Midea Group 2025 Annual Report: Revenue increased by 12.11% to 456.45B yuan; net cash flow from financing activities plummeted by 386.18%

Core Profitability Indicator Interpretation

Operating Revenue: Steady Growth, Coordinated Efforts in Domestic and Overseas Sales

In 2025, Midea Group achieved operating revenue of RMB 456.45B, up 12.11% year over year, continuing a pattern of steady growth. By region, domestic market revenue was RMB 260.5B, up 9.40%; overseas market revenue was RMB 195.95B, up 15.92%. Overseas growth was significantly higher than domestic growth, becoming an important driver of revenue growth. By product line, the smart home business generated revenue of RMB 299.93B, up 11.28%, and remained the core revenue pillar of the Group; commercial and industrial solutions generated revenue of RMB 122.75B, up 17.47%. Within that, the Building Technology business generated revenue of RMB 35.79B, up 25.72% year over year, with strong growth momentum.

Net Profit: Steady Improvement in Profitability

Net profit attributable to shareholders of listed companies was RMB 43.95B, up 14.03% year over year, with growth exceeding that of revenue, indicating an improvement in profitability. After non-recurring items are excluded, net profit attributable to shareholders of listed companies was RMB 41.27B, up 15.46%, further strengthening core earning capacity. Basic earnings per share were RMB 5.80/share, up 6.62%; after non-recurring items are excluded, earnings per share were RMB 5.43/share, up 8.20%, with shareholders’ returns improving in parallel.

Expense Structure Analysis

Selling Expenses: Reasonably Increased Along with Revenue Growth

In 2025, selling expenses were RMB 42.89B, up 10.68%. The growth rate was lower than the revenue growth rate. The selling expense ratio decreased from 9.52% in 2024 to 9.39%, showing the effectiveness of cost control. The main reason was an increase in expenses such as market promotion and channel construction brought by the expansion of operating scale. At the same time, the Group improved the efficiency of expense utilization through digital marketing and channel optimization.

Administrative Expenses: Maintain Steady Growth

Administrative expenses were RMB 16.09B, up 10.94%. The administrative expense ratio decreased from 3.56% in 2024 to 3.53%. Growth mainly stemmed from higher management and operating costs resulting from the expansion of the company’s scale and increased investment in digital management systems. However, by implementing measures such as optimizing organizational structure and digitizing processes, the Group achieved relatively controllable administrative expenses.

Financial Expenses: Financial Income Grows Significantly

Financial income was RMB 5.9B, up 77.32% year over year. This was mainly due to increases in interest income and foreign exchange gains. Interest income was RMB 8.44B, up 17.27%, primarily driven by an increase in the Group’s fund scale and changes in market interest rates, boosting interest gains; the increase in foreign exchange gains benefited from fluctuations in the RMB exchange rate and effective foreign exchange risk management measures implemented by the Group.

R&D Expenses: Ongoing High Investment, Deep Technical Reserves

R&D expenses were RMB 17.79B, up 9.58%. The R&D expense ratio was 3.90%, staying at a relatively high level. Total R&D investment from 2023 to 2025 exceeded RMB 48 billion. In 2025, the number of R&D personnel exceeded 23k, accounting for over 50% of the proportion of non-production personnel. Added 27 provincial/ministerial-level scientific and technological awards for first prize and 47 internationally leading achievement certifications. Cumulatively, the Group has received 4 national science and technology awards and 527 provincial/ministerial-level awards for science and technology. The patent layout has been continuously strengthened, laying a foundation for its technology-leading strategy.

R&D Personnel: Optimized Structure, Higher Share of High-End Talent

In 2025, the number of R&D personnel was 23,926, up 0.98% year over year. R&D personnel accounted for 12.05% of total personnel, up 0.11 percentage points year over year. In terms of educational background, the number of PhDs and master’s degree holders was 903 and 5,791 respectively, up 12.59% and 1.28% year over year, with the share of high-end talent further increasing. In terms of age structure, there were 6,210 R&D personnel aged 40 and above, up 31.46% year over year. The senior technical talent team continued to grow, providing solid support for cutting-edge technology research.

