China Mengniu Dairy Company Limited 2014 Interim Results. Stock Code: 2319 August 2014

Transcription

1 China Mengniu Dairy Company Limited 2014 Interim Results Stock Code: 2319 August 2014

2 Disclaimer The presentation is prepared by China Mengniu Dairy Company Limited (the Company ) and is solely for the purpose of corporate communication and general reference only. The presentation is not intended as an offer to sell, or to solicit an offer to buy or to form any basis of investment decision for any class of securities of the Company in any jurisdiction. All such information should not be used or relied on without professional advice. The presentation is a brief summary in nature and do not purport to be a complete description of the Company, its business, its current or historical operating results or its future business prospects. This presentation contains projections and forward looking statements that may reflect the Company s current views with respect to future events and financial performance. This presentation is provided without any warranty or representation of any kind, either expressed or implied. The Company specifically disclaims all responsibilities in respect of any use or reliance of any information, whether financial or otherwise, contained in this presentation. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 2

3 Management Team Sun Yiping, Executive Director & Chief Executive Officer Bai Ying, Executive Director & Chief Operation Officer Zhang Ping, Chief Financial Officer Liu Shengli, Vice President of Sales Jesper Fournaise Colding, Vice President of Strategy Zhai Mei, Assistant Vice President of Public Relations Thibaut Helleputte, General Manager of Mengniu Danone JV Chris Kwok, Financial Controller & Company Secretary Li Dongming, Executive Director & Vice President of Yashili 3

4 Part Interim Results Review 4

5 Financial Highlights For the Six Months Ended June 30 RMB Million 2014 Organic Change vs Consolidated 2013 Consolidated Change vs Revenue 24, % 25, , % Gross Profit 7, % 8, , % Gross Profit Margin 31.08% 4.38ppt 32.44% 26.70% 5.74ppt EBITDA 1, % 2, , % EBITDA Margin 7.38% 0.10ppt 7.90% 7.28% 0.62ppt Profit Attributable to Owners of the Company Net Profit Margin Basic EPS (RMB) % 1, % 3.83% 0.20ppt 4.06% 3.63% 0.43ppt % % 5

6 Revenue Breakdown by Segment 7.7% 7.5% 0.6% Revenue (RM25,835.8 million, up 25.0% YoY) Liquid Milk Revenue amounted to RMB21,764.8 million, up 19.2% YoY Percentage of revenue down 4.1ppt YoY 1H % 0.3% 9.5% 84.2% 88.3% Revenue (RMB20,667.9 million) Ice Cream Revenue amounted to RMB1,988.4 million, up 1.7% YoY Percentage of revenue down 1.8ppt YoY Milk Formula Revenue amounted to RMB1,933.8 million, up 390.7% YoY Percentage of revenue up 5.6ppt YoY Liquid milk Milk formula Ice cream Other dairy products Other Dairy Products Revenue amounted to RMB148.8 million, up 161.4% YoY Percentage of revenue up 0.3ppt YoY 6

7 Revenue Breakdown of Liquid Milk Segment 26.8% 14.7% Revenue of Liquid Milk (RMB21,764.8 million, up 19.2% YoY) 58.5% UHT Milk Revenue amounted to RMB12,737.4 million, up 16.4% YoY Percentage of liquid milk revenue down 1.4ppt YoY 1H % 14.2% Revenue of Liquid Milk (RMB18,262.5 million) 59.9% Milk Beverages Revenue amounted to RMB5,826.2 million, up 23.1% YoY Percentage of liquid milk revenue up 0.9ppt YoY Yogurt Revenue amounted to RMB3,201.2 million, up 23.6% YoY Percentage of liquid milk revenue up 0.5ppt YoY UHT milk Milk beverages Yogurt 7

8 Market Share Liquid Milk UHT Products 24.1% 25.4% 7.3% 7.0% 15.8% 13.0% 31.9% 33.1% 7.5% 8.0% 12.3% 10.0% 22.8% 23.7% 25.5% 27.0% 27.3% 27.6% 1H2013 Mengniu A B C Others Chilled Products 25.5% 25.2% 1H2013 Mengniu A B C Others 41.1% 41.6% 7.2% 7.7% 13.5% 13.9% 18.7% 18.3% 19.5% 18.5% 1H2013 Mengniu A B Junlebao Others 8

9 Cash Flow & CAPEX (RMB Million) Net Cash Inflow from Operating Activities (RMB Million) Capital Expenditure 3, , , , , , , ,387.1 Plants & Equiments Equity Investment Biological Assets 1H2013 Organic Consolidated 1H2013 Organic Consolidated 9

10 SG&A Expenses S&D G&A (RMB Million) (RMB Million) 21.9% 22.8% 18.4% 5, % 3.5% 3.7% 5, , H2013 Organic Consolidated 1H2013 Organic Consolidated Expenses Percentage of total revenue 10

11 Operating Efficiency Index Inventory Turnover Receivables Turnover (1) Payables Turnover (2) (Day) (Day) (Day) H2013 Organic Consolidated 1H2013 Organic Consolidated 1H2013 Organic Consolidated (1)Receivables Turnover = [Average Balance of Trade and Bills Receivables / Revenue] x No. of days (2)Payables Turnover = [Average Balance of Trade and Bills Payables / Cost of Sales] x No. of days 11

12 Part 2 Business Overview 12

13 2014: Implementation of Winning Strategy Quality and Safety Consumer Experience Healthy Development of the Industry Strengthen milk sources to secure quality supply Expand retail network to enhance penetration Focus on star brands to optimize product mix Bolster innovation to reinforce leading position Optimize incentive plan to strengthen talent pool Integrate strategic resources to implement five-year plan 13

