Hengan International Group Delivers Resilient 2025 Results Amid Intensified Competition

Key Highlights of the 2025 Annual Results and Strategic Outlook for Investors

1. Financial Performance Overview

• Revenue Growth: Hengan International Group reported a revenue of RMB 23.07 billion for the year ended 31 December 2025, up 1.8% from RMB 22.67 billion in 2024. Core business revenues (tissue and hygiene products) rose 1.9% to RMB 20.74 billion.
• Profitability: Gross profit margin improved to 33.8% (2024: 32.3%), and operating profit grew 3.9% to RMB 3.48 billion. Profit attributable to shareholders increased 10.3% to RMB 2.54 billion, with basic and diluted earnings per share both at RMB 2.227, up 10.5% year-on-year.
• Dividend Policy: The Board has proposed a final dividend of RMB 0.70 per share, maintaining a total annual dividend of RMB 1.40 per share (unchanged from 2024). The payout totals RMB 1.63 billion, reflecting a stable and attractive dividend yield for investors.
• Balance Sheet Strength: Cash and equivalents, long-term time deposits, and restricted bank deposits rose to RMB 22.63 billion (2024: RMB 18.89 billion). The Company remains in a net cash position of RMB 6.89 billion, with a gearing ratio of 72.3% and a net gearing ratio of negative 31.7%, highlighting robust liquidity.
• Receivables and Inventory Turnover: Accounts receivable turnover improved to 36 days (2024: 39 days), and finished goods turnover shortened to 42 days (2024: 46 days), indicating enhanced working capital efficiency.

2. Business and Segment Analysis

Hygiene Products (Sanitary Napkins and Disposable Diapers)

• Segment Performance: Revenue declined by 5.3% to RMB 6.57 billion (28.5% of Group revenue), reflecting intensified competition, especially in e-commerce channels. However, sales of premium products such as “Tianshan Cotton” and “Q • MO” reversed the downward trend in the second half.
• Margin Pressure: Gross profit margin for hygiene products dropped to 58.3% (2024: 60.4%) due to price promotions and rising promotional expenses, partially offset by stable raw material costs and premium product growth.
• Premiumization & Innovation: The Group launched new high-margin products including “Cranberry A+” organic sanitary napkins and the upgraded “Royal Supreme Softness” diaper series. The “Tianshan Cotton” series saw sales surge 28.7% to RMB 570 million, and “Q • MO” diapers grew 9.6% to RMB 600 million. Adult diapers (“Elderjoy”) also grew 5.2% to RMB 320 million.
• Capacity Expansion: The Neikeng Phase II production base commenced operations, supporting future growth in premium hygiene products.

Tissue Paper Segment

• Strong Recovery: Revenue increased 5.6% to RMB 14.17 billion (61.4% of revenue), driven by premium tissue growth and double-digit expansion in new retail channels. The segment’s gross profit margin improved notably to 23.0% (2024: 18.9%) as wood pulp prices remained low and promotional spending decreased.
• Innovation & Branding: The flagship “Fluffy Cube” series, using TAD technology, and the new “Embracing Nature” line, along with wet wipes (sales up 30% to RMB 1.58 billion), solidified Hengan’s leadership in premium tissue products.
• Channel Expansion: E-commerce and new retail channels contributed 42.1% of tissue sales, supporting market share gains.
• Capacity Investment: Annual production capacity increased to 1.73 million tonnes, ensuring ability to meet demand growth.

Other Businesses & International Expansion

• Household Products: Revenue grew 25.2% to RMB 316 million, mainly due to increased exports.
• International Business: International revenue (including Malaysia’s Wang-Zheng Group) reached RMB 1.66 billion, maintaining 7.2% of total sales. Wang-Zheng’s turnover in Malaysia rose 6.8% to RMB 518 million. The Group plans to further expand Wang-Zheng branded products in Southeast Asia.

