China Mengniu Dairy Company Limited 2013 Annual Results. Stock Code: 2319 March 2014

Transcription

1 China Mengniu Dairy Company Limited 2013 Annual Results Stock Code: 2319 March 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 disclaim 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 & Senior Vice President Wu Jingshui, Vice President in Finance Liu Shengli, Vice President in Sales Jesper Fournaise Colding, Vice President in Marketing Zhai Mei, Assistant Vice President in Public Relations Wu Wennan, Chief Financial Officer Thibaut Helleputte, Head of Mengniu-Danone Fresh Dairy Chris Kwok, Financial Controller & Company Secretary 3

4 Contents 2013 Results P Business Overview P Outlook P23 4

5 Part Results 5

6 Key Figures 2013 RMB Million 2012 Organic Before Restatement 2012 Organic After Restatement* 2013 Organic YoY VS After Restatement* Yashili (Aug- Dec 2013) 2013 Consolidated YoY VS After Restatement Revenue 36, , , % 1, , % Gross Profit 9, , , % , % Gross Profit Margin 25.10% 24.86% 26.08% +1.22ppt 51.95% 26.98% +2.12ppt EBITDA 2, , , % , % EBITDA Margin Profit Attributable to Owners of the Company Net Profit Margin Basic Earnings Per Share (RMB) 7.00% 7.09% 7.37% +0.28ppt 10.73% 7.49% +0.40ppt 1, , , % , % 3.48% 3.61% 3.67% +0.06ppt 6.36% 3.76% +0.15ppt % % * Certain amounts stated above do not correspond to the annual condensed consolidated financial statements as at 31 December According to the revised requirements of IFRS 11 Joint Arrangements, Mengniu Group s share of investment in the Mengniu- Arla joint venture that was using proportionate consolidation was subsequently revised using the equity method, which caused the changes of data in the 2012 financial statements. 6

7 Revenue Breakdown by Segment 2013 Revenue (RMB43,356.9 million, up 20.4% YoY) 7.0% 0.6% 5.0% Liquid Milk Revenue amounted to RMB 37,902.8 million, up 17.2% YoY Percentage of revenue down 2.2 ppt YoY % 1.2% 0.4% Revenue (RMB36 billion) Ice Cream Revenue amounted to RMB 3,023.4 million, down 4.7% YoY Percentage of revenue down 1.8 ppt YoY Liquid milk Milk formula 8.8% 89.6% Ice cream Other dairy products Milk Formula Revenue amounted to RMB 2,177.3 million, up 393.0% YoY Percentage of revenue up 3.8 ppt YoY Other Dairy Products Revenue amounted to RMB million, up 94.6% YoY Percentage of revenue up 0.2 ppt YoY 7

8 Revenue Breakdown of Liquid Milk Segment % Revenue of Liquid Milk (RMB37,902.8 million, up 17.2% YoY) 14.3% 58.2% UHT Milk Revenue amounted to RMB 22,053.3 million, up 11.9% YoY Percentage of liquid milk revenue down 2.7ppt YoY 2012 Revenue of Liquid Milk (RMB32,336.0 million) 14.2% Milk Beverages Revenue amounted to RMB 10,425.5 million, up 29.7% YoY Percentage of liquid milk revenue up 2.6ppt YoY 24.9% 60.9% Yogurt Revenue amounted to RMB 5,424.0 million, up 18.1% YoY Percentage of liquid milk revenue up 0.1ppt YoY UHT milk Milk beverages Yogurt 8

9 Market Share in 2013 UHT Products Liquid Milk 22.5% 22.5% 6.8% 7.2% 17.7% 15.4% 25.3% 26.8% 30.6% 32.4% 27.7% 28.1% 7.4% 7.7% 13.9% 11.5% Mengniu A B C Others 22.4% 23.0% Chilled Products 25.7% 25.4% 39.7% 41.2% Mengniu A B C Others 7.2% 7.1% 12.9% 13.4% 20.5% 18.9% 19.7% 19.4% Mengniu A B Junlebao Others 9

10 Monthly Market Share of Liquid Milk by Value (Percentage %) Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12 Sep 12 Oct 12 Nov 12 Dec 12 Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 10

11 Cash Flow Index & CAPEX Net Cash Inflow from Operating Activities Capital Expenditure (RMB Million) (RMB Million) 12, , , , , , , , ,263.1 Biological Assets 2, , ,508.1 Equity Investment Mengniu 2013 Consolidated Mengniu 2013 Consolidated Properties, Plants * and Equipments 11

12 SG&A Expenses Selling & Distribution General & Administrative (RMB Million) (RMB Million) 18.2% 18.8% 17.3% 6, , , % 1, % 3.7% 1, , Mengniu 2013 Consolidated Mengniu 2013 Consolidated 12

13 Operating Efficiency Index Inventory Turnover Receivables Turnover (1) (Day) (Day) (Day) Payables Turnover (2) Mengniu 2013 Consolidated Mengniu 2013 Consolidated Mengniu 2013 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 13

14 Part Business Overview 14

15 Mengniu Advances in Strengthened quality control across entire value chain 6 Grew steadily despite challenges in raw milk sourcing 2 Promoted key brands with innovative marketing 5 Expanded financing channels with high credit rating Built a more comprehensive sales system 4 Expanded platform through strategic cooperation 15

