Haier Smart Home 3Q2021 Earnings Report

Haier Smart Home Co., Ltd.*

海 爾 智 家 股 份 有 限 公 司

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

2021 THIRD QUARTER REPORT

The financial data of the Company for the third quarter of 2021 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.

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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 third quarterly report has been audited or not

□Yes √No

1. Key Financial Information

1. Major accounting data and financial indicators

Unit and Currency: RMB

Year-on-year

Year-on-year

From the beginning

increase/decrease

increase/decrease

during the

During the

of the year to the

Items

during the

beginning of the

Reporting Period

end of the Reporting

Reporting Period

year to the end of

Period

(%)

the Reporting

Period (%)

Operating revenue

58,344,749,484.03

-0.58

169,963,571,548.76

10.07

Net profit

attributable to

3,082,339,695.41

-12.43

9,934,611,508.38

57.68

shareholders of the

listed Company

Net profit after

deduction of non-

recurring profit or

2,785,809,654.46

82.93

9,055,716,061.18

121.28

loss attributable

to shareholders of

the listed Company

Net cash flow from

N/A

N/A

13,359,284,075.18

133.91

operating activities

Basic earnings per

share (RMB per

0.331

-38.13

1.072

11.90

share)

Diluted earnings

per share (RMB

0.331

-36.35

1.061

12.99

per share)

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Weighted average

Decrease by 3.03

Increase by 0.58

return on net assets

4.00%

13.29%

percentage points

percentage point

(%)

Increase/decrease

at the end of the

At the end of the

At the end of last year

Reporting Period

Reporting Period

compared to the

end of last year

(%)

Total assets

212,940,580,271.32

203,459,495,879.65

4.66

Owner equity

attributable to

77,733,774,523.46

66,816,422,614.55

16.34

shareholders of the

listed Company

Note: "Reporting Period" refers to the three-month period commencing from the beginning of this quarter to the end of this quarter.

During the Reporting Period, amid tepid industry demand, rising raw material costs and resurgence of the pandemic overseas, the Company expedited its IoT-based smart home strategic transformation, with a focus on building high-end brands, scenario brands, and ecosystem brands. We continuously consolidated the advantages in one-stophigh-endscenario-based smart home solutions, global footprint synergy, efficient operation system, and smart home experiential Cloud platforms; while accelerating digital transformation and efficiency improvement, so as to achieve sustainable development with a steady performance.

Key Performance Indicators

I. Revenue and profit

In the first three quarters of 2021, the Company recorded revenue of RMB169.964 billion, net profit of RMB10.064 billion, net profit attributable to shareholders of the listed Company of RMB9.935 billion, net profit after deduction of non-recurring profit or loss attributable to shareholders of the listed Company of 9.056 billion, representing increases of 10.1%, 25.5%, 57.7% and 121.3%as compared to the same period in 2020, respectively. In particular, in the third quarter, its revenue reached RMB58.345 billion, net profit was RMB3.126 billion, and net profit attributable to shareholders of the listed Company was RMB3.083 billion, net profit after deduction of non-recurring profit or loss attributable to shareholders of the listed Company was 2.786 billion, representing changes of -0.6%,-29.1%,-12.4% and +82.9% respectively as compared to the same period in 2020.

Excluding the impact from the deconsolidation of COSMOPlat in the third quarter of last year, and assuming 100% ownership of the privatised Haier Electronics (01169.HK) in the same period last year, the Company's total revenue and net profit attributable to shareholders of the listed Company would have increased by 20.4% and 60.2% in the first three quarters of 2021 as compared with the same period in 2020; and revenue and net profit attributable to shareholders of the listed Company in the third quarter would have increased by 9.2% and 14.6% as compared with the same period in 2020.

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1. Smart Home and Other Business in China

Revenue of the smart home and other business in China in the first three quarters of 2021 increased by 4.0% as compared with the same period in 2020; excluding the impact of the deconsolidation of COSMOPlat, revenue would have increased by 24.3% in the first three quarters of 2021 as compared with the same period in 2020.

The Company remained committed to the development from high-end brands to scenario-based and ecosystem brands leveraging on innovation, premium product portfolio and comprehensive solutions. The Company accelerated its digital transformation in terms of distribution network, service coverage and supply chain management. We have built a digital platform that gives sales people online access to the latest product offerings, so they could better manage existing as well as new users. Average customer acquisition by per salesperson increased by 38%.

At the same time, the Company managed to grow market shares across the board. In the first nine months, revenue from Casarte increased by 57% as compared with the same period in 2020, with market share gain as a whole and in all categories, where its share in refrigerator market increased by 2.4 percentage points.

