suning turned losses around, not by home appliances but by investment
2024-09-01
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suning achieved profitability in the first half of the year, but the hematopoietic function of its main business is still facing challenges
on august 30, suning.com(hereinafter referred to as "suning")released the 2024 semi-annual report. the announcement showed that the company achieved a net profit of 15 million yuan attributable to shareholders of listed companies in the first half of the year, of which the net profit attributable to shareholders of listed companies in the second quarter was 112 million yuan, the first single-quarter profit in 12 quarters.however, suning's net profit after deducting non-recurring items in the first half of the year was -530 million yuan, which was 73.10% lower than the same period last year, but still not profitable. since 2014, suning.com has been losing money after deducting non-recurring items for ten consecutive years, and its main business has been unprofitable for a long time. according to statistics, suning's cumulative losses have exceeded 85 billion yuan in the past ten years, of which 44.669 billion yuan was in 2021.in the past two years, suning has been committed to closing loss-making stores and divesting bad businesses and assets, and the loss margin has gradually narrowed. according to the 2023 annual report, its net profit loss was 4.09 billion yuan, a year-on-year loss of 74.79% from 16.22 billion yuan in 2022.a closer look at the various financial indicators shows that suning's profitability in the first half of 2024 was mainly due to changes in the value of financial assets and investment income, while operating income is still declining.carrefourthe three business-related companies are no longer included in the company's consolidated financial statements because they have entered bankruptcy.in other words, although suning has achieved profitability, the hematopoietic function of its main business is still facing challenges.profits from non-core businessaccording to the data from the semi-annual report, suning's operating income in the first half of 2024 was 25.783 billion yuan, a year-on-year decrease of 24.26%.the report explained that the company's home appliance industry was relatively weak in the first half of the year. the home appliance retail market declined year-on-year due to macro-comprehensive factors such as adjustments in residents' consumption and weak real estate, and channel competition was fierce. at the same time, due to insufficient liquidity, some commodity supply chains, especially consumer electronics products, continued to be insufficient, which affected sales.although suning has been controlling operating costs and expenses while its overall revenue has been growing poorly, creating space for operating profits to a certain extent, it is still not enough to turn losses into profits.considering suning's other financial indicators from the perspective of the many factors that affect operating profit, we can see that "losses from changes in fair value" and "losses from asset impairment" improved by 46.63% and 80.19% respectively, while investment income was 5.566 billion yuan, up 282.04% year-on-year. the outstanding performance of these items lifted the growth rate of operating profit by 92.65%.according to the report, during the reporting period, the changes in the value of suning's trading financial assets and other non-current financial assets and the decrease in the amount of asset impairment losses resulted in improvements in fair value change losses and asset impairment losses. investment income was due to increased debt restructuring gains and an increase in long-term equity investments accounted for using the equity method.from a further analysis of the investment situation, suning'schina unicom（600050.SH）the securities investment income was nearly 300 million yuan. at the same time, jiangsu sushang bank co., ltd., in which suning holds a 30% stake, achieved an operating profit of 4.475 billion yuan during the reporting period, bringing it a large amount of investment income.suning's main financial indicators in the first half of 2024; source: suning.com's 2024 semi-annual reportweight loss continues
on august 27, suning announced that it would sell its logistics asset tiantian express. the announcement showed that its subsidiary jiangsu suning logistics co., ltd. intends to transfer its 100% equity in tiantian express, as well as all claims of jiangsu suning logistics and its subsidiaries against tiantian express to zhejiang rongyue express.the transfer price is 10 million yuan. when suning acquired tiantian express between the end of 2016 and 2017, the price it paid was as high as 4.25 billion yuan.in 2021, suning ceased operations due to the continued losses of tiantian express, and the focus of suning's logistics business also shifted to professional delivery and installation of large appliances and after-sales services. recently, a relevant person in charge of suning told the media that the company is currently firmly focusing on the core business of home appliances 3c, continuing to resolve the company's debt burden, and downsizing non-core business units.this is not the first time that suning has divested its business. in the years of continuous losses, suning has been trying to improve its financial situation and optimize its asset structure by selling related assets.in 2015, suning sold its 68.08% stake in the video terminal pptv company for 2.59 billion yuan; in the same year, it sold 14 wholly-owned subsidiaries for 3.265 billion yuan; in 2016, suning used the ownership of six supply chain warehouse properties and the corresponding land use rights to establish six wholly-owned subsidiaries, and sold them for 1.814 billion yuan; in 2018, suning sold 100% of the shares of five logistics companies; in 2022, suning sold beijing suning life plaza to capitaland group at a 30% discount. until recently, suning sold tiantian express.in addition, since suning took over carrefour china in june 2019, carrefour's losses have had a significant impact on suning.(shanghai)supply chain management co., ltd., haikou carrefour commercial co., ltd. and shanghai jiayuan commercial co., ltd. were declared bankrupt by creditors and are no longer included in suning's consolidated financial statements. in 2023, the operating income of the above three companies accounted for less than 1% of suning's total revenue.still trying to sell home appliances
as suning gradually divests its other businesses, its main business of home appliances and 3c products has become clearer.in the first half of 2024, suning made a lot of efforts in online and offline aspects as well as in the supply chain, trying to enhance the hematopoietic capacity of its main business.while continuously reducing its size and closing loss-making stores, suning has not given up exploring offline scenarios. during the reporting period, suning opened, renovated and upgraded a number of new large stores with "family scenario solutions" such as suning.com max and pro. the number of buyers and average customer spending of these newly opened large stores were higher than those of other stores, and the gross profit margin level was 1.62% higher than that of other stores.it is worth noting that suning also uses local life platforms such as live broadcasting and instant delivery to expand its store customer acquisition channels.meituanthe platform launched “home appliance takeaway, delivered and installed in as fast as 2 hours” and also became the top1 merchant in the home appliance 3c industry on douyin’s local lifestyle platform. in june, traffic from the douyin platform accounted for 18.8% of store sales.in terms of supply chain, suning is also optimizing its sales structure by increasing the proportion of home appliance special products. according to the report data, suning's sales of special products accounted for 25.6% in the first half of the year, an increase of 1.6% from 2023. this also increased the gross profit margin of its main business by 1.33% year-on-year.cost reduction and efficiency improvement are still being carried out simultaneously. suning has adapted to "tightening the belt": it still implements strict cost control and improves management efficiency.，total expenses in the first half of the year decreased by 24.23% year-on-year.although the home appliance retail industry is affected by the real estate market, the reduced willingness to buy houses has suppressed new purchase demand, but it has also ushered in the policy dividend of "trade-in old for new". therefore, as a designated home appliance retail platform for government subsidies, suning has gained confidence and believes that this will directly stimulate domestic home appliance market consumption in the second half of this year and activate the consumption momentum of the home appliance market.
