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Midea Group IR presentation 2016.12 1
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Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

Mar 16, 2020

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Page 1: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

Midea Group

IR presentation

2016.12

1

Page 2: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

2

Corporate Snapshot

Page 3: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

3

Milestones

Successful transition into a multi-product and global industry leader

Page 4: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

Return to Shareholders

4

Stable dividend distribution to shareholders every year

RMB Bn

Page 5: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

5

Market Cap and rankings

Market cap: ~ RMB 200bn

Ranking among A-share companies: 26

Ranking among A-share companies (excl.

financial and energy companies):4

Ranking among Shenzhen stock exchange: 2

+

Overview

Leading Global Manufacturer of Home Appliances and HVAC Systems

FY 2015

$22 billion Export to

200+ Revenue Countries/Regions

Ranked

481th Fortune 2016

Credit ratings

A-/A3/A- S&P/Moody’s/Fitch

FY 2015, US$ Bn

# 1 Global Home Appliances Player by Revenue

2015 Revenue, US$ Bn

Page 6: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

6

Product Portfolio

One of the Most Extensive Product Portfolio of Any Global White Goods Players

Rice Cooker/

Pressure Cooker

Kettle

Water

Purifier

General SDA

Products

Vacuum

Cleaner

Heater

Fan

Kitchen

Appliances

Split A/C

Standing A/C

Movable A/C

Residential A/C

Major Domestic

Appliances

side by side

Refrigerator

Roof-top

U.S. Ducted

VRF

Mini VRF

Chillers

Commercial A/C

Dish

Washer

Electric

Oven

Microwave

Cooktop

Juicer

Washing

Machine

Rice Cooker

French Doors

Refrigerator

Freezer In-line Water

Heater

Central A/C

System

Key Components

A/C and REF

Compressor

Electric

Motor

HVAC and

Appliance Motor

Hood

Electronic

Controller Magnetron

Range

Smart Washing

Machine

Page 7: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

7

Market Position

No.1 No.2 No.1 No.1 No.1 No.2 No.2 No.3 No.2 No.3 No.3 No.3 No.1

Page 8: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

Turnover Breakdown

HVAC account for close to half of revenue; international sales account for over 40%

8

Unit: RMB Bn

Source: 2016 Semi-Annual Report

2016H1 Main Business Turnover Breakdown

Page 9: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

Manufacturing Footprint

9

Inside / Outside of China: 17 / 12 production facilities; ~90,000 / ~15,000 employees

Saudi Arabia

Residential AC, Washing

Machine, Refrigerator, Rice

Cooker, Fans

Vietnam (1)

India (2)

Egypt (1)

Brazil (2)

Argentina (1)

Microwave, Stoves

Belarus (1)

China (17)

Residential AC,

Commercial AC,

Refrigerators,

Microwaves, Stoves,

Ovens,

Disinfection cabinets,

Small Appliances,

Compressors, Motors

Lighting

Washing machines,

Vacuum Cleaners,

Water Heaters

Japan (2)

Rice Cooker,

Fan, Induction

Cooker

Refrigerator, Wash Machine, Rice Cooker, Microwave Oven

Thailand (1) Residential AC Residential AC,

Commercial AC Residential AC

Residential AC,

Commercial AC

Italy (1)

Commercial AC

Page 10: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

10

Corporate Governance

Page 11: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

Management Handover

11

A family enterprise managed by professional managers

Midea Group Shareholders of

Midea Electric

SDA Motor Logistics Midea Electric

(List Co)

Midea

Holding

Strategic

Investors Management

59.85% 21.15% 19%

Issue Shares

Share swap

Midea Group

(List Co)

SDA Motor Logistics Midea Electric

Midea

Holding

Strategic

Investors Management

35.49% 12.54% 11.27%

Others

40.70%

58.83% 41.17%

Prior to IPO

After IPO

In 2012, professional manager team came on board

Hongbo Fang (Paul) Chairman & President

Joined Midea in 1992

In 2013, Midea Group launched IPO

Mingguang Xiao (Peter) CFO

Joined in 2000

Wenxin Wu (Winson) VP

Joined in 1993

Fengtao Zhu (Frank) VP & GM of Kitchen

Appliances

Joined in 1993

Yanmin Gu (Andy) VP

Joined in 2000

Jinliang Wang (Kim) VP & Head of Domestic

Marketing

Joined in 1995

Ziqiang Hu (Zack) VP & Chief of Central

Research

Joined in 2012

Feide Li (Fred) VP & Head of Operations

Joined in 1999

Bitong Yin (Berton) VP & & GM of

Residential AC

Joined in 1999

Board composition:

4 executive + 2 non-executive + 4 independent

Page 12: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

Organizational Chart

12

10 Product Divisions + 8 Platforms + Corporate Functions = Great Synergies

Midea Group

Kit

ch

en

Ap

pli

an

ce

s

To

sh

iba L

ifesty

le (

TL

SC

)

La

un

dry

Re

frig

era

tor

Liv

ing

Ap

pli

an

ce

s

Co

mm

erc

ial A

C

En

vir

on

men

tal

Ap

plian

ces

Wa

ter

He

ate

r

Pa

rts

& C

om

po

ne

nts

10 Product Divisions

International

Business

Platform

E-commerce

Platform

M-Smart

Institute

Financing

Platform

Service

Platform

Procurement

Platform R

es

ide

nti

al A

C

Logistics

Platform Central R&D

Institute

Page 13: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

Incentive Schemes

13

Clear Shareholding Structure & long-term incentive plans

Midea Group

Controlling Shareholder

36%

Strategic Investors

4%

Management

4%

Other Shareholders

56%

Three terms of share option plans for employees.

