|
|
|
|
|
HONG KONG, June 29, 2016 - (ACN Newswire) - China Huishan Dairy Holdings Company Limited ("Huishan Dairy" or "the Group") (stock code: 6863) announced its annual results for the year ended 31 March 2016 ("year under review").
During the year under review, the Group capitalized on its pioneering fully vertically integrated value chain to achieve turnover increased by 15.4% to RMB4.53 billion, as compared to FY2015. Overall gross profit margin remained high at 56.0%, above the average level in the industry, as compared to 58% in FY2015. Operating profit (before biological fair value adjustments) increased by 23.6% to RMB1.58 billion as compared to RMB1.28 billion in FY2015. Profit for the year attributable to equity shareholders of the Company (before biological fair value adjustments) decreased to RMB820 million as compared to RMB900 million in FY2015. Profit for the year attributable to equity shareholders of the Company (before biological fair value adjustments and excluding the foreign exchange loss) was up 13.0% to RMB1,020 million as compared to RMB900 million in FY2015. A final dividend of RMB1.25 cents per share was proposed, maintaining a stable dividend payout ratio at 25%.
Mr. Yang Kai, Chairman and Chief Executive Officer of Huishan Dairy, said, "China's dairy industry continued to undergo profound adjustments in 2015, yet we were able to achieve progress despite the difficulties. During the year, the liquid milk processing plant in Shenbei District commenced production, increasing the design capacity of liquid milk to an aggregate of 620,000 tonnes per year, which has allowed us to break the production bottleneck for liquid milk and increase our share of the differentiated products market.
In addition, the construction of our liquid milk processing plant in Yancheng, Jiangsu, with a design capacity of 180,000 tonnes per year, obtained the manufacture operation approval in May 2016. Products from the new plant would be focusing on the pasteurized milk markets of Shanghai, Jiangsu, Zhejiang and Anhui. The successful replication of our fully vertically integrated value chain business model in other regions serves as an important milestone as we transform from a regional brand to a national dairy enterprise. We also plan to further extend our fully vertically integrated value chain to the biogas compressed natural gas and organic fertilizer segments by setting up a joint venture that will engage in biomass gasification in China. This will help us gain a first mover advantage in the renewable energy market."
Dairy farming business
As at 31 March 2016, the Group operated the largest number of dairy farms in Liaoning Province, China with 82 standardized dairy farms (2015: 69), while the total herd size increased to 200,892 heads of dairy cattle (2015: 180,331) of which, 48.0% are milkable cows (2015: 41.3%). The Group produced a total of 743,000 tonnes of raw milk during the year, an increase of 23.5% when compared with the last year. This was mainly attributable to an increase in the number of milkable cows and more advanced and effective herd management. The average yield of each milkable cow was 8.6 tonnes. Although lower than that of 2015, the cost of raw milk was also effectively reduced to RMB2,026/tonne (2015: RMB2,161/tonne). As the quality of the Group's raw milk far exceeds the industry average, the average selling price of its raw milk still reached RMB4,415/tonne (2015: RMB4,873/tonne) despite the adverse market conditions.
The Group was a pioneer among domestic dairy enterprises in implementing the ground breaking model of two-harvest cultivation of oat and corn silage in Northeastern China, which was further applied on 88,000 mu of land. Its innovative model of "integrating plantation and farming" improves the efficiency of land use and lowers land rent per unit cost. More importantly, it has provided leeway for reducing the cost for feeding dairy cattle. As a result, the Group has created a modernized farming model of "integration of grass and farm" in China ahead of other market players.
Liquid milk business
As a result of the adjustment in enhancing product structure and market expansion, the overall sales volume of our liquid milk products reached 397,541 tonnes (2015: 293,337 tonnes) despite the downward market trend, representing a year-on-year growth of 35.5%. The sales revenue reached RMB3,090.3 million (2015: RMB2,421.7 million), representing a year-on-year growth of 27.6% and thereby accounted for 68.3% of the total revenue. The sales volume of pasteurized dairy products has been increasing steadily by 13.1%. The liquid milk processing plant in Shenbei New District, Shenyang commenced production in April 2015, raising the overall production capacity of liquid milk to 620,000 tonnes.
