Behind the second layoffs of Midea

Midea Group is experiencing the second "mass layoffs" in history.

Fang Hongbo, chairman of Midea Group, said in a conference call on May 6 that "the industry will face great difficulties in the next three years, which is an unprecedented winter". In the face of the resignation remarks of the old employees in the internal forum, he can only express "deep shame".

In sharp contrast, on May 26th, Dong Mingzhu appeared on the officially certified Tik Tok account of Gree, promising all Gree employees that "no matter what difficulties we encounter, we will never lay off employees. Under very difficult circumstances, we would rather lower our wages so that everyone can have a simple and reliable guarantee. "

Why do layoffs come from Midea Group, a leading household appliance company? This is a question of many people.

Judging from the financial data, Midea Group is not a "poor student". In 20021year, the total operating income of Midea Group was 343.3438 billion yuan, which exceeded the 300 billion yuan mark for the first time. The net profit of the company's return to the mother was 28.574 billion yuan, which also created a record high. In addition, on May 23rd, Kelu Electronics, a A-share listed company, announced that Midea Group will spend no less than 2.2 billion yuan to be promoted to the controlling shareholder of the company.

Amid the controversy, Midea became the one with the largest number of layoffs.

0 1 10 "big layoffs"

May 18, 2022, ranked fourth in the hot search list, which was about the layoffs of Midea Group.

The overall picture patched together by multi-platform information shows that Midea Group is carrying out large-scale layoffs, which is currently the second round, and there will be a third round after June 18. The range of layoffs varies from department to department, and the overall range of layoffs may be around 30%.

On May 19, Meituan officially responded that "in view of the judgment of internal and external environment, the company contracted its non-core business in an orderly manner, suspended its non-operating investment, and took various measures to further consolidate its growth potential and improve its operating performance."

On May 20th, at the 20021Annual General Meeting of Shareholders held by American Group, Fang Hongbo made a "false" response to the rumor of 50% layoffs.

It is reported that Midea's ToC business will retain the core categories of household appliances and optimize the categories of maternal and child, pet household appliances and so on. Realize transformation and upgrading, structural optimization and overall overseas strength; ToB business retains "four big and four small" (four big: robots and industrial automation, building technology, new energy auto parts, energy storage, and four small: Wandong Medical, Ande Chile, Meiyunzhi Digital, Meizhi Optoelectronics), while others shut down and turn.

On the whole, Midea Group pays more attention to the "optimization" of ToC business and the investment in ToB business.

Zhong Zheng, CFO and CFO of Midea Group, said that the optimized businesses such as maternal and child, pet appliances and some SKUs (single product income does not exceed100000 yuan, and compound growth declines) have no impact on Midea's overall income, but are conducive to the improvement of profits.

Up to now, He Xiangjian, the actual controller of the company, directly and indirectly holds 29.76% equity of Midea Group. Based on the current market value of 376.6 billion yuan, the corresponding equity value is112.08 billion yuan.

In fact, it was 20 12, 10 years ago that Fang Hongbo just took over as the chairman of Midea Group, and Midea experienced a wider range of layoffs.

During the rapid expansion from 1993 to 2009, Midea adopted a relatively independent development model of business divisions, and each business division had high autonomy. In 20 10, although the group's sales exceeded10 billion yuan, the company's inventory found that under this all-round attack mode, Midea's net profit was not as good as that of the enterprises manufacturing single products in the industry.

So the beauty began to "do subtraction". Through the assessment indicators of various dimensions, businesses and products that lack core competitiveness and suffer long-term losses, as well as businesses and products that are too small and have meager profits, have been eliminated. The SKU (product category) of the Group decreased from about 22,000 in 2065,438+065,438+0 to over 2,000.

At the same time, the number of employees of Midea Group decreased from the peak of 65,438+096,000 in 2065,438+065,438+0 to 65,438+0000 in the early period of 2065,438+05, and the layoffs exceeded 40%. Fang Hongbo's goal at that time was to "control the total number of employees within 654.38+10,000 when the sales amount reached 200 billion yuan in 2065.438+07".

As a result, business optimization and layoffs have indeed brought about the sustained growth of Midea Group, from 10 billion yuan to 300 billion yuan in 10, and its net profit has finally surpassed Gree for three consecutive years since 20 19.

However, the scale of employees has not developed as Fang Hongbo hoped. Although the revenue in 20 17 reached 24191900 million yuan, after the continuous acquisition of Toshiba household appliances and library cards, the number of employees returned to the growth track, reaching136,800, and then increased to1by the end of 2002/kloc-0.

10 years later, Fang Hongbo and Midea seem to have fallen into a "strange circle" in the matter of layoffs.

