MENGNIU S 2015 INTERIM NET PROFIT

Transcription

1 [Press Release] MENGNIU S 2015 INTERIM NET PROFIT UP AROUND 27.7%TO APPROXIMATELY RMB1.34 BILLION * * * * * OPTIMIZES PRODUCT MIX AND ENHANCES OPERATIONAL EFFICIENCY 2015 Interim Results Highlights: Six Months Ended 30 June Change (Unaudited) RMB 000 RMB 000 % Revenue 25,835,834 25,564,409 (1.1)% Gross Profit 8,381,818 8,142,810 (2.9)% Profit Attributable to Owners of the Company 1,048,609 1,338, % Earnings per share (RMB) - Basic % - Diluted % Under the New Normal growth stage of the Chinese economy, the sub-segments under dairy products have delivered varied performances against the backdrop of intensified competition and changing consumer demand. Premium pure milk brand Milk Deluxe, UHT yogurt brand Just Yoghurt and chilled brands Champion and Yoyi C recorded strong growth, which has optimized the product mix. Mengniu has further consolidated resources, enhanced product innovation, and continued to optimize product mix. These efforts, combined with a focused expense investment strategy, have caused the profit attributable to the owners of the Company to rise 27.7% during the period. Through various technical means, Mengniu has exercised strict control over the quality of raw milk by providing services to the players at the forefront of the industry chain. During the period, the proportion of milk sources provided by ranches and scaled farms reached almost 100%. By introducing the advanced knowledge and technology management systems from international strategic partners and fully implementing an intelligent information management system SAP, Mengniu has managed to achieve more effective information management and has considerably enhanced its operational efficiency. Inner Mongolia Mengniu Danone Dairy Co., Ltd. ( Mengniu Danone ), a joint venture established by Mengniu and Danone Group, has accelerated the technological upgrade of its production facility, channel expansion and product development. Currently, Mengniu Danone continues to lead the chilled dairy products market in China and ranks first in terms of market share. Advances have been achieved in cooperation with international brands: in March, Mengniu renewed its marketing strategic partnership agreement with NBA China; in April, subsequent to the contract renewal it launched special promotion packaged products. With a stable overall performance, Mengniu ranked 11 th in the 2015 Global Dairy Top 20 list released by Rabobank, its seventh year on the list. Page 1 of 6

2 (Hong Kong, ) China Mengniu Dairy Company Limited and its subsidiaries ( Mengniu or the Group, Stock Code: 2319), a leading dairy product manufacturer in China, has announced its unaudited interim results for the six months ended 30 June Ms. Sun Yiping, Chief Executive Officer of the Group, said, In the first half of 2015, while China s consumer demand has been changing, Mengniu continued to enhance its strengths. We have further integrated advanced technology and resources from our strategic partners into our operations, optimized the business layout as well as utilized the model of our ecosystem to build a platform through which a win-win situation with both upstream and downstream partners can be achieved. Within the Group, we have actively nurtured the creativity and capability of staff in a multicultural environment. Mengniu s implementation of digital and intelligent management system also achieved considerable progress, which further enhanced quality and safety management as well as operating efficiency and consolidated the foundation for its long-term development. Externally, we have constantly scored major advances in cooperating with international industry partners, such as Danone Group. At the same time, we have also achieved substantial progress in collaborating with multinational enterprises such as NBA and Shanghai Disney Resort. These partnerships have enhanced the internationalization strategy and brand value of Mengniu. Business performance in first half of Liquid Milk (Revenue: RMB21,940.9 million, accounting for 85.8% of the Group s revenue) The revenue of UHT milk, milk beverages and yogurt amounted to RMB10,710.4 million, RMB5,657.8 million and RMB5,572.7 million respectively, accounting for 48.8%, 25.8% and 25.4% of the liquid milk segment s revenue. In UHT milk, this year marks the 10 th anniversary of Milk Deluxe series. It has maintained the leading position in the high-end milk market with its comprehensive product lines. In addition, the packaging of XinYangDao whole milk, low-fat milk and nutritious milk has been upgraded. Pure Milk also introduced customized packaging featuring NBA teams and players. As for milk beverages, Yoyi C has enhanced the sales coverage of 100ml packaged products which mainly focus on children. During the period, it has also launched the brand new low-sugar flavor with 25% less sugar to advocate the fat-free concept. Suan Suan Ru has appointed TFBOYS as brand ambassadors in order to boost the sales amongst young customers. In the yogurt segment, new products launched under the Champion brand include yellow peach oat and walnut oat flavors as well as a new ready-to-drink product for the Southern China market which prefers yogurt with lower viscosity. The basic yogurt products produced by Mengniu Danone have also had their formula improved. 2. Ice Cream business (Revenue: RMB1,644.3 million, accounting for 6.4% of the Group s revenue) Mengniu has launched a new series Love Sweet Potatoes which looks and tastes like a real sweet potato. With sweet potato sauce inside, it has initiated innovations in ice cream products and has quickly captured market attention. In addition, Mengniu has launched Deluxe Yogurt Ice Cream at the beginning of August. This hybrid product has undergone 100% fermentation and is processed using ice cream processing techniques. The product is also the achievement of the project of ecosystem established by Mengniu and its partners. Page 2 of 6