14 第三部分 2014 年展望 2014 Key Words 14

15 Innovation: Embracing Digital Marketing Marketing Innovation E-commerce System Innovation 187 mil participants From Scan me, I take you to the farm to Cloud-viewable Promoting new products Services for distributors Consumer insights Establish Information & Innovative Development Team Develop applications to build up an integrated digital marketing platform Strengthen digital capabilities >20% marketing spending on digital media 214 mil views T TBM O O2O P WSP 15

16 Integration (1): Mengniu & Danone Sustainable Profitable Growth Revenue Operating Margin 1. Portfolio Management 2. Operating Efficiency Optimization 3. Prudent OPEX and CAPEX Focus on 3 high margin brands: Yoyi C, Champion Yogurt, Bio Reduce the number of SKUs Upgrade taste and packaging Increase utilization rate Enhance production and operation efficiency Cost control and efficiency improvement Focus A&P on 3 major brands Prudent CAPEX 16

17 Integration (2): Mengniu & Arla Import Business Technology Sharing Lean Management Project Went through value chain to identify value-added points Established China-Denmark Milk Technology Cooperation Center Commenced fingerprint spectrum project and developed raw milk testing technology Introduced quality management from Arla Gaarden and built ranch technology standardization system Launched Lean projects, including quality improvement, supplydemand balance, etc., to lower the cost, improve quality and shorten the production cycle 17

18 Integration (3): Mengniu & Yashili Focus on building an infant nutrition platform Through disposal of nutrition drinks business (Yashili (Zhengzhou)), Yashili focus on infant nutrition products businesses Promote Yashili s operation reform Develop the maternal and baby, e-commerce channels in response to market change Launch dedicated products for different channels Introduce strategic cooperative resources to Yashili Diversify milk sources Collaborate with Arla to launch imported Arla Merla infant formula by end of this year 18

19 Integration (4): Mengniu & WhiteWave Joint Venture Progress (51%) Establish Joint Venture with start-up activities on track Receive government approvals Complete initial capital injection Complete acquisition of Yashili (Zhengzhou) Obtain approvals from Yashili independent shareholders Carry out construction and modification work to the facility Next Step (49%) To launch nutritious, healthy and innovative plantbased beverage products by end of 2014 To shape the future of plant-based food and beverages in China with WhiteWave (NYSE: WWAV) while leading the development of dairy industry 19

20 Investment: Investment along the Industry Value Chain Mengniu s Stake (1117.HK) (1431.HK) ~ 43% ~ 28% ~ 4% 25% of raw milk was sourced from farming companies which we have equity investment 69% of raw milk was sourced from our cooperative farms (1432.HK) ~ 4% Leveraging small capital for big resources: To secure supply of premium raw milk through small capital investment 20

21 Performance: Launch of SAP System to Improve Operational Efficiency SAP-ERP SAP-CRM 2.0 Pilot run at 3 plants, aiming to cover 50% of plants by end of 2014 Cover 4 categories: UHT, chilled products, ice cream and cheese Apply in supply chain, quality management and finance modules Pilot run in 3 sales regions, aiming to cover all sales regions by end of 2014 Cover 4 categories: UHT, chilled products, ice cream and cheese Cover management over comprehensive range of sales procedures Business and finance management alignment Sophisticated management of sales Optimize operational efficiency, provide accurate data support for better decision-making 21

22 Performance: Key Brands to Profits Categorize key brands More resources invested in star brands and opportunity brands Effective and selective capital allocation Brand focus Gross margin Star Brands Profit Contributor Brands Backbone Brands Opportunity Brands CAPEX investment in brands with growth potential Yoyi C, Just Yoghurt Marginal profit Market potential Strict portfolio management & efficiency enhancement Gross margin improved Rebuild mother brand Optimize SKUs Launch Design to Value initiatives: refining packaging, recipes Brand value increased Brand image improved Emphasizing Mengniu s social responsibility 22

23 Performance: Key Brands to Profits * % of Mengniu Revenue UHT Yogurt/ Probiotic Beverage Milk Beverage Ice Cream Fresh Milk 1H2013 Star brands 34.3% 35.3% Backbone brands Profit Contributor brands 43.7% 41.9% 10.5% 8.7% Opportunity brands 3.5% 4.7% * Revenue of Mengniu s four major brand clusters (excluding milk formula, cheese and Junlebao) as a percentage of Mengniu s organic revenue. 23

24 Performance: Reinforce Sales Execution Build up sales organization capabilities Strengthen distributor management system Improve Retail Management & Service Quality Increase market penetration Innovate in sales information management 24

25 Open & Transparent Culture Achieve cross-division, cross-system and crosscultural integration to build a stronger team Build an innovative and efficient management system to improve strategy execution Build an attractive reward and incentive system to motivate talents 25

26 Interpret Little Happiness Matters through A Drop of Goodness Brand Positioning Reinforcement of Little Happiness Matters A Image Upgrade Brand new image for consumers B All-round Communication Deliver the message A Drop of Goodness to the public C Brand Manifesto Upgrade VI System Each and every drop Song and MV Helin XI Experience Hall 羽泉版 员工版 Meng Federal Warm Open Brand Elements Affectionate Passion Heart-led innovation Star Citizens 26

27 THANKS! 阳光 Sunshine 高尚 Nobility 责任 Responsibility 创新 Innovation 27