0KUKA increases salary pressure.

In fact, the acquisition of KUKA is a key event on the road of Midea's return to expansion-the obvious increase in personnel, the substantial increase in per capita salary and the unsatisfactory performance can all be regarded as the "invisible pusher" behind layoffs.

In 20 15, the adjustment of personnel structure of Midea Group was basically completed, but it also encountered the downward cycle of the household appliance market. Therefore, the strategy of "smart home+smart manufacturing" was put forward for the first time in the annual report, and the industrial robot business was regarded as the second growth curve.

Globally, KUKA Germany, ABB Switzerland, Fanuc Japan and Yaskawa Electric Japan are known as the "four big families" of industrial robots, among which KUKA is the first robot manufacturer in the world to bring photosensitive robots into the production workshop.

As a result, Midea increased its shareholding in KUKA Germany for the first time on 20 15, and established a joint venture with An Chuan to go deep into the field of industrial automation.

From 2065438 to June 2007, Midea Group further completed the acquisition of KUKA for 3.7 billion euros (about 27 1 billion yuan), holding 94.55% of its shares.

After the acquisition, the number of global employees of Midea Group increased from 1 12400 to 136800, an increase of 2 1.7 1%, the highest increase since listing.

More importantly, the acquisition of KUKA directly improved the overall per capita annual salary of Midea Group-from 20 16 years 103400 yuan to 20 178400 yuan, an increase of 72.47%.

Similarly, since 20 17, Midea Group has greatly widened the per capita salary gap with Gree Electric. By 202 1, the per capita salaries of Midea and Gree are 1905438+00000 yuan and 125900 yuan respectively.

In addition to high labor costs, the acquisition of KUKA has also brought considerable goodwill to Midea Group. At the end of 20021,the total goodwill of Midea Group was 27.875 billion yuan, ranking second among more than 4,000 A-share listed companies, equivalent to the total net profit of Midea Group in 20021year.

Behind such a price, Midea's acquisition of KUKA is actually controversial.

Before investing heavily in KUKA, both parties signed an investment agreement on June 20 16, valid for 7.5 years. Agreed Beauty has maintained the independence of KUKA in many aspects, not changing the number of existing employees, not urging KUKA to withdraw from the market, concluding isolation and prevention agreements, maintaining KUKA's business secrets and customer data, and so on.

At that time, KUKA executives told the media that before the expiration of the agreement, Midea could not obtain KUKA data, and "the decision of enterprise management will continue to be made by Germany".

Judging from the performance level, Midea once stated in the tender documents that "by 2020, KUKA may exceed its set revenue of 4-4.5 billion euros (about 286-32/kloc-0.0 billion yuan), of which 654.38 billion euros will come from the China market".

But the reality is far from it-since the consolidated statement of 20 17, KUKA's income has been declining, from 3.479 billion euros in 20 17 to 2.792 billion euros in 2020, and only rose to 3.565 billion euros in 20021year, but only 68/kloc-0.

Compared with the other three "four big families", KUKA's income scale is always in the second echelon, and its gross profit margin and net profit margin are always at the lowest level. There will be a loss of 4% in 2020. Even though the situation of 202 1 has improved, it is still the weakest of the "four big families".

Although Zhong Zheng, the current financial director of Midea Group, made it clear that KUKA 202 1 has increased in performance and there is no impairment, in view of the fact that KUKA's performance in the past few years is far less than expected, the future impairment risk is still a sword hanging over KUKA.

At the beginning of listing, the financial director of Midea Group was Yuan Liqun. In 20 16, KUKA was acquired, and Yuan Liqun left Midea Group, taking away 90.75 million restricted shares. After continuous reduction, it still holds 39.32 million shares, and the current market value is 2,244.38 million yuan.

After that, Midea Group changed its CFO/CFO three times from 20 16 to 202 1. Among them, HelmutZodl, who took office on 201910, was the regional financial director of IBM, and on 20/7/2005, he was the financial director and chief financial officer of Lenovo. However, HelmutZodl left the company after only 15 months as the financial director of Midea Group, and received nearly 10 million yuan in salary from listed companies.

2021165438+1On October 23rd, Midea announced its intention to acquire the remaining 5% equity of KUKA, thus completing the privatization. After the transaction is completed, KUKA will become an overseas wholly-owned subsidiary of Midea and be delisted from Frankfurt Stock Exchange.

This means that the investment agreement that originally agreed to expire in 2023 was broken by Midea in advance.

Some insiders told Caijing that Midea hopes this move will enable KUKA to better meet the development needs of China and realize the deep synergy of R&D, production and marketing.

There are traces to follow.

