Several key Chinese dairy
processors have recently released their financial reports for Q1, showing mixed
performances in the period, according to CCM International’s May issue of Dairy
Products China News.
Yili performed well with sales of
USD1.6 billion (RMB10 billion) and a net profit of USD73.0 million (RMB460
million): these figures showed growth of 13.2% and 68.5% respectively over Q1
2011.
These trends are attributed to its
good product mix as well as strong sales. A positive factor was the Chinese
Spring Festival (in late January) which gave a significant boost to the
consumption of dairy products, and its increased sales prices also played a
part. Recently Yili has developed some new products:
• In
mid-April it launched a premium lactobacillus milk drink – Meiyitian – claimed
to be the result of investing USD31.75 million (RMB200 million) on 3 years’
research
• In late
April it launched CPP Shuhua, a variant in the Shuhua range which includes CPP
(Casein Phosphopeptide) as well as Vitamin D to help the absorption of calcium
(CPP binds/solubilises minerals such as calcium, so aiding bioavailability of
calcium from milk; it also binds calcium to plaque, so combating dental caries)
Bright Dairy saw a similar
situation in Q1. Its sales rose 16.1% year on year to USD481.4 million
(RMB3,033 million) and the company’s net profit of USD8.6 million (RMB54
million) represented an increase of 49.2% over the same period in 2011. However
it’s noteworthy that Bright Dairy’s operating costs increased by 21.1% to
USD191.7 million (RMB1,208 million) in Q1, acting as a brake on its
profitability to some extent.
This high operating cost seems
likely to reflect the ongoing costs related to the company’s major acquisitions
abroad. It acquired a 51% stake in New Zealand’s Synlait Milk in July 2010 at a
cost of USD56.3 million and invested USD562 million in buying a 75% interest in
Australia’s Manassen Foods in August 2011. However, ultimately such
acquisitions are expected to enhance the company’s prospects and profitability
of course. For instance, Bright Dairy launched a premium infant formula product
called Pure Canterbury in late 2011, which is produced by Synlait Milk.
Opportunities may also arise from the activities of the wider group. Recently,
on 3 May, Bright Food – the largest shareholder in Bright Dairy – signed an
acquisition contract with the UK
Beijing Sanyuan enjoyed more
mixed fortunes. Although its revenues in Q1 increased by 12.7% to USD132.4
million (RMB834 million), it recorded a loss of USD240,000 (RMB1.5 million).
This is believed to stem from the ongoing problems encountered after its acquisition
of Sanlu Group in 2009. Since then it has endured ongoing losses, and its
increased revenues are mainly non-operating revenues. Nevertheless a positive
feature for the company has been Hunan Taizinai Group, which it acquired in
cooperation with Macrolink Group in September 2011 (please see Dairy Products
China News Vol.4 October issue, p8). Hunan Taizinai Group is performing well at
present and is likely to provide a boost to Beijing Sanyuan’s figures in the
future.
When we look at the smaller
regional player, Royal Dairy, we can see that it has also seen both ups and
downs in this period. In Q1 its sales rose to USD24.1 million (RMB152 million)
– a growth rate of 61.7% – but its net profit fell by 46.1% compared with
USD2.1 million (RMB13 million) in Q1 2011.
Royal Dairy’s problems result
primarily from its acquisition of Yunnan-based Dali Laisier Dairy Co., Ltd.
(Laisier Dairy) and the high costs which the company is incurring in its
expansion outside Guangxi. The latter include substantial advertising costs as
it seeks to build its profile in northern China
The figures highlight that whilst
growth through acquisition can build the business it can also exert quite a
knockon effect upon ongoing operations, especially for regional dairy
enterprises with less capacity to absorb shocks, such as Royal Dairy and
Beijing Sanyuan. It is critical for China
http://www.cnchemicals.com/Newsletter/NewsletterDetail_22.html
Content of Dairy Products China
Key
Processors’ Performance in Q1
Children’s
Milk Products Provide Marketing Opportunities
Online
Sales: An Essential Challenge?
Government
Strengthens Controls on Imported Food
Mengniu
Builds Up Its Dairy Business in Hunan
Yili
Secures Financial Support
Junlebao
Dairy’s Acquisition
M&S
Trade Targets Imported Dairy Sales
Xuedun
Yak Milk Develops Its Yak Milk Business
Hero
Group Focuses Further on Infant Formula
Scient
Targets Premium Infant Formula
Dairy
Products China News,
a monthly publication issued by CCM International on the 30th/31st of every
month, brings you the latest information on new market dynamics, company
dynamics, new dairy products and consumption trend, new legislations and
policies and raw milk supply dynamics that are shaping the market.
About CCM
International
CCM International is dedicated to market research in China
CCM International Ltd.
Guangzhou CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China
Guangzhou CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China
Tel: 86-20-37616606
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