The Group strengthened its competitiveness by continuously optimizing its product mix, which includes top quality high-protein dairy products and fresh low-temperature products, and was made possible by taking advantage of its self-produced milk sources. At the same time, the Group has continued to develop its portfolio of UHT milk in order to increase market share. According to a Frost & Sullivan report, in terms of retail sales volume in 2015, the Group's share of the liquid milk products in Northeastern China was 21.9%, placing it first in the market. Its share of the low-temperature yogurt market was 33.0% and that of pasteurized dairy products even reached 39.5%. Besides strengthening its No. 1 position in the liquid milk market in Northeastern China, the Group has also increased efforts to develop the Northern China market. It has enhanced R&D of lactobacillus beverage and launched related new products in order to expand its market share - such beverage products feature Huishan milk. As at 31 March 2016, the Group's marketing network covered 360 distributors and 400 direct retailers, while milk delivery customers increased to 230,000 households.
Milk powder business
Revenue from the milk powder business increased by 3.3% to about RMB489.1 million, accounting for 10.8% of the total revenue. This was mainly due to a surge in sales volume of infant milk formula ("IMF") products and adult milk powder. The Group has bolstered the brand image of "Huishan" through the three marketing channels, namely retail stores and supermarkets, mother-and-baby stores, and e-commerce. It has also increased its support for directly operated mother-and-baby stores by launching two IMF products under the "Huishan Supreme Label" and "Super Huizhi" brands. Apart from enriching the product mix and strengthening its brand image, the Group has also expanded its sales network, which currently covers approximately 1,522 distributors (2015: 1,049 distributors) and 9,705 retail stores.
During the year under review, the Group has completed the joint venture agreement with Friesland Campina (Royal FrieslandCampina N.V. or "Friesland"). The joint venture will provide Chinese consumers with a quality guarantee that comes from the high quality and safety associated with Huishan milk, as well as benefit from Friesland's successful management and marketing experience in relation to IMF products, and their exceptional marketing channels in China. The joint venture has obtained a certificate of compliance in accordance with the FSSC22000:2013 standard - a food safety accreditation from SGS, which is a leading global inspection, appraisal, testing and accreditation institution. The domestically produced IMF products which are of international quality and specifically made for Chinese consumers will be launched in 2016.
Additionally, "Senscious", a new in-house developed brand of whipping cream and liquid milk products targeting bakeries and catering and food processing enterprises, officially entered the market. This makes the Group the first domestic manufacturer of low-temperature, whole-milk fat whipping cream with long shelf life to enter the baking industry.
Successfully expands the renewable energy business
To broaden income sources, the Group has extended its industry chain to the renewable energy segment, i.e. biogas compressed natural gas and organic fertilizer, which contributes significant and steadily growing revenue and gains to the Group as it is immune to cyclical changes in the dairy industry. In February 2016, the Group entered into a letter of intent with CGN Energy Service Co., Ltd. ("CGN Energy") with the intention of establishing a company that will engage in biomass gasification in China. Leveraging the resources and industry experience that CGN Energy possesses, the Group will seize opportunities arising from rapid development of the biomass gasification industry.
Ms. GE Kun, Executive Vice President of Huishan Dairy, said, "With industry integration as the core, we pursued in-depth vertical development. Apart from strengthening our dairy business, the Group has also further extended our industrial chain to renewable energy segments such as biogas compressed natural gas and organic fertilizer. It is expected that the renewable energy business can contribute significant, stable and growing revenue and gains to the Group and broaden our future income sources due to its immunity to the cyclical changes of dairy industry, and maximize returns for our shareholders."
About China Huishan Dairy Holdings Company Limited (Stock code: 6863)
China Huishan Dairy Holdings Company Limited is a leading and the most vertically-integrated dairy company in China. The Company's business model covers the entire dairy industry value chain from growing and processing of alfalfa and supplementary feeds, processing of concentrated feed, dairy farming and manufacturing and sales of dairy products under the "Huishan" brand. Currently, Huishan Dairy is the only company in China capable of providing 100% of the raw milk required for the production of liquid milk and milk powder products based on raw milk produced by the self-operated farms. The Company's impeccable product safety record and high quality products stand behind a brand worthy of the trust of consumers in China. Huishan Dairy is a company publicly listed on the Main Board of the Stock Exchange of Hong Kong Limited since 2013. For details, please visit www.huishandairy.com
Topic: Press release summary
Source: China Huishan Dairy Holdings Ltd.
Sectors: Daily Finance, Daily News
https://www.acnnewswire.com
From the Asia Corporate News Network
Copyright © 2024 ACN Newswire. All rights reserved. A division of Asia Corporate News Network.
|
|
|
|
|
|
|
|
