Good morning. I am Inae Lim, Head of IR team at Coway. Thank you for joining Coway's first quarter 2026 earnings presentation despite your busy schedules. Today's conference call will be conducted via consecutive interpretation, and you can view the presentation materials through the live webcast screen or download the files from our IR website. Joining us today are CEO Jangwon Seo, CFO Soon Tae Kim, and Head of Business Management Division, Soon Il Kim. We will be answering your questions following the earnings presentation. Please note that the contents of today's presentation have been prepared prior to the completion of the external audit, therefore, some details may be subject to change depending on the final audit result. I will now turn the mic to CFO Soon Tae Kim for the earnings presentation.
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Good morning, this Soon Tae Kim CFO at Coway and I will take you through our Q1 results.
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First, we will discuss the major business highlights for the quarter from page five. In Q1 2026, the company achieved its highest quarterly earnings, demonstrating strong growth accompanied by profitability. Revenue grew by 13.2% year-over-year, and operating profit reported a steeper increase of 18.8%, achieving an operating profit margin of 18.9%. Net profit reported a high growth of 31.1% YoY, aided by factors such as exchange rate impacts. These favorable financial conditions are the result of solid operational performance in our core businesses, combined with positive external environmental factors. We view the growth of rental accounts as a core indicator that reveals the essence of the rental business model itself.
This is because rental accounts are the key to creating a stable and predictable monthly cash flow, which is the top priority value supporting our financial soundness. Supported by steep influx of new customers this quarter, total rental accounts reached 11.73 million, a solid growth rate of 10.9% YoY. This overwhelming account growth proves our unrivaled market dominance once again by widening the gap with competitors, despite uncertainties in domestic and international market environment. In February, the company had presented its 2026 guidance as a range, and based on the upper end of that guidance, we have achieved 24% for revenue and 26% for operating profit guidance in Q1, showing a smooth start toward our full year 2026 business target.
Our board of directors and management will continue to focus our capabilities on core business to ensure sustainable growth in domestic and overseas markets.
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Regarding the domestic business, despite the impact of decrease in matured accounts, we achieved revenue of KRW 742.8 billion, which is a 9.5% YoY growth, driven by the expansion of new rental sales. Due to expansion of new rental sales and decrease in matured accounts, the rental net add recorded 188,000 units, which is an 81.8% increase YoY, showing a high growth trend. The growth trend of overseas subsidiaries this quarter was also encouraging. The Malaysian subsidiary's revenue grew 23.5% YoY, continuing the double-digit revenue growth and opening the era of KRW 400 billion in quarterly revenue. The Thailand subsidiary also continued high sales growth, recording a revenue growth of 29.3% YoY. Despite temporary external variables such as delays in obtaining local certification, the Indonesian subsidiary continued its revenue growth of 14.7% YoY based on solid local demand.
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Next is page six, which looks at the total rental account status, which is a core indicator. The total number of rental accounts combining domestic and overseas reached 11.73 million as of Q1, achieving double-digit growth of 10.9% YoY. Domestic accounts reached 7.48 million, up 9.8% YoY, and overseas subsidiaries reached 4.25 million, recording a 12.9% growth YoY. The proportion of overseas subsidiaries within the total rental accounts is 36%, continuing a balanced growth trend between both domestic and overseas markets.
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Next is page seven, where we discuss the consolidated management results. Consolidated revenue for Q1 recorded KRW 1.328 trillion, which is a 13.2% increase YoY, achieving the highest quarterly revenue in history. This quarter, both domestic business and overseas subsidiaries reported high growth, driving the expansion of overall company's top line. Operating profit reached KRW 250.9 billion, growing by 18.8% YoY. We achieved an operating profit margin of 18.9%. In particular, the core factor of this improvement in operating profit margin lies in the realization of economies of scale following our revenue growth. We will continue to strive to maintain this high level of profit margin through efficient management.
Net profit reached KRW 182 billion, which is a 31.1% increase YoY, and the difference between the OP growth rate and the net profit growth rate is mainly due to the increase in foreign currency and foreign exchange-related gains following exchange rate fluctuation. These results prove that the strategic outcome of our focused investments in core domestic and overseas businesses are now materializing in earnest alongside profitability improvements. Moving forward, we will further accelerate the current growth momentum to continue sustainable growth.
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Next, please turn to page eight, where we discuss the domestic business performance. Domestic business is a combined figure of our domestic environmental home appliances business and the BEREX business. Q1 revenue was KRW 742.8 billion, which is a 9.5% growth YoY, continuing solid revenue growth. Rental revenue reported KRW 715.3 billion, which is a 10.5% increase YoY, maintaining a double-digit growth trend supported by the expansion of new rental sales. Other revenue, which includes membership and lump sum sales, was KRW 27.5 billion, which is a 12.2% decrease YoY. On the right-hand side is the total domestic account status. The total number of accounts in Q1 reached 7.81 million, maintaining a high growth trend of 8.3% YoY.
Rental accounts drove total accounts, growth by increasing 9.8% YoY, while membership accounts decreased by 16.4% YoY. The proportion of financial lease within total rental accounts was 61%, which is an 11 percentage points increase from 50% in Q1 of last year.
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Next is page nine, where we discuss the domestic rental account adds and the net increase in rental accounts. In Q1, gross add was 471,000 units, which is a 0.3% decrease YoY. Total gross adds decreased slightly due to reduction in re-rental sales following the decrease in accounts reaching maturity, new rental sales increased by 11.1% YoY. In particular, bed sales within the product category showed double-digit growth, continuing the growth trend of our BEREX business. The proportion of financial leases within rental sales was 79%, which is a 13 percentage point increase from 66% in 2025. On the right hand is the net adds. Q1 net add was 188,000 units, showing a high growth rate of 81.8% YoY.
