Financial Summary. Profit attributable to equity holders of the Company % Net profit margin 7.5% 1.3% -6.1%

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2 2 Disclaimer This document is prepared by Yashili International Holdings Ltd (the Company ) for corporate communications and general reference only. The document does not constitute an offer to sell or subscribe for any securities of the Company in any jurisdiction or serve as the basis of related investment decisions. All information included herein should not be used or relied on before obtaining professional advice. This document is a brief overview of the Company and does not constitute a complete description of the Company and its business activities, current and historical operating results or future operating prospects. Any information contained herein is provided without any express or implied representation or warranty. The Company disclaims any liability for any loss or damages howsoever arising from the use of this document or reliance upon any financial or other information in this document.

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5 5 Financial Summary RMB million 1H H 2016 VS 1H 2015 Revenue 1, , % Gross profit % Gross profit margin 49.3% 50.6% 1.4% EBITDA % EBITDA margin 6.9% 0.4% -6.5% Profit attributable to equity holders of the Company % Net profit margin 7.5% 1.3% -6.1% Basic earnings per share (RMB cents) %

6 Sales Revenue Breakdown 0.0% 10.6% 28% 4% 7.6% 27.5% 1H % 52.9% RMB1,464.8million 14% 1H % 6% 43% RMB1,146.5million Yashili infant formula Arla infant formula Scient infant formula Oushi Mengniu infant formula Dumex infant formula Nutrition food products and others Yashily infant formula Revenue amounted to RMB486.0 million, down by 37.2% year-on-year and 28.4% periodon-period Percentage of total revenue down by 10.5 percentage points from the same period last year Arla infant formula Revenue amounted to RMB67.7 million, up by 219.3% year-on-year and 79.0% periodon-period Percentage of total revenue up by 4.5 percentage points from the same period last year Scient infant formula Revenue amounted to RMB59.2 million, down by 46.9% year-on-year and up by 31.1% period-on-period Percentage of total revenue down by 2.5 percentage points from the same period last year Oushi Mengniu infant formula Revenue amounted to RMB162.7 million, up by 5.2% year-on-year and down by 3.5% period-on-period Percentage of total revenue up by 3.6 percentage points from the same period last year Nutrition food products and others Revenue amounted to RMB321.3 million, down by 20.3% year-on-year and 12.4% periodon-period Percentage of total revenue up by 0.5 percentage point from the same period last year Dumex infant formula Revenue amounted to RMB49.6 million, which was added to Yashili Group since June

7 7 Sales, Administrative Expenses and Income Tax Expenses Sales and Distribution Expenses Administrative Expenses Income Tax Expenses (RMB million) (RMB million) (RMB million) % % 43.0% 42.9% 40% % 30% 25% 20% 15% 10% 5% 0% 1H H 2016 Sales and Distribition Expenses Marketing Expenses Rate % 5.8% H H 2016 Administrative Expenses Management Fees Rate 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% % 1H H 2016 Income Tax % 0.0% -50.0% % % % % % Effective Income Tax Rate

8 8 Operation Efficiency Indicators Inventory turnover days (1) Trade receivable turnover days (2) Trade payable turnover days (3) H H H H H H 2016 (1) Inventory balances at year end divided by cost of sales for the year and multiplied by 180 days. (2) Balances of trade and bills receivables at year end divided by turnover for the year and multiplied by 180 days. (3) Balances of trade and bills payables at year end divided by cost of sales for the year and multiplied by 180 days.

9 9 Cash Flow and Capital Expenditure Net operating cash flow RMB: million RMB: million Capital expenditure (20.0) (40.0) (60.0) (80.0) H H (100.0) (120.0) H H 2016 Note: Not including equity investment

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11 11 Challenges, Opportunities and Strategies Challenges Opportunities The Administrative Measures for Registration of Recipes of Infant Formula Powder Products (the Recipe Registration Requirement ) will be duly implemented on 1 October 2016, which will have significant impact on the industry. In principle, the Recipe Registration Requirement provides that each enterprise shall have no more than 3 product series (9 product recipes). Brand Upgrade Product Structure Optimization Channels Transformation Resources Consolidation In 2016, the nationwide two-child policy has been officially implemented. The National Health and Family Planning Commission of the PRC preliminarily estimated that against this backdrop, the number of newborn babies would reach 17.5 million to 21.0 million each year during the 13th Five-Year-Plan Period. This has created a favorable condition for stable market demand for infant formula milk powder.