(1) Household food solution (internet of food)

Refrigerator: The Company addressed users' demand for upgrade with large capacity, health- oriented and freshness preservation technology, kitchen aesthetic designs, and smart scenario experience. According to CMM, by retail sales, our market share reached 38.7% online and 41.4% offline from January to September 2021, representing a year-on-year increase of 3.6 and 2.1 percentage points, our leadership further consolidated as Haier continued to rank no.1 in the industry, while Casarte became no.2 with 14.2% market share or 2.4 percentage points year-on-year expansion.

During the Reporting Period, with the accelerated implementation of globalized operating platform, product upgrade and smart manufacturing, our refrigerator segment quickly responded to change in consumer taste with successful launch of scenario-based solutions, Boguan series boasting cell-level freshness preservation and built-in design was an immediate bestseller. Casarte Homey series that caters for users' taste with stone panel, simplicity in designs and seamless integration with cabinets facilitated by bottom-mounted cooling technology, has contributed to 46% sales revenue growth of Casarte's refrigerators.

Kitchen appliances: According to CMM, by retail sales, our market share reached 7.3% offline in the first nine months, representing an increase of 1 percentage point as compared to the same period last year, and Casarte's market share grew by 1.2 percentage points, representing an increase of 75%.

During the Reporting Period, the Company's kitchen appliance segment made breakthroughs in the high-end market by continuously expanding Casarte's product portfolio. Ideal Home Galaxy series was launched with 114 patents and 5 ground-breaking technologies in the industry, providing users with a premium and comprehensive smart kitchen experience, driving Casarte's kitchen appliance sales revenue to grow 123% from January to September 2021, among which Casarte dishwashers grew by 152%. At the

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same time, the Company continued to upgrade scenario-based solutions, accelerated lower tier network expansion and increased presence in home improvement markets. By introducing GEA and FPA in commercial projects, the Company fully leveraged the global brand portfolio to address diverse customer demands and achieve steady growth. During the first three quarters of 2021, revenue from kitchen appliance grew by 31% as compared with the same period last year, among which the sales of dishwashers grew by 92%.

(2) Household clothing solutions (internet of clothing)

Washing machine: According to CMM, by retail sales, our market shares reached 40.5% online and 43.6% offline from January to September 2021, representing increases of 1.1 and 3.1 percentage points.

Our washing machine segment appreciates the growing diversification in users' demand with continued technological innovations. During the period, several "New Species" products were launched, including Casarte Neutron Hemei Washing and Drying Machine, which integrates washing, drying and garment care. Facilitated by innovative patented technology, it is 20cm lower than the height of traditional washer-and-dryer combo, allowing users to enjoy a comfortable "China height" (中國高度) of 150cm, where they do not have to raise their hands above shoulder level, all of which contributing to our front- loading machines' further market share expansion of 8.5 percentage points, reaching 45.8%. In order to eliminate bacteria contamination when wet clothes are left behind after laundry, we developed the unique Deep Breathing series, which can automatically air-dry the laundry and the drum when users do not pick them up in time. Its launch attracted wide attention and a total of 32,000 units have been sold since then.

At the same time, the washing machine segment rapidly expanded into new categories such as tumble dryers, shoe washers. In order to address demand in drying large items, delicate items and reducing crease, the Company developed industry leading technologies including independent fan, hybrid fast drying and smart wind speed control, thus effectively improved drying experience. Sales revenue of tumble dryers grew by more than 260% and its market share offline reached 36.7%, representing an increase of 19.3 percentage points over the same period, and 1.32 times the market share of runner-up according to CMM.

(3) Household air solutions

Household air conditioner: Based on CMM's retail sales data, from January to September 2021, our market share reached 17.0% offline, representing an increase of 2.5 percentage points as compared with the same period last year, while market share online reached 13.6%, representing an increase of 2.4 percentage points as compared with the same period last year. Through the rapid expansion of Casarte's product portfolio and distribution network, our share in high-end market (wall-mounted units > RMB 4,000 and cabinet units > RMB 10,000) reached 20.8%, representing a year-on-year increase of 5.6 percentage points. In the single third quarter, an impressive 9.2 percentage points market share expansion was achieved, reaching 25% in high-end market, among which installation of Casarte units doubled.

During the period, the household air conditioning business focused primarily on health-conscious and smart products, accelerated the channel reorganization, improved store layout in order to foster a closer user interaction through various marketing strategies including "experience + air-conditioningcleaning(體驗官+全民洗空調)", while implementing operational efficiency initiatives in procurement, R&D, manufacturing and marketing, streamlining SKU as well as improving the efficiency of individual models. During the first three quarters, revenue from household air conditioning grew by 20% as compared with the same period last year, with revenue from Casarte up by 68.6%.

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