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Lower Raw Material Prices Increases Home Appliance Industry's Gross Margin

Himfr analyzes that in 2009, China's home appliance industry was subject to export doldrums.

Household appliances saw a decline in revenue growth. Except for the TV industry, air conditioners, washing machines and refrigerators all saw year-on-year negative growth.

Even though the fourth quarter of 2009 saw export performance take a dramatic turn for the better, the trend of decline in exports was the norm for 2009.

The home appliance industry's overall gross profit margin in 2009 compared with 2008 saw an increase of 2.5 percent, of which washing machines and refrigerators increased the fastest. Industry gross margin increase was mainly due to lower prices of raw materials and the adjustment of product structure of listed companies to enhance the proportion of high-margin product sales.

The household appliance industry's overall revenue has seen a significant increase in the first quarter of 2010, with growth in exports and domestic sales.

As raw material prices rise, the industry's overall gross profit margin has declined slightly. Himfr thinks that, because of 2009's low raw material prices, the current rise in raw material prices will bring unexpected pressure on the industry's profitability. The industry's overall gross margin may fluctuate slightly.

Himfr believes that, in 2010, industry profitability may decline. Every enterprise will adjust product structure, while industry and consumption upgrades will make industry profitability fluctuate. Himfr believes that in 2010, the overall trend of home appliance is still good.

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