Fang Hongbo, chairman of Midea Group, said in a conference call on May 6, "the next three years, the industry will face great difficulties, this is an unprecedented winter. In the face of the old staff in the internal forum of the resignation of the long speech, he can only express "deep shame".
In stark contrast, on May 26, Dong Mingzhu appeared in the official certification of Gree Tik Tok account, to all Gree employees committed to "no matter what the difficulties encountered, we will never layoffs. In very difficult circumstances, we prefer to reduce wages, so that everyone has a simple and reliable security.
Why layoffs from the leading home appliance company Midea Group? This is the question many people have.
From the point of view of financial data, the Midea Group is not a "bad student". 2021, the Midea Group's total operating income of 343.361 billion yuan, for the first time exceeded 300 billion yuan mark. The company's net profit of 28.574 billion yuan, also created a new high. In addition, on May 23, the a-share listed company Kelu Electronics announced that the Midea Group will spend no less than 2.2 billion yuan to be promoted to the company's controlling shareholder.
Amidst the controversy, Midea has become one of the biggest layoffs.
01 10 years after the "big layoffs"
May 18, 2022, the fourth on the list of hot searches, is about the Midea Group layoffs.
The overall picture, pieced together from multiple platforms, shows that Midea Group is in the midst of a large-scale layoffs, which is currently in its second round, and will be followed by a third round after June 18th. Layoffs vary by department, and overall layoffs may be around 30%.
On May 19, MMT's official response said, "In view of the judgment of the internal and external environment, the company orderly contraction of non-core business, suspension of non-operational investment, and multiple measures to further consolidate the growth potential and improve operating performance."
On May 20, at the 2021 annual general meeting of the U.S. group, Fang Hongbo responded to rumors of layoffs of 50% "out of nothing".
It is reported that the U.S. ToC business will retain the core category of home appliances, optimize the mother and baby, pet appliances and other categories. The ToC business will retain the core categories of home appliances, and optimize the categories of mother and baby, pet appliances, etc. It will realize the transformation and upgrading, structural optimization, and overall strengthening of overseas; the ToB business will retain the "four big and four small" (four big: robotics and industrial automation, building technology, new energy automotive parts, energy storage, four small: Wandong Medical, Ande Chile, Miyunzhi digital, Mizhi photoelectricity), and the other will be shut down and transformed.
On the whole, Midea Group focuses more on ToC business "optimization" and ToB business investment.
Zhong Zheng, CFO and Chief Financial Officer of the United States Group, said that mother and baby, pet appliances, some SKUs and other optimized business (single product revenue of not more than 10 million yuan, compound growth decline) on the United States of America's overall revenue has no impact, but is conducive to the improvement of profits.
As of now, the company's actual controller He Xiangjian directly and indirectly hold 29.76% of the equity of the Midea Group, with the current market value of 376.6 billion yuan, the corresponding equity value of 112.08 billion yuan.
In fact, it was 10 years ago in 2012, the year Fang Hongbo just took over as chairman of Midea Group, that Midea experienced a wider range of layoffs.
During the period of high-speed expansion from 1993 to 2009, Midea adopted a relatively independent business unit development model, with each business unit having a high degree of autonomy.
In 2010, although the group's sales exceeded 100 billion yuan, the company's inventory found that in this all-encompassing attack mode, Midea's net profit was not as good as that of the industry's enterprises manufacturing single products.
So the United States began to "subtract". Through the various dimensions of the assessment indicators, eliminated the lack of core competitiveness, long-term loss of business and products, as well as too small, thin profit business and products. The Group's SKUs (product categories) decreased from approximately 22,000 in 2011 to over 2,000.
Meanwhile, Midea Group's workforce was reduced from a peak of 196,000 in 2011 to 110,000 in early 2015, a layoff of more than 40%. Fang Hongbo's goal at the time was "to reach 200 billion yuan in sales in 2017, the total number of employees to control within 100,000 people".
As a result, business optimization and layoffs did bring sustained growth of Midea Group, from 100 billion yuan to 300 billion yuan in 10 years, and net profit finally exceeded Gree for three consecutive years starting in 2019.
However, the size of the staff did not develop as Fang Hongbo hoped. Although revenue reached 241.919 billion yuan in 2017, the number of employees returned to the growth track after the successive acquisitions of Toshiba Home Appliances and Kuka, reaching 136,800 people, and then increased to 165,800 people by the end of 2021, basically returning to the level of the last round of layoffs before.
10 years, Fang Hongbo and the United States in the matter of layoffs seems to have fallen into a "strange circle".
0KUKA increased salary pressure.
