by Margins, cost of sales hold steady, per Q3 filing
HANGZHOU, China – Kuka Home reported weaker results for the first nine months of 2026, with the slowdown concentrated in the third quarter, according to its Q3 report filed Wednesday. Revenue fell 7% in the third quarter.
While no letter to shareholders or narrative is included in the report, the causes for the slowdown indicated by the numbers are rising financial costs, slowing sales, and increased spending on research and development.
Revenue for the three quarters fell by about 2% from a year earlier to approximately $2.2 billion, using current dollars to make the currency exchange from Chinese RMB. Net profit attributable to shareholders dropped about 10% to about $209 million, while earnings per share fell 21% to roughly 23 cents.
All the amounts were reported in yuan, but then were converted to U.S. dollars by Gemini using current dollars. The financial reports cited here were translated into English from Chinese by Claude.
For the third quarter, which was the focus of the filing, revenue declined 7% to $728 million, while total profit fell 21%. Attributable net profit slid 11%, according to the public filing made to the Shanghai Stock Exchange.
Stalling sales
The nine-month figures show a turn for the worse in the summer months. Subtracting the third quarter from the year-to-date totals shows first-half revenue of about $1.5 billion, up almost a percent from a year earlier. But, sales were essentially flat through June, then slipped 7% in the quarter July-September.
Profit followed the same path, but perhaps a bit more sharply. Total profits fell about 14% in the first half and 21% in the third quarter. Attributable net profit fell about 9% in the first half and 11% in the third quarter.
Easing the pain a bit was cash received from customers, which reached $2.2 billion to remain unchanged from a year earlier and slightly above reported revenue. However, accounts receivable grew only 2.5% since the end of 2025.
Margins holding
Another positive in the numbers shows Kuka’s margins holding firm. The cost of sales fell slightly faster than revenue, helping the gross margin for the nine months to finish at 32%, or essentially unchanged from a year earlier.
Zeroing in on the cited causes, financial expenses swung from a net gain of $3.2 million to a cost of $19.2 million, a $22.4 million turnaround. Interest income still exceeded interest expenses, however, so the swing came from factors not identified in the filing. This is speculation, but for a company that earns much of its revenue in the U.S., currency exchange losses during a year of yuan strength are a likely explanation. The cash flow statement shows an $8.7 million negative currency effect on cash, against a $3.5 million gain last year.
Research and development spending rose 28% to $60 million, or 2.7% of revenue, which was up from 2.1%, according to the filing. This was the fastest-growing operating expense, and it could be reasonably interpreted as a bet on the future, as its North America CEO, Calvin Wang, has suggested.
A few other metrics softened the blows to the bottom line. First, administrative costs dropped 5%. Second, credit impairment charges diminished to $1.2 million from $6.8 million for the same period a year ago. Lastly, income tax expenses fell by a third.
So, let’s connect a few dots. A week prior to filing its 3Q report, Kuka Home filed an announcement that it has secured a new $45 million credit line with China Minsheng Bank. The parent company agreed to guarantee up to about $45 million of borrowing by its wholly owned subsidiary, Kuka Home (Ningbo), according to a filing with the Shanghai Stock Exchange dated Oct. 20.
The Ningbo subsidiary signed a comprehensive credit facility agreement with China Minsheng Bank’s Hangzhou branch. The parent company signed a maximum-amount guarantee agreement on the same day, accepting joint and several liability for the debt. The guarantee covers principal, interest and other amounts owed on debts arising between Oct. 8 this year and Oct. 7 next year, according to the filing.
The Ningbo unit, founded in 2013, handles furniture sales, online retail and import-export for the Kuka Home group, also known as Jason Furniture (Hangzhou). Ningbo reported revenue of about $612 million and net profit of about $39 million for the first half of this year (unaudited). For all of last year, the unit posted audited revenue of approximately $1.4 billion and net profit of about $52 million, the filing states in yuan.
Kuka Home’s board and shareholders had already approved a ceiling on loan guarantees of about $1.3 billion across the group, including approximately $450 million earmarked for Ningbo. Before this deal, Ningbo had around $142 million in outstanding guarantees, as we reported earlier this month. The parent company’s total guarantees add up to approximately $231 million, or about 14.5% of net assets, according to the earlier filing.
As we also noted, Ningbo carries substantial leverage. Liabilities were 68% of its assets at the end of June, down slightly from just a hair under 70% at the end of 2025. This means that both figures sit just below the 70% level at which Chinese exchange rules require listed companies to flag a guarantee as a special risk.
Those earlier filings also show that controlling shareholder Yingfeng Group is helping out as Kuka Home’s short-term borrowing rises and advance payments from customers fall. Yingfeng subscribed to a share sale to raise $279 million in exchange for 104.3 million new shares, and $149.2 million of those funds were to be earmarked as working capital, according to a SINA report in August quoting company executives. Yingfeng’s stock “lock” period is three years, meaning no stock sales for 36 months.
So, between Yingfeng and China Minsheng Bank, Kuka Home has fresh capital with which to work.
A shareholder table in Kuka Home’s 3Q report shows new shares going to Infore Group/Yingfeng, which now holds 104 million-plus shares. This means Infore/Yingfeng now holds 37% of Kuka Home shares. This new round of shares issued to Yingfeng helped drop EPS to 21%.
The new credit line is significant because Kuka Home’s 3Q filing shows that short-term bank borrowings sharply rose, from $83.7 million in December to $300 million by Sept. 30, a multiple of about 3.6. Making this a bit quizzical is the company’s strong cash position.
In addition to dividends and interest paid out over the period, the filing mentions “other financing outflows,” which jumped to $158 million from just $32.6 million. Not stated is what they were or where or to whom they went.
Inventory numbers indicate that Kuka Home is either producing less or clearing out stock. Inventory fell 24% during the three quarters to $258 million, a reduction of $82 million. In addition, contract liabilities, including mostly customer prepayments for orders not yet delivered, fell 29%. The seasonal nature of furniture buying at retail explains some of this decline, but it could also result from a slowdown in sales. Fourth-quarter sales will, therefore, be a metric to watch.