3 3. Milk Formula business (Revenue: RMB1,783.5 million, accounting for 7.0% of the Group s revenue) Mengniu has launched a contamination-free new product, Ruipuen Organic Infant Milk Formula with milk sources from Europe and has certified by the organic authority in China. A new brand has been added to Mengniu Arla s Beauty series, a nutritious formula specially created for infants that contains all the necessary nutrients. Furthermore, aiming at targeted customers of different consumption levels, Yashili has set up a complete range of infant milk formula product lines, including Yashily Super α- Golden series, Scient Golden series and Newwitt series. 4. Other Products business (Revenue: RMB195.7 million, accounting for 0.8% of the Group s revenue) Arla Foods Kids Cheese Sticks are available in plain, mild, strawberry and banana flavors, offering nutritious and tasty choices for kids. Strengthens strategic cooperation and realizes market potential Mengniu Danone, a joint venture established by Mengniu and its second-largest strategic shareholder Danone Group has commenced full operation, and has continued to achieve the target of sustainable profitable growth during the period. Mengniu Danone has continued to develop high profit margin brands, including Champion, Bio and Yoyi C, in order to enhance the product portfolio. Both companies have synchronized the standard of quality control, operation and management. In addition, they have organized an activity Chilled Products Safety and Technology Week to promote technical exchanges of both companies. With the Ma anshan plant as a pilot project, Danone Group has seconded technical experts to Mengniu Danone s plants so as to further enhance the performance of the plants. In addition, Mengniu Danone has identified five key breakthrough regions and has expanded its market presence in Eastern China and Southern China regions accounting for about 50% in China s chilled dairy products market. Mengniu has deepened the cooperation with Arla Foods in the import business. Starting from the second quarter of 2015, the global packaging of Arla Foods UHT milk has been fully upgraded to reinforce the brand proposition of Consumed by the Danish Royal Family, Crowning our Precious Health and enhance the brand image. During the period, the Group has introduced the world-leading dairy knowledge and production technology of Arla Foods, while the Arla Foods team for its part has advanced plans for optimization of filling processes, equipment maintenance, energy supply, utilization ratio of production lines and workflow standardization in Mengniu s plants. In dairy breeding, Arla Foods has further implemented the advanced ranch management system of Arla Gaarden and applied its own advanced ranch operation model and management standards aimed at upgrading ranch management standards for Mengniu s suppliers. With Mengniu remaining its controlling shareholder, in the first half of 2015, Yashili actively optimized its marketing models and transformed its sales channels. In terms of the maternal and child channel, Yashili has developed more than 14,000 maternal and child points-of-sale, in which some were directly-supplied. In respect of the e-commerce channel, Yashili has set up a professional e-commerce team and has strategically cooperated with JD.com and launched online products distinct from those in the offline channels. In the aspect of system management and consumer acquisition by leveraging an information system and a data platform, Yashili has improved its professional operation standard and customization of its services, thereby strengthening customer loyalty. Page 3 of 6