In fact, the acquisition of KUKA is the return of the United States on the road to expansion of a key event - a significant increase in personnel, per capita salary increased significantly, the performance of the unsatisfactory, can be regarded as layoffs behind an "invisible pusher".
In 2015, the Midea Group staff restructuring is basically complete, but also touched the downward cycle of the home appliance market, so for the first time in the annual report put forward the "smart home + intelligent manufacturing" strategy, and industrial robotics business as the second growth curve.
Globally, Germany's Kuka, Switzerland's ABB, Japan's Fanuc and Japan's Yaskawa Electric are known as the "four families" of industrial robots, of which Kuka is the world's first to bring light-sensitive robots into the production plant robot manufacturer.
So the United States in 2015 for the first time to increase the shares of Kuka Germany, and at the same time with Japan YASKAWA set up a joint venture, deep into the field of industrial automation.
In January 2017, Midea Group further completed its €3.7 billion (about RMB 27.1 billion) acquisition of Kuka, **** holding 94.55% of its equity.
Upon completion of the acquisition, Midea Group's global workforce increased from 112,400 to 136,800, an increase of 21.71%, the highest increase since listing.
What's more, the acquisition of Kuka directly boosted the overall per capita annual salary of Midea Group - from 103,400 yuan in 2016 to 178,400 yuan in 2017, an increase of 72.47%.
Also from 2017, the United States Group greatly widened the gap between the per capita salary with Gree Electric. By 2021, the per capita compensation of the United States and Gree is 190,100 yuan and 125,900 yuan respectively.
In addition to high labor costs, the acquisition of Kuka also brought considerable goodwill to the United States Group. 2021 end, the United States Group goodwill totaled 27.875 billion yuan, ranked second in more than 4,000 listed companies on the a-share market, equivalent to the United States Group's total net profit in 2021.
Behind such a price, the acquisition of Kuka by the United States is actually controversial.
Before spending a huge amount of money to acquire Kuka, the two sides signed an investment agreement in June 2016, which is valid for seven and a half years. It was agreed that the United States would maintain Kuka's independence in many ways, not change the number of existing employees, not urge Kuka to withdraw from the market, enter into an isolation and prevention agreement, maintain Kuka's trade secrets and customer data, and so on.
At the time, a Kuka executive told the media that before the expiration of the agreement, the U.S. can not access Kuka data, "the decision of the management of the enterprise will continue to be made by Germany."
In terms of performance levels, Midea had said in the offer document that "by 2020, Kuka could exceed the €4-4.5 billion (about RMB 28.6-32.1 billion) in revenue it had set, with €1 billion coming from the Chinese market".
But the reality is far from that - Kuka's revenues have been declining since the 2017 consolidation, from €3.479 billion in 2017 to €2.792 billion in 2020, only to rise to €3.565 billion in 2021, but only €681 million from China.
Compared with the other three "Big Four", Kuka's revenue size has always been in the second tier, gross margins and net profit margins have always been at the lowest level. 4% loss in 2020. Even if the situation improves in 2021, it is still the "four families" in the weakest profitability.
Although the current CFO of Midea Group, Zhong Zheng clearly stated that Kuka 2021 performance growth, there is no impairment, but in view of the past few years, Kuka's performance is far less than expected, the risk of impairment in the future is still hanging over the head of Kuka a "sword".
At the beginning of the listing, Midea Group's chief financial officer is Yuan Liqun. 2016, Kuka was acquired, Yuan Liqun left the Midea Group, taking 90.75 million shares of restricted stock. After successive reductions, he still holds 39.32 million shares, with a current market value of 2.241 billion yuan.
After that, from 2016 to 2021, Midea Group has changed three CFO/CFO. Among them, HelmutZodl, who took office in October 2019, was IBM's regional finance director, and from 2005 to 2017 served as Lenovo's finance director and chief financial officer. However, HelmutZodl left after only 15 months as CFO of Midea Group and received nearly $10 million in compensation from the publicly traded company.
On November 23, 2021, Midea announced its intention to acquire the remaining 5% stake in Kuka and complete the privatization. Upon completion of the transaction, Kuka will become a wholly owned overseas subsidiary of Midea and delisted from the Frankfurt Stock Exchange.
This means that the investment agreement originally agreed to expire in 2023 was broken by the United States in advance.
Some industry insiders told "Finance" that the United States hopes that this move will allow Kuka to better adapt to the needs of China's development, and to realize the depth of synergy in research and development, production, marketing and other aspects.
There are signs.
In addition to the pressure brought by Kuka, Midea Group's original home appliance business is also facing unprecedented challenges.
