Hengan International Group (1044) H1 2026 earnings summary

Executive summary

• Revenue for the first half of 2026 declined by 6.1% year-over-year to RMB11.09bn, mainly due to intensified market competition and promotional pressures, but gross profit margin improved to 35.3% from 32.3% due to premium product growth and lower raw material costs.

• Operating profit rose 12.6% year-over-year to RMB1.98bn, while profit attributable to shareholders fell 8.7% to RMB1.25bn, reflecting higher finance costs and exchange losses.

• E-commerce and new retail channel sales grew 4.6% year-over-year, now accounting for 38.3% of total sales, supporting market share expansion.

• Maintained a solid net cash position (RMB6.44bn) and stable interim dividend of RMB0.70 per share.

• Market leadership in tissue and hygiene products sustained amid intensified competition.

Financial highlights

• Revenue: RMB11.09bn (down 6.1% YoY); core business revenue: RMB9.96bn (down 4.9% YoY); gross profit: RMB3.91bn (up 2.7% YoY); gross margin: 35.3% (up 3 ppts YoY).

• Operating profit: RMB1.98bn (up 12.6% YoY); net profit attributable to shareholders: RMB1.25bn (down 8.7% YoY); basic EPS: RMB1.104 (down from RMB1.206 YoY).

• Net cash: RMB6.44bn; gearing ratio: 97.6%; net gearing ratio: -29.4%.

• Interim dividend per share: RMB0.70 (unchanged YoY).

• Cash and bank balances plus time deposits: RMB27.83bn; borrowings: RMB21.39bn.

Outlook and guidance

• The operating environment is expected to remain challenging in the second half of 2026, but premium product sales and omni-channel strategies are anticipated to support stable revenue and further profitability improvements.

• Focus on expanding premium product mix, technological upgrades, ESG integration, and supply chain resilience for long-term growth.

• Management will closely monitor raw material prices and geopolitical risks, leveraging procurement scale and premium product mix to mitigate cost pressures.