In addition to the pressure brought by KUKA, Midea Group's original home appliance business is also facing unprecedented challenges.

Steel, copper and aluminum, as the main raw materials for the owners of consumer appliances in the United States, will face a sharp price increase in 20021year-compared with the relatively low prices at the end of March 2020, the prices of these three materials will increase by 1 19% and160% respectively.

In addition, multiple negative factors such as rising freight, chip shortage and power shortage are squeezing Midea's performance.

At the same time, despite years of efforts to develop small household appliances business, refrigerators, air conditioners and washing machines are still the core income and profit sources of Midea, and the real estate industry will have an important impact on household appliances business.

Since the second half of 20021,the continuous adjustment of the real estate industry has been visible to the naked eye. Statistics from the Bureau of Statistics show that the domestic commercial housing sales area was 3.977 billion square meters from June to April in 2022, down 20.9% year-on-year, and continued to slow down compared with the first quarter.

As of May 26th, the latest market value of Midea Group was 376.58 1 billion yuan, which was nearly 50% lower than the highest market value of 734.8 billion yuan.

Under the dual pressure of new and old businesses, many indicators of Midea Group actually have hidden concerns.

The data shows that the growth rate of Midea Group's revenue has slowed down since 20 18, mainly due to the negative growth of KUKA robot business acquired in 20 17, and the weak growth of HVAC and consumer electronics business under the background of real estate downturn. The revenue rebound of 202 1 is largely due to the rising prices of upstream raw materials and American products.

More intuitive is the net profit index-from 20 15 to 20 19, its net profit growth rate has been maintained at around 16%- 17%, but it suddenly dropped to 8.82% in 2020 and 20021year respectively.

Under the financial system that big companies put their budgets first, such deviation means that there is an uncontrollable situation.

Since the epidemic, a series of negative factors, such as commodity price increase, shipping logistics price increase and energy supply price increase, have squeezed the profits of Midea Group. As a result, its gross profit margin eventually climbed to 28.86% in 20 19, and then fell back to 22.48% at the end of 2002 10 from 2020, lower than the level before10.

In terms of funds, although the monetary funds of 69.847 billion yuan on Midea Group's books at the end of the first quarter of 2022 can still cover the total long-term and short-term interest-bearing debts of 62.772 billion yuan, the "safety margin" between monetary funds and short-term interest-bearing debts has dropped from 63.755 billion yuan in 20 19 to 29.459 billion yuan at the end of March 2022.

At the same time, while Midea Group's accounts receivable remained relatively stable, notes payable and accounts payable kept rising, reaching 98.736 billion yuan at the end of 20021,the highest level since listing, which was 69.3 billion yuan higher than accounts receivable and notes.

This ability to occupy upstream funds can be explained as being in a relatively strong position in the industrial chain, but objectively it also brings greater liquidity pressure-at the end of 20021,Midea Group's quick ratio and cash maturity debt ratio were 9 1% and 52.3 1%, respectively, which were the lowest levels in 20 14 years.

Today, the United States is undoubtedly a successful representative of the diversification of the home appliance industry and going to sea.

Good years and diversified development make Midea enjoy multi-track dividends, but personnel expansion is inevitable. During the high-light period of 20 16, Midea Group's per capita income was1657,800 yuan, ranking third among 79 A-share home appliance enterprises, higher than Hisense Video, Haier House, Gree Electric and Boss Electric.

However, in the face of sudden adversity, the budding new track obviously does not have the ability to resist risks as its core business, and "expansion-trial and error-contraction-layoffs" has become an inevitable result. In 20021year, Midea Group's per capita income was 2,070,900 yuan, ranking 12 in the A-share home appliance industry, which has lagged behind the above-mentioned enterprises.

Gree, which advocates diversified beauty and promises never to lay off employees, actually has a decreasing number of employees-from 88,800 at the end of 2065,438+09 to 84,000 at the end of 2020, and then to 865,438+09 at the end of 2026,5438+09.

Highly praised netizens commented, "A master can reduce his salary and let his employees go by themselves." "Lowering his salary is equivalent to layoffs." From this perspective, the two companies just adopted different ways to cope with the changes in the industry and themselves.

A sentence in Midea's 202 1 annual report is quite appropriate for this layoff. "In the big era, no road is flat, and no road is unchangeable. Great enterprises must have experienced the cycle of reincarnation baptism. "

20 12 layoffs can be said to be the first big exam after Fang Hongbo took over the baton from He Xiangjian.

Now 10 years have passed, the scale of employees in Midea has returned to a high point, and the gross profit margin has fallen below the historical low. Fang Hongbo seems to have returned to the crossroads where everything started.