Cash Flow: Investment Cash Flow Turns Positive, Financing Cash Flow Sees a Large Outflow

Cash Flow from Operating Activities: Still at a High Level, with Moderating Growth

Net cash generated from operating activities was RMB 23k, down 11.84% year over year, mainly because the growth rate of cash outflows from operating activities (12.47%) was higher than the growth rate of cash inflows (8.91%). Among them, cash received from the sale of goods and the provision of services was RMB 53.35B, up 9.66%, basically matching the growth of revenue; cash paid for purchasing goods and receiving services was RMB 426.21B, up 14.72%, mainly due to the expansion in the scale of procurement of raw materials and impacts from price fluctuations.

Cash Flow from Investing Activities: Turned from Negative to Positive, with a Significant Contribution from Recovered Investments

Net cash generated from investing activities was RMB 281.8B, up significantly by 128.83% year over year. This was mainly due to an increase in cash received from recovering investments, which increased to RMB 25.34B, up 75.04%. Meanwhile, cash paid for the purchase and construction of fixed assets, intangible assets, and other long-term assets was RMB 197.53B, up 42.12%, showing that the Group is still continuously advancing capacity planning and technology upgrades.

Cash Flow from Financing Activities: Large Net Outflow, Increased Debt Repayment Efforts

Net cash generated from financing activities was -RMB 11.14B, down sharply by 386.18% year over year. The main reason was that cash paid to repay debt increased to RMB 64.96B, up 348.53%. At the same time, cash received from obtaining loans was RMB 112.06B, up 135.08%. Overall, the Group’s financing activities are mainly focused on repaying debt, further optimizing its financial structure.

Compensation of Senior Executives: Linked to Performance, Incentive Mechanisms Are Improved

During the reporting period, the Chairman Fang Hongbo’s total pre-tax remuneration received from the company was RMB 12.67 million; the General Manager Wang Jianguo’s total pre-tax remuneration was RMB 11.05 million; for Vice Presidents Gu Yimin and Guan Jinwei, their total pre-tax remuneration was RMB 8.81 million and RMB 10.70 million respectively; the Chief Financial Officer Zhong Zheng’s total pre-tax remuneration was RMB 8.90 million. Senior executives’ compensation is closely tied to the company’s performance. Meanwhile, through long-term incentive measures such as equity incentives and employee stock ownership plans, the Group has achieved deep alignment between management’s interests and shareholders’ interests.

Risk Warning

Risk of Intensifying Market Competition

The global home appliance market is highly competitive. The overseas market faces challenges such as geopolitical tensions and trade protectionism. The domestic market, meanwhile, faces pressures including insufficiently strong demand recovery expectations and intensifying price competition. If the Group cannot continue to improve product competitiveness and optimize market strategies, it may affect market share and profitability.

Risk of Technological Innovation Becoming Outdated

Technology industry development is rapidly evolving. The iteration speed of cutting-edge technologies such as artificial intelligence, embodied intelligence, and new energy is fast. If the Group cannot keep up with industry trends in technological R&D, or if the transformation of technological achievements does not meet expectations, it may weaken its technological leading advantages and affect long-term growth momentum.

Risk of Supply Chain and Raw Material Price Fluctuations

The Group’s industrial chain covers the globe. Fluctuations in raw material prices and the stability of the supply chain are significantly influenced by factors such as geopolitics and natural disasters. If raw material prices rise sharply or the supply chain is disrupted, production costs will increase directly, affecting profitability.

Risk of Foreign Exchange Rate Fluctuations

Overseas business accounts for more than 40%. Exchange rate fluctuations will affect the Group’s revenue, profits, and cash flow. If the RMB exchange rate experiences significant fluctuations and the Group’s foreign exchange risk management measures cannot effectively hedge the exposure, it may lead to foreign exchange losses and affect the stability of performance.

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