May 5, 2017

 

Mengniu announces 2016 annual results

 

In late March this year, China's Mengniu Dairy Company Limited and its subsidiaries has announced its audited annual results for the year ended December 31, 2016.

 

Benefiting from the upgraded product structure and brands as well as active promotion and marketing efforts, the Group's total revenue for 2016 increased by 9.7% year-on-year to RMB53,779.3 million.

 

With the average price of raw milk on the downtrend during the year and an optimised product mix, the Group's gross profit increased to RMB17,635.4 million and gross profit margin was up by 1.4 percentage points to 32.8%. Affected by the provision for goodwill impairment due to deterioration of operating performance of Yashili, sale of inventory of raw milk powder and a significant loss incurred by an  associate company, loss attributable to owners of the company amounted to RMB751.2 million (2015: a profit of RMB2,367.3 million). Basic loss per share was RMB0.193 (2015: basic earnings per share of RMB0.609).

 

Jeffrey Minfang Lu, CEO of Mengniu, said: "In 2016, Mengniu actively embraced innovation and changes, continued to push forward its two-pronged "internationalization + digitalization" development strategy to fully enhance the value of its brands and optimised business deployment. During the year, Mengniu completed together with Yashili the acquisition of Dumex China from Danone, which has given its milk formula business a stronger brand portfolio."

 

"And, through cooperating with international brands such as Shanghai Disney and NBA China, Mengniu has effectively boosted the value of its brands," Lu added. "In addition, Mengniu also started to implement a new business division system that comprises independent business segments including room temperature, chilled, milk powder and ice cream products, thereby strengthening the synergies from coordinated resources allocation and risk management, enabling to achieve balanced development of its different businesses. At the beginning of 2017, Mengniu increased its shareholding in modern dairy, thereby being able to ensure access to quality raw milk supply and that also is expected to smoothen upstream and downstream cooperation. We believe it has laid a solid foundation for the long-term development of Mengniu."

 

Business performance in 2016

 

For liquid milk, Mengniu recorded a revenue of RMB48,102.9 million, accounting for 89.4% of the company's total revenue.

 

UHT milk, milk beverages and yogurt recorded a revenue of RMB23,851.9 million, RMB9,380.2 million and RMB14,870.8 million, accounting for 49.6%, 19.5% and 30.9% of the liquid milk segment revenue, respectively.

 

During the year, Mengniu maintained a leading share in the liquid milk market. Its chilled dairy products continued to hold the largest market share, and the market share of room temperature products had a slight increase. Milk Deluxe, Just Yoghurt and Mengniu Pure Milk were the main contributors of revenue growth of the Group.

 

In the UHT milk segment, Milk Deluxe and Mengniu Pure Milk had a full upgrade in nutritional standards; XinYangDao and Miao Miao Kid Growth Milk in the Future Star series mounted cross-selling effort, joining with promotions of the movies "Warcraft" and "Ice Age: Collision Course" respectively to release limited edition packaging milk products.

 

For the milk formula business, Mengniu recorded a revenue of RMB3,150.9, accounting for 5.9% of Mengniu's total revenue.

 

Mengniu is committed to producing milk powder of international standard, hence has worked towards consolidating its milk formula business.

 

Image: SCMP