High net account growth was achieved through the combined impact of expanded new rental sales and a decrease in accounts reaching maturity.
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Next is page 10, where we look at the update of our overseas subsidiaries in Q1. Overseas subsidiary revenue reported KRW 537 billion, which is a 20.2% growth YoY, supported by high growth in major subsidiaries such as Malaysia, Thailand and Indonesia. The total number of overseas subsidiary accounts on the right also reached 4.34 million, which is an 11.5% growth YoY based on high sales in major subsidiaries and solidifying our leadership in the market.
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Next is page 11, which is a performance breakdown of our Malaysia and U.S. subsidiaries. First, a look at Malaysia. Q1 revenue reached KRW 406.2 billion, which is a 23.5% growth YoY. The high revenue growth trend is continuing as double-digit sales growth in major product categories combines with the launch effect of new air purifier products. The operating profit margin reached 18%, which is an improvement of 2.4 percentage points YoY. The key to margin improvement is the improvement of cost to sales ratio through changes in product mix and improved efficiency of fixed costs. First, an increased portion of mid to high priced water purifiers and increased sales in home care and living appliance categories led to a decline in our cost to sales ratio.
Secondly, local production of some products also contributed to cost improvement. Finally, economies of scale worked in our favor as revenue grew significantly, further strengthening the profit structure. Next is a look at our U.S. subsidiary. Q1 revenue was KRW 57.5 billion, which is a slight decrease of 4.1% on a YoY basis. While the door to door or direct sales channel continued stable growth, some volatility occurred in the retail channel side from a negative base effect against January of last year, when air purifier sales had spiked by deteriorating air quality during the large scale wildfires that had occurred in western U.S. last year.
In terms of profitability, operating margin reported 5.3%, which is a 2.3 percentage point increase on a YoY basis through continuous efforts to improve the cost structure, such as revising the commission system.
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Page 12 looks at the performance of Thailand and Indonesia subsidiaries. First, Thailand subsidiary Q1 revenue reported KRW 55.4 billion, which is a 29.3% growth YoY. Sales were strong and the monthly water purifier sales exceeded 10,000 units, contributing to the revenue increase. The operating profit margin of Thailand subsidiary was 4.9%, which is a 1.7 percentage point increase YoY. Profitability improvement is gaining traction through qualitative growth such as improved organizational productivity, operational efficiency, and an increased proportion of sales, service revenue following account growth. Following is the Indonesian subsidiary. Q1 revenue was KRW 12.6 billion, which is a 14.7% growth YoY.
Volume growth slowed somewhat temporarily due to delays in administrative procedures during the process of obtaining the SNI certification, which is the Indonesian National Standard certification. We expect to obtain the certification during Q2 and look forward to business normalization and a strong backlog demand. Since local demand in Indonesia remains solid, we forecast a recovery of steep growth after the certification is obtained. Please look at page 13 where we talk about the status of our governance improvement. The company is continuing its advances in governance to establish a sophisticated governance system. First, we newly established internal transaction committee to enhance the fairness and transparency of transactions between affiliated companies. This committee is composed of three independent directors to ensure independence and objectivity in the deliberation process.
We established a stricter process by restricting any agenda item rejected by the committee from being submitted to the board of directors. We also introduced a Lead Independent Director system or LID. To enhance the independence of the board and collect opinions from our outside directors, we appointed a Lead Independent Director, LID, to represent the independent directors. The LID will faithfully perform the role of a bridge between management and shareholders to protect shareholder interest in addition to the board's monitoring function. Page 14, where we look at our plan to enhance corporate value further through shareholder returns and responsible management. The board of directors discussed specific utilization plans and execution schedules for the shareholder return resources this year to increase the visibility of shareholder returns. We would like to share those with you preemptively. Increasing the portion of cash dividends.
Within our 40% shareholder return ratio policy, the company plans to focus all remaining resources on cash dividends, excluding the KRW 50 billion of share buyback that has been already completed at the beginning of this year. Through this, we plan to support shareholders in enjoying separate taxation benefits on their dividend income by ensuring that the company qualifies as a high dividend enterprise. Second, we plan to implement quarterly dividends starting from this year. Through this, we aim to enhance shareholder value by building a more predictable and stable profit return system. As part of that, we plan to pay a dividend of KRW 700 per share for Q1 2026, with a record date of May 31st. Third is plans for treasury shares that have already been acquired.
The KRW 50 billion of treasury shares acquired earlier this year will be fully canceled within this year, contributing to a substantial increase in value per share.
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Next is our efforts to further reinforce responsible management. Internal directors of the company directly acquired company stock to better align their interests with our shareholders. Our Chairman of the Board, Bang Jun-hyuk, also plans to acquire KRW 10 billion worth of company stocks over approximately a one-month period starting May 7. Through the stock-linked RSU restricted stock unit compensation system newly established this year, we have established a governance system where the CEO and CFO can focus on long-term corporate value improvement by directly linking their compensation to stock price performance. The RSUs are divided into two types RSU one, which is a performance bonus conversion type, and then RSU two, which is a performance-linked type granted upon reaching certain target stock prices.
The target stock prices for the RSU two are set at KRW 120,000, KRW 160,000, KRW 200,000, KRW 240,000, and KRW 280,000 respectively, and the company will continue to realize more responsible management based on the trust of shareholders and the market through transparent management and active shareholder returns.
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That concludes our first quarter 2026 earnings results. Thank you.