As the United States of America's consumer appliances business owner of the main raw materials of steel, copper, aluminum in 2021 will face a significant price increase - with the end of March 2020 relatively low prices compared to October 2021, the price of the three materials will rise 119%, 114% and 62%.
In addition, multiple negative factors such as rising freight costs, chip shortages, and power supply constraints are squeezing Midea's performance.
At the same time, although efforts have been made over the years to develop the small home appliance business, refrigerators, air conditioners and washing machines are still the core source of income and profit for Midea, and the real estate industry will have a significant impact on the home appliance business.
Since the second half of 2021, the real estate industry's continued adjustment is visible to the naked eye. Data from the Bureau of Statistics show that the domestic commercial property sales area of 3.977 billion square meters in January-April 2022 declined by 20.9% year-on-year, and continued to slow down compared with the first quarter.
As of May 26, the latest market value of Midea Group was 376.581 billion yuan, down nearly 50% from the highest market value of 734.8 billion yuan.
Under the double pressure of the old and new business, many of Midea Group's indicators actually have hidden concerns.
The data show that the revenue growth of the Midea Group has slowed down since 2018, mainly due to the negative growth of the Kuka robotics business acquired in 2017, as well as the lack of growth of the HVAC and consumer electronics business in the context of the real estate downturn.2021 Revenue rebound is largely due to the price of raw materials in the upper reaches of the U.S., and the price of the United States' products has increased.
More intuitive is the net profit indicator - from 2015 to 2019, its net profit growth rate has been maintained at about 16%-17%, but in 2020 and 2021 suddenly fell to 8.82% and 5.49%, respectively, which greatly deviated from the original growth trajectory.
In a financial system where budgets are prioritized by large companies, such deviations imply an uncontrollable situation.
Since the outbreak, a series of negative factors such as price hikes in commodities, shipping logistics, and energy supply squeezed Midea Group's profits. As a result, its gross margin finally climbed to 28.86% in 2019, then fell back from 2020 to 22.48% at the end of 2021, already below the level of 10 years ago.
Funding, although at the end of the first quarter of 2022, Midea Group's money funds of 69.847 billion yuan on the books can still cover the long and short-term interest-bearing debt totaling 62.772 billion yuan, but money funds and short-term interest-bearing debt "margin of safety" has dropped from 63.755 billion yuan in 2019 to 23.755 billion yuan at the end of March 2022, and then dropped to 22.48% at the end of 2021. The first time I saw this, it was a very good idea.
At the same time, while Midea Group's accounts receivable remained relatively stable, notes payable and accounts payable continued to rise, reaching 98.736 billion yuan at the end of 2021, the highest level since the listing, which is 69.3 billion yuan higher than accounts receivable and notes.
This ability to occupy the upstream capital can be interpreted as a relatively strong position in the industry chain, but objectively also brings greater liquidity pressure - at the end of 2021, Midea Group's quick ratio and cash maturity of debt ratio were 91% and 52.31%, respectively, both of which are since 2014 the The lowest level.
To this day, Midea is undoubtedly a successful representative of the diversification of the home appliance industry and going overseas.
In the good years, diversification allows the United States to enjoy the multi-track dividend, but personnel expansion is inevitable. 2016 high-gloss period, the United States Group per capita income of 1,657,800 yuan, ranked third among the 79 household appliances in the a-share business, higher than Hisense video, Haier Zhijia, Gree Electric Appliances, the boss of the appliances.
But in the face of sudden adversity, the budding new track obviously does not have the same anti-risk ability as the core business, "expansion - trial and error - contraction - layoffs" has become the inevitable result. 2021, Midea's per capita income of 2,070,900 yuan, in the a-share home appliance industry ranked twelfth, already behind the The above enterprises.
Midea, which advocates diversification, is experiencing large-scale layoffs, while Gree, which promises never to lay off employees, is actually decreasing its workforce - from 88,800 at the end of 2019 to 84,000 at the end of 2020 to 81,900 at the end of 2021.
Gaozhan netizen commented, "A master can reduce wages and let employees go by themselves" "Reducing wages is equivalent to layoffs." From this point of view, the two companies just took different ways to deal with the industry and their own changes.
A quote from Meiji's 2021 annual report is still quite apt for this layoff. "Big time, no road is flat, no road is unchangeable. Great companies must have gone through the cycle of reincarnation and baptism."
The layoffs of 2012 can be said to be the first big test faced by Fang Hongbo after he took over the baton from He Xiangjian.
Now 10 years later, the United States of America's employee size back to the high point, the gross margin fell below the historic low point. Fang Hongbo seems to be back at the crossroads where it all began.