Hengan International Group (1044) H1 2026 earnings summary

Executive summary

• Revenue for 1H2026 declined 6.1% YoY to RMB11.09bn, mainly due to intensified competition and promotional pressures, but gross profit margin improved to 35.3% from 32.3% due to premium product growth and lower wood pulp/raw material costs.

• Operating profit grew 12.6% YoY 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% YoY to RMB4.25bn, 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 (↓6.1% YoY); core business revenue: RMB9.96bn (↓4.9% YoY).

• Gross profit: RMB3.91bn (↑2.7% YoY); gross margin: 35.3% (↑3.0pp YoY).

• Operating profit: RMB1.98bn (↑12.6% YoY); profit attributable to shareholders: RMB1.25bn (↓8.7% YoY); basic EPS: RMB1.104 (↓8.5% YoY).

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

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

Outlook and guidance

• Full-year revenue expected to remain stable for hygiene and tissue segments, supported by premiumisation and omni-channel strategies.

• Industry consolidation and increased domestic wood pulp supply expected to stabilise costs in 2H2026.

• Focus on expanding premium product mix, technological upgrades, ESG integration, and leveraging e-commerce and new retail channels for long-term growth.

• Stable raw material prices and supply chain resilience are expected to sustain profitability.