Appliance

According to CMM, by retail revenues, our shares of online and offline kitchen appliances market were 4.5% and 7.3% respectively in the first quarter of 2022, while Casarte's market share recorded a year-on-year growth of 0.9 percentage points offline.

During the reporting period, the Company focused on high-end solution strategy and accelerated expansion in home improvement channels by launching bestsellers such as

Casarte Gourmet and Galaxy series, both of which contributed to Casarte's kitchen appliance revenue growth of 70.3% year-on-year with 96.7% revenue increase from dish washers. 859 new sales outlets were developed in home improvement channels and lower tier markets

during the period. We also made effort to gain user recognition with Three-Winged Bird kitchen scenarios solutions, formed cross-industry alliances with interior designers, organized interactive events such as "super BBQ", while offering cleaning and upgrading

services to boost user conversion efficiency.

（2）

Household Laundry Solutions (Internet of Clothing)

According to CMM, by retail revenues, the Company's leadership consolidated with market share of 40.3% online and 45.4% offline in the first quarter of 2022; in particular, our shares of online and offline tumble dryer market increased by 2.5 and 2.3 percentage points respectively reaching 27.6% and 35.3%, putting us in top one position offline.

During the Reporting Period, the Company expedited the development of tumble dryers growth with continuous innovation. Casarte's Zhongzihemei series addresses users' concern of separated washing and drying with additional space required to stack two machines, and it achieved market share of 95% in top washer + bottom dryer category. The Company also achieved 114% revenue growth from tumble dryers with increased investment and new product launches including Casarte Xianjianhemei (纖見和美) Dryer.

（3）

Air Solutions

Home air conditioning

The Company focused primarily on smart and health-conscious products, strengthened the retail transformation and made breakthroughs in medium to high end products. According

to CMM, by retail revenues, Haier's online and offline market share was 13.7% and 19.6% respectively. Leveraging on growing product portfolio of Casarte and Haier water-cleaning air conditioner, our market share in the high-end home air conditioners (hanging machines priced above RMB4,000 and standing machines priced above RMB10,000) reached 24.3%, up by 4.8 percentage points year-on-year.

During the Reporting Period, the Company focused on growing revenue with differentiated product innovation where Haier features healthy air, Casarte features double tower of soft wind while Leader caters for young and trendy demand. Meanwhile, we

enhanced retail transformation, strived to achieve full user coverage, 1,515 new franchise stores were developed to increase presence in air conditioner, HVAC and water solutions channels. Capitalizing on the brand awareness of the Three-Winged Bird scenario solutions

and the three-in-one user platform (including sales, design and service), home central air conditioner revenue grew by over 70% leveraging on Three Winged Bird one stop purchase,

design and service solutions.

Commercial air conditioning

The Company focused on meeting segmented user demand with exclusive customized air solutions for different scenarios such as transportation, commercial real estate, data centres and hotels: 1. The Company's introduced more environmentally friendly HFO refrigerant in maglev air conditioners to address our users' concern of carbon reduction and environment protection. 2. In the European market, we released R32 environmental

protection refrigerant air source heat pump products that heat water, kills bacteria and automatically adjust temperature, without having to heat water and the room at different

temperature, thus well-received by local users.