'Winix' Transforming from a Summer Beneficiary Company to an Export Company

[Asia Economy Reporter Yoo Hyun-seok] Winix, a company that benefited from summer sales, is transforming into an export-oriented business. The variety of products it manufactures is increasing, and the proportion of overseas sales is expected to reach 50% this year, improving the sales structure that was previously concentrated only in summer.

Winix is a home appliance manufacturer. It produces and sells finished home appliances such as air purifiers, clothes dryers, and dehumidifiers, as well as heat exchangers for refrigerators. Its overseas subsidiaries in China and Thailand manufacture and sell finished products and key components such as heat exchangers for dehumidifiers, air conditioners, and refrigerators. Additionally, two overseas subsidiaries in the United States and Europe are conducting related businesses to sell finished home appliances locally.

Winix has traditionally been a summer peak season company. Its main product, the dehumidifier, is a product used to prepare for the summer monsoon season, so it sells mostly during this period. In 2013, it achieved sales of 257.8 billion KRW, with 182.1 billion KRW concentrated in the second and third quarters alone, accounting for 70.64% of total sales. In 2014, sales in the second and third quarters were 156.8 billion KRW, representing 59.57% of total sales.

However, as the company’s product lineup expanded, the performance previously concentrated only in summer improved. Winix was established in 1973, launched dehumidifiers in 1997, and air purifiers in 2002. Recently, it has expanded its product range by launching washer-dryers. Furthermore, with worsening yellow dust and fine dust in Korea, sales of air purifiers have also increased. As a result, in 2019, sales in the first and second quarters were 131.8 billion KRW and 103.2 billion KRW respectively, and last year, except for the third quarter, sales remained around 90 billion KRW.

In particular, the increase in exports has contributed to the company’s growth. On an individual basis, total sales in 2014 were 201.9 billion KRW, of which 42.8 billion KRW were exports, accounting for only 21.18%. However, by 2017, this increased to 34.26%, and last year to 45.50%. The main driver of export growth is the United States. Since 2018, Winix has increased its supply of air purifiers to major U.S. retailers. Additionally, sales in online markets, including Amazon, have been rising.

However, last year’s performance was sluggish. The spread of COVID-19 led to a contraction in domestic consumer sentiment and a global decrease in demand, resulting in reduced operating rates in domestic industries. Moreover, a decrease in fine dust reduced domestic demand for air purifiers. Last year, Winix’s consolidated sales and operating profit were 382.3 billion KRW and 52 billion KRW respectively, representing decreases of 1.02% in sales and 1.09% in operating profit compared to the previous year. By product, finished products such as air purifiers, water purifiers with cooling and heating functions, air purifiers, fan heaters, and dehumidifiers accounted for 66.29%. Heat exchangers used for refrigerators and air conditioners (EVAPORATORS) accounted for 6.61%, outsourced raw materials such as resin and fuses 6.14%, and other and air conditioner parts accounted for 5.33% and 2.35%, respectively.

Winix recorded consolidated sales of 100.4 billion KRW and operating profit of 8.9 billion KRW in the first quarter. Sales increased by 4.06% year-on-year, but operating profit decreased by 8.20%. Performance growth is expected this year. Currently, Shinhan Financial Investment is the only securities firm in Korea that has released performance forecasts for Winix this year. Shinhan Financial Investment expects sales and operating profit to reach 457.3 billion KRW and 70.2 billion KRW respectively, increases of 15% and 16% compared to the previous year. Domestic sales are expected to increase by 16% to 234.5 billion KRW.

The core of growth is exports. Winix recorded export sales of 46.4 billion KRW on a separate basis in the first quarter, a 68.47% increase year-on-year. Shinhan Financial Investment forecasts that Winix’s export ratio will reach 49% of total sales this year, a 16 percentage point increase from the previous year. Domestic product sales have also increased. Winix announced that cumulative dehumidifier sales through last month increased by 270% compared to the same period last year. Last month, the number of rainy days more than doubled compared to the average for the same month over the past 10 years, leading to strong dehumidifier sales.