4 The joint-equity company established by Mengniu and WhiteWave from the US has launched the ZhiPuMoFang plant-based beverage in December The overall market is still at an incubation stage at present. Adopts leading management system to improve quality Mengniu has succeeded in implementing quality informatization, intelligent management and quality tracking over the entire process starting from milk sources to raw and auxiliary materials and to products through launching the SAP system and introducing LIMS (Laboratory Information Management System). By introducing the standards of the COFCO Group and the Danone Group, Mengniu has elevated the entry barriers of suppliers and integrated measures such as alert notifications to guarantee the quality, safety and stability of the supplied materials. Extends industry chain to strictly control milk sources During the period, the proportion of milk sources provided by Mengniu s ranches and scaled farms has reached almost 100%, outperforming industry peers. Through various technical means, Mengniu has exercised strict control over the quality of raw milk by providing services to the players at the forefront of the industry chain. In this way Mengniu has enhanced the profitability of milk suppliers and fostered a mutually beneficial situation by providing guidance to milk suppliers in their breeding methods. In cooperation with China Agricultural University, China Agricultural Machinery Testing Center of the Ministry of Agriculture ( 農業部農業機械實驗鑒定總站 ) and Holstein Farmer Satellite Auditorium ( 荷斯坦衛星大講堂 ), Mengniu has launched the 2020 Ecosystem Project for Sustainable Development of Milk Sources starting at the forefront of the dairy industry chain and which would cover the entire dairy industry. The Group has also cooperated with a national authoritative testing body to commence the Cow SPA Project, which optimized the cow milking system for milk suppliers and fosters pristine ecological quality ranches. Expands sales channels and implements sophisticated management Mengniu strived to expand its sales channels and has adopted sophisticated management techniques so as to bolster its control over the core markets. During the period, Mengniu has initiated the Route to Market (RTM) Project which aims to, through strengthening market execution of distributors, sales companies and Central Business Units (CBU), increase the number of direct sales retail outlets and their sales contribution by developing sophisticated management, and excellence in execution in order to foster the competitive advantage of the omni-channel management system, so as to further enhance its control over retail end and competitiveness. Leverages the internet to build an international brand Mengniu is evolving into a more international, digitalized and youthful brand. During the period, Mengniu has renewed its marketing strategic partnership agreement with NBA China. In addition to the existing scope of cooperation, NBA China has granted Mengniu the right to put its logo onto the package design of Mengniu s products for the first time. Mengniu could thus develop its unique milk products with product design including the elements of the NBA in the China market. In April 2015, Mengniu and Shanghai Disney Resort announced a multi-year strategic alliance which recognizes Mengniu as the official dairy provider of the resort. This alliance will ensure that guests who visit the resort can enjoy a wide variety of well known, high-quality dairy products, including milk, yogurt and ice cream. In addition, Mengniu will have an integrated brand presence at a variety of locations, including ice cream carts and an ice cream shop throughout Shanghai Disney Resort. Page 4 of 6

5 Through the use of cloud technology and 2-D barcode tracking system, Mengniu has introduced a digitalized milk Prime Ranch Pure Milk. Mengniu has implemented the Traceable+ strategy to upgrade the product to One Barcode per Pack. The Traceable+ platform is expected to provide comprehensive services to consumers through a variety of WeChat applications. Riding on the Group s continuous technological innovation, Prime Ranch Pure Milk has been recognized as the Best New Commercial Brand under the World Dairy Innovation Awards and Mengniu has become the only Chinese dairy brand to receive this accolade. Ms. Sun concluded, In the second half of 2015, we will accelerate the development of projects which have already commenced, continue to introduce the advanced technologies and management experience of our strategic partners and generate synergies with those partners. We will strengthen our leadership position in the liquid milk and chilled dairy business, consolidate the platform of milk formula business and prepare for the development of low-temperature fresh milk business. We are dedicated to building a more efficient sales network and operational system, realizing digitalized management. We will assign internationalization, digitalization and youthful as the key concepts in brand communication and implement product marketing based on the Internet+ concept. Under the concept of Little Happiness Matters, we strive to become a consumer-oriented and innovation-led food company offering nutrition and health. ~ End ~ About China Mengniu Dairy Company Limited China Mengniu Dairy Company Limited and its subsidiaries manufacture and distribute quality dairy products in China. It is one of the leading dairy product manufacturers in China, with MENGNIU as its core brand. Mengniu s diversified products range includes liquid milk products (such as UHT milk, milk beverages and yogurt), ice cream, milk formula and other dairy products (such as cheese). By the end of June 2015, the Group s annual production capacity reached 8.61 million tons. In March 2014, Mengniu became a Hang Seng Index constituent, making it the first blue chip Chinese dairy product manufacturer. For more information, please visit the website of For Enquiries: Strategic Financial Relations (China) Limited Karen Hung Tel: karen.hung@sprg.com.hk Janice Au Tel: janice.au@sprg.com.hk Page 5 of 6

6 China Mengniu Dairy Company Limited Consolidated Income Statement For the six months ended 30 June (Unaudited) RMB 000 RMB 000 Revenue 25,564,409 25,835,834 Cost of sales (17,421,599) (17,454,016) Gross profit 8,142,810 8,381,818 Other income and gains 177, ,872 Gain/(loss) arising from changes in fair value less cost to sell of dairy cows (6,912) 3,345 Selling and distribution costs (5,565,274) (5,897,135) Administrative expenses (1,093,651) (962,047) Other operating expenses (182,839) (556,196) Profit from operating activities 1,471,745 1,220,657 Interest income 273, ,868 Finance costs (134,616) (176,248) Share of profits of associates 143, ,180 Profit before tax from continuing operations 1,754,199 1,481,457 Income tax expense (321,343) (252,501) Profit for the period from continuing operations 1,432,856 1,228,956 Loss for the period from discontinued operations (8) (22) Profit for the period 1,432,848 1,228,934 Attributable to: Owners of the Company 1,338,669 1,048,609 Non-controlling interests 94, ,325 Earnings per share attributable to ordinary equity holders of the Company (expressed in RMB per share) Basic Diluted Page 6 of 6