Smoore International’s Interim Financial Report: Revenue Declines for Two Consecutive Years, Pod Mod E-Cigarettes in Europe and Other Markets See 22.5% Growth

Smoore International’s 2024 interim financial report reveals that the Group achieved sales revenue of approximately RMB 5,037.242 million during the review period, a decrease of approximately 1.7% year-on-year. According to the company’s 2023 and 2024 interim reports, its sales revenue has declined for two consecutive years. However, in markets such as Europe, Smoore’s closed pod mod products saw a year-on-year increase of approximately 22.5% in the second quarter. The company is accelerating its expansion into medical atomization and has gained recognition from regulatory agencies in the U.S. and Europe.

On August 19, 2024, Smoore International (06969.HK) released its interim financial report for the first half of 2024. The report shows that the Group achieved sales revenue of approximately RMB 5,037.242 million during the review period, a year-on-year decrease of 1.7%. The gross profit was RMB 1,914.597 million, a year-on-year increase of 3.2%, while the profit for the period was RMB 683.198 million, down 4.8% year-on-year. According to Smoore’s 2023 and 2024 interim reports, Smoore’s sales revenue has declined for two consecutive years, with year-on-year declines of 9.4% and 1.7%, respectively.

Revenue from Corporate Clients Down 12.3%, Pod Mod Products in Europe and Other Markets See 93.2% QoQ Growth

The report shows that the company’s revenue from corporate clients during the review period was approximately RMB 3,921.635 million, down 12.3% year-on-year. It is reported that the company’s revenue from corporate clients has been declining for two consecutive years, with a year-on-year decrease of 12.2% according to the 2023 interim report. The performance of corporate client revenue varies significantly across different global markets.

In Europe and other regions, Smoore’s corporate client revenue in the first half of 2024 was approximately RMB 1,975.700 million, down 16% year-on-year, a decrease of nearly RMB 400 million. Smoore’s business in Europe and other markets primarily involves the sale of closed-system e-cigarette products. As Europe increasingly tightens regulations on traditional disposable e-cigarettes, closed-system pod mod products achieved a year-on-year growth of approximately 22.5% in the second quarter, with a quarter-on-quarter growth of approximately 93.2%. Meanwhile, revenue from disposable e-cigarette products declined by approximately 18.9% year-on-year during the review period. The proportion of corporate client revenue from Europe and other markets dropped from about 45.9% in the same period last year to about 39.3% during the review period. Although the growth of pod mod products in Europe and other markets is evident, it is insufficient to offset the decline in disposable e-cigarette products, leading to an overall decrease in corporate client revenue from these markets.

In the U.S. market, where Smoore mainly sells e-cigarette products and special-purpose atomization products, corporate client revenue for the first half of the year was approximately RMB 1,858.160 million, a year-on-year decrease of about 9.8%. Among these, pod mod e-cigarette products saw a year-on-year decline in the first half, but the quarterly trend was positive, with a year-on-year growth of about 6.5% in the second quarter.

In the mainland China market, which has a smaller share of the company’s corporate client revenue, revenue was approximately RMB 87.775 million in the first half, a year-on-year increase of 41.4%.

Additionally, during the review period, the company’s own brand achieved rapid growth, with revenue of approximately RMB 1,115.607 million, a year-on-year increase of about 71.9%. The fastest growth was seen in Europe and other international markets, where revenue reached approximately RMB 928.687 million, up about 88.0% year-on-year. The company’s own brand, VAPORESSO, continues to increase its market share in the open-system product segment.

Accelerating the Development of Medical Atomization, Recognized by U.S. and European Regulatory Agencies

The report shows that during the period, the company completed the development and production layout of several drug delivery devices for asthma and COPD, and developed more than ten drug formulations. These formulations and devices have been recognized by U.S. and European regulatory agencies and have entered preclinical or registration batch production stages.

Meanwhile, the report mentioned that the company’s R&D expenditure for the first half of the year totaled RMB 760.112 million, a year-on-year increase of approximately 23.7%, mainly driven by growth in the fields of medical atomization and heated tobacco products.

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