3. Sales Channels and Digital Transformation

• Omni-Channel Strategy: E-commerce and new retail channels (including instant retail and livestreaming) grew 10.1% to RMB 8.52 billion, now comprising 36.9% of total sales. The Group plans further digital expansion, leveraging data analytics, celebrity endorsements, and social media to engage younger consumers and drive sales.
• Market Leadership: Hengan’s established omnichannel sales network, product premiumization, and marketing investments underpin its leading market position.

4. Cost Management and Operating Efficiency

• Expenses: Selling and administrative expenses increased 4.9% to RMB 5.36 billion (23.2% of revenue), mainly due to investments in new sales channels. The Group aims to optimize expense ratios through precise allocation in 2026.
• Finance Costs: Net finance costs decreased to RMB 279 million (2024: RMB 383 million), as interest costs declined and exchange losses narrowed significantly (RMB 29 million loss vs. RMB 170 million in 2024).
• Capital Expenditure: Capex was RMB 1.08 billion, focused on increasing production capacity.

5. ESG, Governance, and Awards

• ESG Achievements: Hengan’s MSCI ESG rating was upgraded to A. It was included in the S&P Global Sustainability Yearbook, Hang Seng ESG 50 Index, and FTSE4Good. The Group received multiple accolades for sustainability and investor relations from Forbes, HKIRA, S&P Global, Tmall, JD.com, and others.
• Governance: A four-tier ESG governance structure ensures robust management. The Group maintains ISO 9001 and ISO 45001 certifications for quality and safety, with zero work-related fatalities in 2025.
• Green Initiatives: The Group met its “Zero Deforestation” pledge, with 100% of pulp suppliers holding FSC or PEFC certifications. Efforts on energy management, circular economy, and packaging innovation are ongoing.
• Social Responsibility: Hengan continued to support women’s empowerment, rural revitalization, and public welfare, including the “Warm Hearts Initiative” and “Berry” Heartwarming Initiative for rural children.

6. Shareholder Actions and Capital Management

• Share Buybacks: In 2025, the Company repurchased 1.3 million shares (HK\$28 million) for treasury, with potential future use for share incentive schemes or cancellation. Treasury shares carry no voting or dividend rights.
• Dividend Timetable: The proposed final dividend (RMB 0.70 per share) is subject to approval at the AGM on 18 May 2026, with payment scheduled for 5 June 2026.

7. Strategic Outlook for 2026 and Beyond

• Market Environment: Despite global economic uncertainty and rising raw material prices (especially wood pulp), Hengan expects resilient performance driven by product premiumization, digital transformation, and stable domestic demand.
• Strategic Priorities: The Group will focus on its core tissue and hygiene businesses, brand leadership, and long-term sustainability. It aims to accelerate smart technology adoption (AI, big data), enhance supply chain flexibility, and drive product innovation for high-quality growth.
• Expansion Plans: The Group will further penetrate rural and online markets, expand product categories (including feminine, infant, and elderly care), and strengthen its international presence, especially in Southeast Asia.
• ESG and Sustainability: Hengan will continue to advance its ESG strategy across governance, resource efficiency, customer care, employee empowerment, partnerships, and community engagement, supporting its goal to become a global top-tier household products enterprise.

Potentially Price-Sensitive/Noteworthy Investor Information

• Stable Dividend and Buyback Activity: The maintained dividend and active share repurchase program may support share price stability and signal management’s confidence in the Company’s cash flow and earnings outlook.
• Margin Expansion: The significant improvement in gross profit margin, especially in the tissue segment, could positively impact investor sentiment and valuation multiples.
• Digital Growth and Premiumization: The rapid growth of e-commerce/new retail channels and premium product launches position Hengan to capture evolving consumer trends and may drive future earnings growth.
• Resilience Amid Competition: Despite revenue pressure in hygiene products, the Company was able to offset declines through premiumization and tissue growth, demonstrating strong operational adaptability.
• ESG Leadership and Awards: The raft of sustainability and governance accolades may attract ESG-focused investors and enhance Hengan’s global profile.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consult with professional advisers before making investment decisions. The information herein is based on the Company’s official disclosures as of 17 March 2026 and may be subject to change.

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