Mengniu 2023 Financial Report: Promoting high-quality development with new quality productivity
On March 26, Mengniu Dairy (2319.HK) released its 2023 annual results announcement. According to the announcement, Mengniu achieved full-year revenue of 98.62 billion yuan, a year-on-year increase of 6.5%, and operating profit of 6.17 billion yuan, a year-on-year increase of 13.8%. The operating profit margin continued to increase by 40 basis points year-on-year to 6.3%, continuing to lead the industry with high-quality growth.
In 2023, Mengniu will boost market confidence through repurchases based on its firm confidence in business development, profitability and future prospects. The amount of share repurchases during the year totaled HK$795.6 million. At the same time, Mengniu actively rewards shareholders and shares development results. It will increase the dividend payout ratio to 40% in 2023 and pay a final dividend of RMB 0.489 per ordinary share. The total cash dividend will be RMB 1.924 billion, a year-on-year increase of 21%.
Core business bucked the trend and achieved significant results in channel optimization
In 2023, domestic dairy consumption will show a weak recovery trend, the short-term growth rate of dairy consumption will slow down, online and offline channels will be reshaped, and market competition will become increasingly fierce. In the post-epidemic era, national nutrition and health awareness continues to increase, and dairy consumption demand has shown strong resilience. Faced with challenges from the external environment, Mengniu adheres to a high-quality growth strategy, actively strengthens its business fundamentals, optimizes its business structure, and refines its operations and management, achieving steady growth in revenue and continued improvement in operating profit margins.
During the year, Mengniu’s basic liquid milk business grew, its market share continued to expand, and its Deluxe market share advantage continued to expand; its low-temperature yogurt business focused on upgrades and innovations in three major areas: deliciousness, nutrition, and functionality, achieving positive growth despite the trend and achieving stable growth for 19 consecutive years. Ranking first in market share; the growth rate of fresh milk outperforms the industry. Daily Xianyu upgrades the quality with 4.0g of milk protein, consolidating its position as a benchmark for high-end fresh milk.
As the economy and society return to normal operations, consumers pay more attention to contract performance efficiency and product cost-effectiveness. Mengniu continues to promote the reform of RTM channels. While consolidating the deep distribution advantages of traditional offline channels, it also actively explores new online retail channels, achieves effective contact with consumers through new scenarios and new channels, and promotes business growth. Among them, the online sales market share of room-temperature liquid milk remains the first. The number of new retail members has steadily increased, with a total of more than 74 million. It has strengthened its control over the sinking market through digital tools. During the year, it has covered more than 26,000 towns and villages. There are more than 800,000 outlets; the fresh milk segment has strengthened channel operations and maintained a leading market share in offline and online channels such as Yonghui, Sam’s, Hema, JD.com, and Taobao.
Large single products continue to lead brands and lead category innovation
Deluxe, the largest single product in the global dairy industry, will continue to lead the market in 2023 through continued efforts in product upgrading, innovation and brand value enhancement. During the year, Deluxe firmly adhered to the “better” brand concept and further expanded its leading position in the high-end market. Chunzhen focuses on brand differentiation and launches the new Chunzhen 0 yogurt with Tetra Prisma original flavor, highlighting the nutritional and health value of yogurt with a pure formula. In addition, Mengniu’s various product lines tap market demand, focus on nutrition, function, deliciousness, scene and other subdivisions to increase category innovation and continue to explore potential blue ocean markets.
In terms of nutrition category innovation, the company has comprehensively improved product quality, and launched fresh yogurt to quickly occupy the fresh nutrition track. Daily Fresh Milk launched the industry’s first 4.0 Juanshan fresh milk, firmly ranking at the forefront of the high-end fresh milk market. The sub-brand Xiaoxianyu is positioned as a “light fresh milk” track for young people. Its annual sales growth rate leads the mid-to-high-end fresh milk, and its performance in the convenience store channel is particularly strong.
In terms of innovation in functional categories, Mengniu accurately understood the pain points of consumers and launched Mengniu’s mother-brand lactose-free milk. The entire line of Youyi C probiotic drinks uses probiotic strains independently developed by Mengniu and won the China Patent Silver Award, reshaping the brand value of Jianhao yogurt Guanyi Milk and launching new immunity-enhancing products. Seizing the new trend of the silver economy, Mengniu Yourui’s high-end products focus on whey protein that is more suitable for middle-aged and elderly people, and provide nutritional solutions that meet the needs of middle-aged and elderly people.
In terms of delicious category innovation, we strive to create a high-end brand of “Daily Fresh Cheese”, positioning it as “yogurt so delicious that you can lick your spoon.” Osmanthus water chestnut cheese, forest avocado cheese, etc. are deeply loved by consumers and have dominated the rankings of many e-commerce companies since their launch. platform.
