Carote (2549) H1 2025 earnings summary

Executive summary

• Revenue for H1 2025 was RMB836.9 million, down 12.4% year-over-year, mainly due to US tariffs, a strategic shift to branded business, and reduced focus on Europe and Southeast Asia.

• Profit for the period fell 37.4% to RMB102.8 million, with net profit margin dropping from 17.2% to 12.3%.

• Branded business now represents 92.9% of total revenue, with strong growth in the US (+4.0%) and Japan (+13.6%), offset by declines in other regions.

• Gross profit margin for branded business declined from 45.4% to 35.3% due to increased US tariffs.

Financial highlights

• Revenue: RMB836.9 million (down 12.4% YoY); branded business RMB777.6 million (down 7.5%), ODM RMB59.3 million (down 48.3%).

• Gross profit: RMB281.6 million (down 28.7% YoY); branded business RMB274.5 million (down 28.1%), ODM RMB7.1 million (down 47.8%).

• Net profit: RMB102.8 million (down 37.4% YoY); adjusted net profit margin: 12.3% (vs. 18.3% prior year).

• Net cash used in operating activities: RMB18.7 million (vs. RMB89.9 million generated in H1 2024).

• Current ratio improved to 3.2 (from 3.1 at end-2024).

Outlook and guidance

• Focus remains on US, Japan, and China markets, with expansion of product lines and sales channels.

• Plans to diversify product offerings, enhance brand profile, and optimize organizational structure.

• Strategy includes increasing non-aluminum product sales and optimizing supply chain to mitigate tariff impacts.

• Strategic suspension of new business in Southeast Asia, India, and Western Europe to concentrate resources.

• Plans to enhance organizational capabilities, supply chain, and talent to support multi-category and multi-channel growth.