According to multiple media reports, on October 29th, local time in the United States, the US Department of Justice released a message on its official website that Gree and the US Department of Justice reached a deferred prosecution agreement (DPA). According to the terms of the DPA, Gree Zhuhai and Gree Hong Kong agreed to accept a total fine of US$91 million (approximately 580 million yuan), and agreed to provide to any uncompensated victims of a fire caused by the company’s defective dehumidifier compensation.
According to court documents, Gree Zhuhai, Gree Hong Kong and Gree’s subsidiaries in the United States know theirDehumidificationThe machine is defective and does not meet applicable safety standards and may catch fire, but these companies have not reported this information to the US Consumer Product Safety Commission for months. These companies only reported and recalled these dehumidifiers after consumer complaints about fires and the damage they caused continued to increase.
Gree was exploded in the U.S. to reach a delayed prosecution agreement
The U.S. Department of Justice said Gree Hong Kong reached an agreement to defer prosecution on a criminal document filed in the U.S. District Court for the Central District of California on Thursday. The criminal information submitted with the DPA accused Zhuhai Gree and Hong Kong Gree of violating a felony under the Consumer Product Safety Law, that is, deliberately failing to report consumer product safety information to the CPSC.
At the same time, Gree USA Inc., a US subsidiary of Gree located in Industrial City, California, was also charged in criminal information. Court documents show that Gree Zhuhai, Gree Hong Kong, and Gree’s US subsidiaries knew that their dehumidifiers were defective and did not meet applicable safety standards and could catch fire. However, these companies have not reported to the US Consumer Product Safety Commission for months. Report this information. These companies only reported and recalled these dehumidifiers after consumer complaints about fires and the damage they caused continued to increase.
According to the terms of the DPA, Gree Zhuhai and Gree Hong Kong agreed to accept a total fine of US$91 million and agreed to provide compensation to any uncompensated victims who caused a fire due to the company’s defective dehumidifier. The civil fine of US$15.45 million that Gree paid to CPSC earlier was included in the total fine of US$91 million in the agreement. According to the US Department of Justice, this is the conclusion of the first batch of corporate criminal enforcement actions launched under the Consumer Product Safety Act (CPSA). As part of the criminal settlement, Gree agreed to continue to cooperate with the Ministry of Justice’s investigation and prosecution and agreed to strengthen the company’s compliance programs and reporting requirements.
On the exposed DPA document, a suspected Dong Mingzhu’s signature also appeared, signed on October 20, 2021.
As of press time, Gree Electric has not yet responded to this matter.
Gree’s dehumidifier products have been turbulent in the US market. As early as 2013, Gree dehumidifier encountered a US$150 million lawsuit in California. The plaintiff alleged that Gree’s dehumidifiers sold through distributors could easily cause fires. The accusation also alleges that Gree not only denied that these dehumidifiers sold in the United States are dangerous, but also retaliated after the dealer reported the problem to the US government.
That is, since 2013, Gree has initiated two dehumidifier recalls. In the first recall in September 2013, the “problem” dehumidifiers involved 12 brands, and the number of recalls was about 2.25 million units. In the expanded recall in January 2014, the number of dehumidifiers involving the GE brand was approximately 350,000 units. The dehumidifiers involved in the recall were sold in stores in the U.S. and Canada and on Amazon and Ebay websites from January 2005 to August 2013. They involved Gree, Danby, De’Longhi, Fedders (Fedders), Fellini, Frigidaire, GE, Kenmore, Norpole, Premiere, Seabreeze, SoleusAir and SuperClima 13 brands, but the manufacturers are all Gree Electric.
In the third quarter, revenue and net profit fell, Gree’s stock price hit a new low during the year
On October 28, Gree Electric’s share price closed at 36.5 yuan per share, a record low in two years. The stock price rebounded slightly on the 29th, closing at 36.65 yuan per share. As of now, Gree’s stock price has fallen by 38% during the year, and its market value has evaporated 180 billion yuan from its high.
The performance of the stock price is directly related to Gree Electric’s third-quarter performance. On October 26, Gree Electric released three quarterly reports. The report shows that the company’s revenue in the first three quarters increased by 9.73% year-on-year, and the net profit attributable to the parent increased by 14.21% year-on-year. However, from the perspective of the third quarter alone, Gree Electric’s revenue and net profit both declined, with revenue falling 16.5% and net profit falling 15.66%.
Judging from past revenue data, the third quarter of each year is generally the peak season, and the revenue generated is generally the highest that year. At the same time, the summer heat causesair conditionerFactors such as high demand and the 618 shopping festival can drive the company’s revenue. However, in the third quarter of this year, the company’s revenue dropped by more than 10 billion yuan from the previous quarter, and the phenomenon of “not busy in peak season” appeared.
In terms of other financial indicators, Gree Electric’s inventory has reached 39.675 billion yuan, an increase of 92% compared to the same period last year, and an increase of 42% compared to the beginning of this year; long-term borrowings have soared from 1.57 billion yuan in the same period last year to 8.84 billion yuan, while The bill item also surged from 21.427 billion yuan at the beginning of the year to 40.816 billion yuan.
Southwest Securities pointed out that the slowdown in domestic sales growth in the air-conditioning industry may be an important reason for Gree Electric’s third-quarter performance decline. Industry Online data shows that from January to September this year, the domestic sales of air conditioners increased by 8% year-on-year, which was a decrease of 9% compared with the same period in 2019. In terms of export sales, exports from January to September increased by 13% year-on-year. In the first three quarters of this year, domestic sales in the air-conditioning industry recovered slowly, while export sales performed well. Gree, as the industry leader, has a relatively large share of domestic sales. Affected by the slow recovery of terminal demand and its own channel reform, the company’s performance fell in the third quarter.
The slowdown in demand-side growth has also brought about inventory squeeze. Data show that in the third quarter, Gree’s inventory continued to rise, reaching 39.675 billion yuan, an increase of 42.31% from 27.879 billion yuan in the same period last year. Under the general trend of the overall slowdown in the growth rate of the home appliance industry, destocking through channel reform has become a problem that Gree needs to solve in the process of seeking diversified transformation.
Gree Electric had more than 880,000 shareholders as of the third quarter report, an increase of more than 170,000 from the half-year report, and a surge of more than 400,000 from the end of last year.
Even Yale University with QFII funds bought against the trend and became the top ten shareholders of Gree Electric Appliances with a position of 17.01 million shares.
At the same time, the Central Huijin Asset Management Company, which has been sticking to it for many years, reduced its holdings of 44.435 million shares in the third quarter of this year. “Beijing Capital” also reduced its holdings by nearly 200 million shares, retreating to the second place in the list of top ten shareholders.
As soon as the news comes out today, what will happen to Gree Electric’s share price next Monday will only be verified by the market. But for the 880,000 shareholders who hold the stock, this weekend is destined to be a sleepless weekend. In the stock bar, the investors who hold Gree Electric have already fried the pot, and the popularity of its stock bar quickly soared to 29.