Accumulatively account for 6% of TSO.

Majorly management in R&D and manufacturing.

Two terms of “Partners” Program (ESOP)

For key senior management.

From “professional managers” to “business partners”.

Share Option

Plan

“Partners”

Program

Page 14: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

14

Strategic Transformations

Page 15: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

15

Significant margin improvement and strong cash generation capabilities

Key Financial Changes

2011 2015 Change

Revenue (RMB Bn) 134.1 138.4 3%

Net Earnings (RMB Bn) 6.6 13.6 106%

Net Cash / Debt (RMB Bn) * -5.1 64.9 +70 Bn

Cash flow from Operating Activities (RMB Bn) 4.1 26.7 551%

Revenue per employee (RMB Mn) 6.8 13.1 91%

Number of Employees (‘000) 196 105 -46%

Net Asset (RMB Bn) ** 30.2 56 85%

* The calculation of Net Cash here includes Notes Receivable.

** In addition, the dividend paid to the shareholders of the list company and JV partners amount to RMB 18Bn

in total in the last five years.

Page 16: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

16

Leading

Products

• Focus on consumer-centric; improve product competitiveness

• Increase investment in R&D and innovation

• Spin off loss-making product categories; improve product mix

Global

Operation

Efficiency

Driven

• Set up International Business Platform (MIB)

• HQ globalization, subsidiaries localization

• Business model from OEM to OBM

• Joint Ventures, Mergers & Acquisitions

• Launch 632 IT project to standardize and streamline process

• Invest on automation of factories

• Promote Just-in-time manufacturing and destocking initiatives

• Consolidate business support to 6 platforms to create synergies

Strategic Focuses

Strategic focuses shifted to Products, Efficiency, and Globalization

Page 17: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

17

Technology & Innovation

Top Global Innovator with increased R&D expenses, personnel and centers

Page 18: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

18

Efficiency Driven

Investment on automation & IT; reduction on overcapacity, inventory, leverage

RMB 7Bn on

factory

automation

RMB 2Bn on

632 IT

project

Product

categories:

6432

SKU:

>4,000

2,000

Inventory:

1610Bn

RMB

Loan:

14.44Bn

RMB

Lean organization, lean manufacturing, made to orders (T+3 model)

Investments Reductions

Page 19: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

19

Proven Partner with Leading Global Brands

JV cooperation in China,

India, Egypt, Philippines

and South America

JV cooperation in China with

Bosch Thermotechnology

JV cooperation in HVAC

and compressors

JV cooperation on

Commercial Ac

JV cooperation in Belarus

Strategic JV with Little Swan,

OEM business

JV cooperation in China

with Yaskawa on robotics

13.5% Stake in Kuka and

cooperation in robotics

Joint development with Siix

on electronic controllers

Globalization

To achieve global allocation of capital and global operations

HQ

Globalization

Subsidiaries

Localization

Global

standardization

Local

Differentiation

Midea International Business (“MIB”)

• A management platform with corporate functions

• An interface between HQ and overseas subs

• A “Special Economic Zone” within Midea Group

• 15 nationalities of less than 100 employees

OEM OBM

Functional Brand

Emotional Brand

Aspirational Brand

Page 20: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

20

Recent Transactions

美的以5亿美元,受让

Midea + Clivet Midea + Toshiba Midea + KUKA

Acquisition of 80.1% stake in the

home appliances businesses of

Toshiba with a consideration of

c.US$500 million

Being licensed to use the Toshiba

brand worldwide for 40 years;

Obtained over 5,000 IP assets

Significant synergies in brand,

channels, R&D, supply chain, etc.

Launched a voluntary tender offer at

EUR115 in cash per KUKA share;

Total consideration amounts to be

approximately EUR 3.7Bn

81.04% of shares being tendered,

plus the 13.51% shares acquired by

Midea prior to the takeover offer,

results in a total of 94.55% of all

issued shares of KUKA

All Completion Conditions are

satisfied. Settlement will be

completed in the first half of January.

Acquisition of 80% stake in Clivet, a

European leading company based

in Italy

Improve market share on the

European as well as global markets

Significant synergies in in product

offerings, market presence, supply

chain, manufacturing and

technologies

Being closed on 30 June 2016 Being closed on 31 October 2016 Still in progress

Page 21: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

21

Future Strategies

New geographic expansion

Existing business

New business

“Leading Products” strategy

Focusing on strategic markets

Building, security, B to B business

Page 22: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

22

Business Update

Page 23: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

23

Revenue & Margins

Revenue growth recovered; both gross and net profit margin further increased

Note: Acquisition of TLSC was closed on 30 June 2016. Financial reports of TLSC has been consolidated since then.

Page 24: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

24

Cash & Cash Flow

Abundant cash-in-hand; strong cash generation capabilities

* The calculation of Net Cash here includes Notes receivables.

Page 25: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

25

Cash Conversion Cycle

Cash conversion cycle became negative

Page 26: Midea Group IR presentationimg.midea.com/global/investors/financial_statements/Presentations/201601/P... · Rice Cooker, Fan, Induction Cooker Refrigerator, Wash Machine, Rice Cooker,

Thank you!