Net profit plummeted by 90%, can the hot sales of heating products make a comeback?

As a leading company in the industry, Ogawa started out as an OEM. After initial accumulation, capital support, and listing, it now has 11 self-owned brands, focusing on core markets such as North America and Europe. In addition to its stable market share in North America and Europe, its brands also have many products dominating the Amazon BSR list, but it is still difficult to resist the changes in the overall environment.

Amid the European energy crisis and the boom in heating products, the Medisana brand's multiple electric blankets have dominated the Amazon Europe BSR charts, which seems to have brought a new turn of events.

Ogawa's net profit plummeted 94.86% in the first half of the year

The changes in the macro environment are affecting every cross-border person, and Ogawa Intelligent Health Technology Group (hereinafter referred to as "Ogawa") is no exception. It also suffered a major impact in the first half of this year. Its operating income in the first half of the year was 3.153 billion yuan, a decrease of 20.07% compared with the same period last year; the net profit attributable to shareholders of listed companies was only 13.36 million yuan, a decrease of 94.86% compared with 260 million yuan in the same period last year.

Many people may not be familiar with Ogawa, but it was founded as early as 1996. It is currently headquartered in Xiamen and mainly focuses on health equipment products such as health massage (massage chairs, massage appliances), healthy environment (fresh air system, air purifiers) , etc. In addition to selling its products through Amazon, it also maintains close cooperation with leading distributors such as Costco and Brookstone.

Unlike general enterprises, Ogawa has strong supply chain integration and bargaining power. It is reported that Ogawa has the world's largest professional production base for health massage equipment , with an annual production capacity of 700,000 intelligent massage chairs , an annual production capacity of more than 17 million professional massage small appliances, and an annual production capacity of more than 6 million healthy environmental products.

Initially, the company was mainly engaged in OEM business, but now it is developing with both independent brands and ODM business. It owns several independent brands including OGAWA, ihoco, BRI, FUJI, cozzia, Medisana, etc., which are distributed in core markets such as North America, Europe and Asia. The market share of many brands has jumped into the top three in the local market.

In terms of segmentation, OGAWA focuses on the Southeast Asian market and is one of the top two famous health brands in Asia; FUJI focuses on the Taiwan market and is a well-known massage chair brand in Taiwan, ranking second in market share; cozzia focuses on the North American market and is a high-end brand in the North American home furnishing market, ranking second in market share; Medisana focuses on the European market and is a leading family health brand in Europe, ranking top three in market share in Europe.

Among them, Medisana mainly produces a full range of medical and personal care products, and many of its products are ranked BSR in the personal care appliance category on Amazon Europe. The heating products we are going to talk about today happen to belong to this brand.

The worsening energy crisis in Europe has caused natural gas prices to soar. However, Europe has already ushered in a severe winter, and using natural gas for heating has become a "luxury" for local residents. As a result, many European families have begun to buy heaters, electric blankets and other products, and heating products on major European e-commerce platforms have also become popular.

Since July, the sales volume of foreign electric blankets has increased rapidly. The 27 EU countries alone imported 1.29 million electric blankets from China, which has now exceeded the peak. According to incomplete statistics, the export volume of Chinese electric blankets to Europe in the first eight months of this year has exceeded 50 million US dollars. Many electric blanket sellers have benefited from this, and Ogawa is one of them.

Heating products dominate Amazon's rankings, Ogawa may turn things around in the second half of the year

In the heating products category of Amazon Europe, you can find that many electric blankets from Ogawa have dominated the Amazon BSR list. Before the National Day holiday this year, careful netizens found that two electric blankets from Medisana, Ogawa's German subsidiary, ranked first and third on Amazon's sales list , and sales were still increasing rapidly. Its stock price achieved an average daily increase of nearly 6% within 5 days.

The editor learned that on the German Amazon site, the price of Ogawa's electric blankets in the past two months has been between 27.99 and 201 euros, and the ratings are mostly 4.6 points. Consumers have also given very positive reviews of the product. Although the company's sales during the holiday period are not yet known, the above data shows that Medisana made a lot of profit during this holiday.

In fact, Ogawa is very good at seizing opportunities to sell products globally. For example, during the global epidemic in 2020, the company seized the opportunity in the overseas epidemic prevention products market, and its home medical product sales jumped from 3.16 million units in 2019 to 121.31 million units in 2020, equivalent to a year-on-year increase of 3,733%. For Ogawa, which is good at seizing opportunities, this opportunity for heating products is naturally not to be missed.

Public data shows that in the first eight months of 2022, the Medisana brand ranked fifth in the sales ranking of electric blankets on Amazon Europe, with a market share of more than 6%. This undoubtedly provides a greater possibility for the company's performance to rebound in the second half of the year.

In this regard, many sellers said: "Ogawa's German subsidiary is almost on par with iHealth, that's awesome! " Ogawa also said that the decline in performance was only temporary, and that attention to its electric blanket business had increased, which would have a positive impact on the company's subsequent valuation repair.

In fact, the craze for electric blankets caused by the European energy crisis has not subsided. From April to July this year, China exported an average of 500,000 electric blankets per month, and the export volume continued to increase in August and September. Of course, Ogawa is not the only company that has benefited from the hot sales of heating products. The well-known Rainbow Group is also the same. In the just-concluded World Table Tennis Championships, the company's products were also given as souvenirs to foreign athletes.

Many netizens said: "Sending an electric blanket is really thoughtful and heartwarming. It is just what we need." Some netizens also suggested that "in the future, we can also send a hot water bottle or a small sun."

In fact, many people were surprised by the buying craze in Europe: "Electric blankets, which are rarely used in China, were unexpectedly sold in such large quantities during the European energy crisis this year!"

According to feedback from major e-commerce platforms and sellers, the demand for other heating-related products, such as electric water heaters, electric kettles, and reserve air conditioners, is also growing. There is no doubt that for companies like Ogawa, the hot sales period of heating products will also continue.

Under the influence of the overall environment this year, although Ogawa's performance in the first half of the year has dropped significantly, as some sellers said: "The company is likely to rebound in the second half of the year. After all, there are many examples of counter-trend turnarounds." With the popularity of heating products, Ogawa's performance is very likely to rise against the market trend.

Heating

net income

Amazon