Why did NIU's Q4 earnings fall short of forecasts?

Niu Technologies' (NIU) Q4 earnings fell short of forecasts due to several factors impacting profitability despite strong revenue growth:

1. Margin Challenges: Niu Technologies faced decreased gross margins, with Q4 gross margin at 12.4%, a significant drop from the previous year's 19.0%. The full-year gross margin decreased to 15.2%, down from 21.5% in 2023. This decline was primarily due to increased competition and strategic market expansions, especially in the overseas market, which affected profit margins.
2. Tariff and Market Expansion Impact: The company faced headwinds in the micro mobility market due to a 25% US tariff increase on key products, impacting margins. Additionally, the change in product mix for overseas markets, such as the shift to kick-scooters, led to a 25% decrease in the average selling price of branded scooters. These factors contributed to the net loss of RMB73 million for the quarter.
3. Cost Management Issues: The company reported a negative return on equity of 24.22% and a negative net margin of 8.53%, indicating inefficiencies in cost management. The increased sales volume and market expansion efforts may not have been fully translated into proportional profitability due to these cost challenges.

In summary, Niu Technologies' Q4 earnings fell short of forecasts due to margin challenges, tariff and market expansion impact, and cost management issues. Despite strong revenue growth, these factors led to a decline in profitability, resulting in earnings that did not meet market expectations.