16 2013 Strengthened Quality Control Across Entire Value Chain System Technology Responsibility Upstream: Raw Milk Sourcing Milk Sources Quality Management Center Mid-stream: Production of Dairy Products Operations Quality Management Center Downstream: Sales and Distribution Sales Quality Management Center Planting of pasture Construction of ranches Cow breeding Production of raw milk Low temperature storage Logistics system Product development Procurement management Planning management Preparation workflow Production workflow Product delivery Storage management Delivery management Channels management Customer feedback The proportion of raw milk sourced from scaled farms has reached 94%, ensuring product safety from the source. 16

17 2013 Promoted Key Brands with Innovative Marketing Revenue Breakdown by Brand Clusters * Combined Traditional and Digital Marketing Initiatives Brand Star brands 30.5% 34.9% Backbone brands Profit contributor brands 49.2% 44.0% 10.2% 8.3% Movie collaboration Opportunity brands 1.5% 3.1% Title sponsor of The X Factor * Only states revenue of Mengniu s four major brand clusters as a percentage of Mengniu s stand-alone revenue Latte 3D music 17

18 Mengniu Brands Value Enhanced 18

19 2013 Built a More Comprehensive Sales System Reinforced Sales Channels 19

20 2013 Expanded Platform through Strategic Cooperation Increased holdings in China Modern Dairy (1117.HK) to around 28% to strengthen control of premium milk sources Introduced Arla Gaarden ranch management technology Adopted advanced inspection technology on raw milk Invested in YST Dairy Farm Limited (1431.HK) as cornerstone investor to strengthen strategic cooperation Supply of raw milk Quality Control and import business Targeting high-end consumers, distribute Arla s imported infant milk formula and UHT milk products Introduced Danone as a strategic shareholder Fresh dairy business Milk powder business Acquired Yashili (1230.HK) to strengthen milk powder business Set up JV with Danone to operate chilled products business in Greater China Region (Mengniu 80% / Danone 20%) Holds 76.6% of Yashili shares 20

21 2013 Expanded Financing Channels with High Credit Rating Highest credit rating in China fastmoving consumer goods industry Leading market position and brands Advanced and efficient production facilities and strong R&D capabilities Well-positioned to seize opportunities arising from Chinese dairy industry Experienced management team Comprehensive cooperation with strategic shareholders Nationwide distribution network and strong pricing power Ensure product quality through procurement from premium milk source Prudent financial management and policies S&P: A- / stable Moody s: Baa1 / stable Issued US$500 million 3.50% bonds due 2018 Expanded financing channels and continued to improve capital structure 21

22 2013 Grew Steadily Despite Challenges in Raw Milk Challenge Response Undersupply of raw milk Planned on premium milk sourcing Increased holdings in China Modern Dairy Invested in YST Dairy Farm Limited Built self-owned ranches Enhanced product mix Optimized product mix to improve margin profile Optimized selling price Increasing cost of raw milk Balance the selling price and sales volume 22

23 Part Outlook 23

24 第三部分 2014 年展望 2014 Key Words 24

25 Innovation Marketing Innovation System Innovation Products Innovation Engagement Experience Digital Traditional Advertisement Broadcast Exposure Effects Business Model Winning ecosphere Build Online Platform High margin and low sensitivity to raw milk Milk value extension Media 25

26 Integration (1): Strategic Integration Mengniu and Danone Split account of Mengniu s chilled product segment Passed anti-monopoly review Obtained production certificate Injection of Danone s chilled product business and assets Establishment of JV Dec 2013 Jan 2014 Mar Q2014 By end of Jun 2014 On track to improve margins of fresh dairy business Optimize brand and product mix Improve operational efficiency Prudent operating& capital expenditure 26

27 Integration (2): Strategic Integration Mengniu and Arla Arla products in China: To achieve breakthrough in import business UHT Milk IMF Cheese & Butter 27

28 Integration (3): Strategic Integration Mengniu and Yashili Step 5 Step 4 Step 3 Step 2 Step 1 Re-organized board of directors to optimize corporate governance Completed share placement to retain listing status Renewed five-year strategy Promoting innovation and transformation Strengthening talent pool to implement organizational reform 28

29 Performance: Efficiency and Effectiveness Leverage SAP system Workflow Optimization Does the brand focus on our star brands/skus? Does the margin reach target level? Does the product have positive marginal profit? Brands Optimization Procedure Optimization I : Innovation project management table P: Performance management table O: Open communication management table 29 29

30 Open & Transparency: Sunshine Culture Sunshine Nobility Responsibility Innovation Top 20 Mengniu 100 Mengniu 100 Junior Mengniu 100 MT Mengniu 100 GT 30

31 2014:Implementation of Winning Strategy Quality and Safety Consumer Experience Healthy Development of the Industry Strengthen milk sources to secure sufficient 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 31

32 Our Mission and Vision Mission Vision Grow with our clients, employees, shareholders, and all stakeholders, to create a win-win ecosystem. We aim to be a consumer need-oriented and innovative-led food company offering health and nutrition. 32

33 Our Future Business Layout Established Business Emerging Business Embryonic Business Investment Business 33

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