In terms of scene category innovation, the ice cream business actively promoted product portfolio upgrades, broke through seasonal restrictions, and expanded consumption scenarios. Mengniu Cheese and Magic Land focus on age and scenarios, and continue to expand from “children’s snacks” to “adult snacks”. During the period, Mengniu’s first self-produced whipping cream, the first domestic dairy company’s fermented butter and other products were launched, successfully creating a retail-oriented The dual-wheel development model of consumers and commercial users continues to consolidate its leading position in the domestic cheese market.
New businesses are booming and overseas markets continue to make breakthroughs
In 2023, while increasing category innovation, Mengniu will actively explore new businesses around specific consumer groups and successfully develop high-potential new products from “0 to 1”.
In the field of infant formula nutrition, Mengniu has launched Ruibu Enenzhi 4-stage formula milk powder, which is currently the only formula milk powder that uses two innovative ingredients, HMO and MLCT, independently developed in China. In the field of sports nutrition, Mengniu actively responds to the core appeal of the sports and fitness crowd to “reduce fat and gain muscle” and launches China’s first liquid protein nutritional supplement – Maisheng Sports Protein Drink to help improve competitive performance and post-exercise recovery.
While Mengniu is operating steadily in the domestic market, Mengniu is also accelerating its overseas expansion. During the year, Mengniu’s ice cream business gained momentum in the Southeast Asian market. Its subsidiary Aixue maintained strong growth and significantly increased profit margins, ranking at the forefront of Indonesia’s market share. It also officially entered markets such as Vietnam, Thailand, Laos, and Cambodia, and was deeply loved by local consumers.
More nutritious, smarter and greener to create an industry benchmark
In 2023, adhering to the core value of “consumers first”, Mengniu will continue to build industry benchmarks around the three leading strategic directions of “nutrition, intelligence and green”. Mengniu provides consumers with “more nutritious” diversified dairy products covering the entire life cycle. The independently developed breast milk oligosaccharide HMO passed national approval and became the only local Chinese company among the first batch of companies, breaking through the industry’s “stuck” problem. Establish a first-mover advantage at the forefront of nutrition.
During the year, the world’s first fully digital dairy factory built by Mengniu was put into operation in Ningxia, achieving the world’s highest annual human efficiency ratio, that is, 100 people create an annual output of 1 million tons and an annual output value of 10 billion yuan. The AI-driven “dual flywheel of digital intelligence”, from the supply side to the consumer side, has comprehensively pushed Mengniu into the digital intelligence strategy 3.0 stage. Mengniu has released a model in the global nutrition and health field – MENGNIU.GPT, creating a digital and intelligent nutrition and health management platform “WOW Health+”, using AI nutritionists to provide families with personalized, long-term, multi-member companion health services.
At the same time, Mengniu has steadily promoted the GREEN sustainable development strategy and the “double carbon” strategy, taken the lead in releasing sustainable development policy documents such as the “Animal Welfare Policy”, and proposed the “zero deforestation in 2030” commitment. So far, Mengniu’s Shengmu Forage Industry has planted a total of 97 million trees in the Ulan Buh Desert, greening more than 200 square kilometers of desert. In the upstream, a number of green pastures have been built to reduce carbon emissions by more than 180,000 tons in 2023. In the midstream, a total of 30 national-level green factories have been built. The Yunnan Qujing factory became the first zero-carbon factory in the Chinese dairy industry to obtain both international and domestic certifications, achieving carbon neutrality for two consecutive years. Downstream, Mengniu optimizes packaging materials and designs and launches a variety of carbon-neutral products as well as green and low-carbon products.
Mengniu’s sustainable development has been highly recognized by all walks of life. The MSCI ESG rating was raised to AA level, becoming the only comprehensive dairy company in China to obtain an AA rating. It was named the 2023 Forbes China’s Best Employer of the Year and the Best ESG Practice Employer, and was rated as the “Best Progress in the Industry” by S&P Global. enterprise”.
Lu Minfang said that China’s dairy industry has huge potential and a vast market, and Mengniu is full of confidence in the future of the industry. Looking forward to the future, Mengniu will maintain strategic focus, seize the opportunities of the times, strive to become a leader in the reform and development of the industry, accelerate the cultivation of new productivity in the dairy industry, continue to create value for consumers and partners, comprehensively lead the high-quality development of China’s dairy industry, and become a With the goal of becoming the preferred dairy brand of Chinese consumers and building a world-class national dairy enterprise, we will contribute more to promoting the progress of human health.