12 Brand Upgrade Strategies Re-shape Yashily and accelerate Arla brand building H Original products manufactured in NZ launched in foreign and domestic markets with multi-dimensional promotion Brand recognition rapidly built up leveraging on celebrities and resources New Domestic Products, New Vitality Immunity Utmost pureness, totally organic, the only ultra high-end Domestically manufactured, organic and high-end Multi-Brands, New Breakthroughs 2H 2016 Make continuous efforts to build up image as New Domestic Products Original products manufactured in NZ make greater contribution, targeted at specific distribution channels Re-shape Dumex brand Enhance promotion on Immunity Expand on high-end Diamor Extend growth in the first half and increase share in high-end organic market Greatly promote Rui Bu En and build up organic product lines Channel Cooperation: Achieve rapid growth of Mengniu s adult powder by leveraging on Yashili s channels Stabilize Yashily, develop Dumex and organic Oushi, and expand Arla s contribution 12

13 Products Deployment and Structure Optimization 13 Third- and fourth-tier cities First- and second-tier cities Clear brand positioning and complete product portfolio Price differentiation and full price ranges Different claims to cater for different maternal needs Central China region Core market Eastern coastal region Ultra high-end Pure and organic 400+ Innovative immunity Differentiated market and precise deployment Third- and fourth-tier market: Penetration into Central region Yashily to leverage on new original products with continuous channel transformation Oushi Mengniu to promote Rui Bu En for organic high-end growth Capture the market opportunities for adult powder First- and second-tier market: Focus on Eastern region Arla to extend growth and expand the share of the organic market Dumex to increase share in MBS and expand sales of high-end product Originally packaged and imported 100+ Global milk sourcing Mid and low-end

14 14 Acceleration of Channel Transformation MBS 1H Focused on MBS expansion, and established the KMBS team that focused on domestic large and medium-sized MBS chains and mainly promoted original products imported from New Zealand New account information reported by the KMBS team involved hundreds of MBS chain systems covering thousands of stores 2H Establish the Project Department dedicated to directly-managed MBS, launch universal marketing and explore new market Introduce Partnership Program to deepen cooperation with MBS, and unleash potential of the teams by encouraging their own career with directly managed MBS Emphasis on enhancing sales turnover and sales per point of distribution. Focus on Yashily

15 15 Acceleration of Channel Transformation EC 1H Completed transformation from a single sales platform into a multi-dimensional business platform Emphasized cooperation with three major customers, namely Tmall, Suning and JD.com, with year-on-year growth of 65% for JD.com s 618 sales Fostered social media vertical business and effectively attracted new customers via campaigns such as trial use of products invited by posts 2H Enhance the depth of cooperation with Tmall, Suning and JD.com Explore projects such as Village Taobao and downward channel penetration and build a new, sound model for cross-border e-commerce Actively prepare for e-commerce campaigns and strive to be a leading domestic brand Major Customers Synergy

16 16 Resources Integration Production Capacity Planning and Utilization Longjiang Factory (Closed) Dumex Shanghai Factory Dumex s production base with Danone s global standards Mengniu Helin Factory Top domestic model factory close to milk sources Yashili Shanxi Factory Yashili New Zealand Factory First overseas infant formula factory established by PRC company Yashili Chaozhou Factory Guangzhou Factory (Closed) Proactively foster global synergy with Danone to further enhance production capacity utilization

17 17 Resources Integration Supply Chain System Optimization Procurement Establish the Procurement Management Center, which is responsible for the consolidation of the Group s procurement business and procurement management with a view to realizing centralized procurement and reducing procurement costs Planning, Storage and Transportation Establish the Planning and Logistics Management Center, which organizes production plans, storage and order services for all factories Production Realize the uniform vertical reporting mechanism for all factories Scientifically rationalize production and reasonably match capacity with products in demand in accordance with equipment capacity and packaging line configurations, so as to increase utilization of equipment and production capacity, save costs and also satisfy specific products mass production requirement Quality Control Consolidate quality management resources of each company, including drawing upon the extensive experience on quality management of Dumex which previously was under Danone Group and the quality management rationale of Mengniu Group; unify various standards within the Group, including raw material standards and supplier audit standards, etc.

18 18 Resources Integration External Synergy More Opportunities Leading Research and Development Results Global Top Class Raw Materials Bargaining Power in Purchase Extensive Quality Control Experience New Domestic Products Great Potential Combining Global Resources The Group will continue to leverage on strong support and more advanced platforms rendered by COFCO, Mengniu Group, Danone Group and Arla, so as to sufficiently create synergetic effect and achieve support and cooperation among different parties in respect of branding, resources, management and technology to the largest extent, for example, by leveraging on its strong bargaining power to save purchase costs, by exploring cooperation in production to further improve capacity utilization, etc. The Group is devoted to building up an entire value chain for the dairy industry covering production capacity synergies, complementary advantages and resources sharing.

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