Our reporter Wang Lixin
Trainee reporter Liang Aonan
Wind data shows that as of April 24, 21 of the 29 listed dairy enterprises in A-share and H-share have released their "report cards" for 2023. Overall, 21 companies achieved a total revenue of 209.496 billion yuan last year, up 3.77% compared with the same period in 2022; The total net profit attributable to shareholders of the listed company was 8.433 billion yuan, down 28.40% year on year.
From the perspective of financial reports, in 2023, most dairy enterprises will face multiple challenges brought by operating pressure and external environment.
5 companies achieved double growth in revenue and net profit
According to the data of the National Bureau of Statistics, the national milk output will be 41.97 million tons in 2023, up 6.7% year on year. However, the Kaidu consumer index shows that domestic dairy product consumption performance is flat. In 2023, the sales of domestic normal temperature dairy products will decrease by 0.4% year on year, and the sales of low-temperature dairy products will decrease by 6.1% year on year.
On the whole, the total revenue of the 21 dairy enterprises mentioned above exceeded 200 billion yuan last year, but the total net profit was less than 10 billion yuan. The losses of the upstream raw milk production enterprises became the main factor hindering the net profit performance of dairy enterprises. Many raw milk producers mentioned in their annual reports that they will face challenges such as "slow growth of dairy products consumption", "declining milk prices" and "high feed costs" in 2023.
From the perspective of revenue, 14 of the above 21 dairy enterprises achieved year-on-year revenue growth, of which 4 companies achieved revenue growth of more than 10%; Junyao's health increased the most, 65.71%. From the perspective of net profit, 14 of the 21 dairy enterprises had a decline in net profit, most of which were raw milk producers and milk powder enterprises.
The reporter noticed that a total of 5 dairy enterprises achieved double growth in revenue and net profit last year. Among them, Yantang Dairy, Knight Dairy and Sunshine Dairy have made outstanding achievements.
From the perspective of asset liability ratio, four of the 21 dairy enterprises mentioned above have asset liability ratios of more than 60%, namely Youran Animal Husbandry, Jianhe Group, Maiqier and Modern Animal Husbandry, with asset liability ratios of 71.65%, 68.59%, 66.81% and 62.28% respectively.
It can be seen that income increase without profit increase will become the real performance of most dairy enterprises in 2023. Milk powder enterprises are still in the adjustment stage, while most raw milk production enterprises have not yet gone out of the vortex of losses.
Although the overall performance of listed dairy enterprises in 2023 is not satisfactory, most dairy enterprises have taken action in terms of shareholder returns. According to the statistics of the Securities Daily, 16 of the 21 dairy enterprises disclosed their dividend plans while publishing their annual reports, accounting for 76.19%. Among them, the dividend ratio of Chinese flying cranes remained at 70%.
Performance pressure of milk powder sector
Nielsen IQ data shows that in 2023, China's omni channel sales of infant formula milk powder will decline by 13.9% year on year, of which offline channels will decline by 17.5%.
"Our infant milk powder dealers have a hard time, and the number of customers entering the store has been declining," said a dairy product dealer in an interview.
The reporter checked the 2023 annual reports of several listed dairy companies and found that the performance of the milk powder sector was generally under pressure. Among them, the revenue of China Feihe Infant Powder Business, Aoyou Dairy Sheep Milk Powder and Milk Powder Business, Mengniu Dairy Milk Powder Business, and Jianhe Group's infant nutrition and care products business declined to varying degrees.
In this regard, most dairy enterprises said that this was mainly due to the intensification of industry competition during the transformation of the new national standard.
From the perspective of retail channels for mothers and babies, the largest business of Baby Room is milk powder products. In 2023, the milk powder business, which accounts for 57% of the company's total revenue, will decrease by 12.23% year on year.
It is worth mentioning that in February last year, the new national standard was officially implemented, which put forward stricter standards for the production and R&D capacity of infant formula and scientific formula.
In the view of the industry insiders, with the implementation of the new national standard, the adjustment of the mother and baby industry is also accelerating, and the market concentration is further improving, which will usher in new opportunities for the industry's leading enterprises.
"The pattern of infant powder mixing market has changed significantly, the market concentration has further improved, backward production capacity is being phased out, and new supply and demand relations and sales channels are being formed," Song Liang, the expert leader of China Agriculture Reclamation Dairy Industry Alliance, told reporters.
Although the performance of milk powder enterprises was under pressure last year, the gross profit rate of milk powder enterprises ranked first in the whole dairy sector. China Feihe, Jianhe Group and Aoyou Dairy ranked third in terms of gross profit rate of sales.
In addition, according to the reporter's observation, under the market environment of stock competition, dairy enterprises have taken the initiative to adjust their strategies, turn their eyes to the adult and middle-aged and elderly milk powder market, and dig deeply into the family nutrition track. At the same time, we will standardize the market order by stabilizing market prices, controlling market inventory and shipping.
Analysts from Bank of Pudong International said that after strengthening the management of channels and terminals, the inventory level of most dairy enterprises' channels has improved significantly, and the brand is poised to improve steadily.
Loss of many raw milk enterprises
Compared with milk powder enterprises, the upstream raw milk production enterprises have a more difficult time. Influenced by factors such as the increase of feed cost and the low price of raw milk, most raw milk enterprises are still in a loss state.
Statistics show that among the five raw milk producers, Youran Animal Husbandry, Australia Asia Group, Primitive Animal Husbandry, China Shengmu, and Modern Animal Husbandry, except for Modern Animal Husbandry and China Shengmu, which remain profitable, the other three companies have suffered losses. Among them, Youran Animal Husbandry has suffered losses of more than 1 billion yuan, becoming the company with the most losses among raw milk producers at present, Original animal husbandry has become the company with the largest decline in net profit.
As for the company's performance, Youran Animal Husbandry said that in 2023, dairy consumption will be slightly weak, and the dairy farming industry will face severe challenges such as declining milk prices and high feed costs.
Australia Asia Group said in its financial report that 2023 will be the most challenging year for the dairy farming industry in more than ten years. Domestic raw milk has increased by more than 6% for the fourth consecutive year. Affected by the consumption environment, the growth rate of dairy products consumption last year was the slowest in more than ten years. Consumers are more sensitive to prices, and price competition among dairy products manufacturers is fierce.
Li Shengli, the chief scientist of the national dairy industry technology system, said that the loss of the domestic raw milk industry has exceeded 60%. Due to the short shelf life of raw milk, many pastures and milk enterprises that maintain the collection of milk will also choose to spray it, that is, the liquid fresh milk will be sterilized, spray dried, etc. into the state of milk powder, so as to extend the shelf life.
According to the reporter, at present, raw milk enterprises are actively seeking change. While slowing down the construction of new pastures, they also adjust the structure of cattle herd to achieve breakthrough through technological innovation.
Sun Yugang, President of Modern Animal Husbandry, told reporters that with the continuous decline in the number of domestic cattle and the slowdown in the construction of new pastures, it is expected that the growth rate of domestic raw milk supply will also slow in 2024, and the core is the sluggish growth rate of the demand side. But different from the past, when the current round of raw milk cycle went up, most of the farms invested were large dairy groups or powerful breeding enterprises, which had strong risk resistance ability, so the industry's capacity adjustment speed was not as fast as expected.
Song Liang also told reporters that the industry will still face a severe test in 2024. Only by reducing the proportion of reserve cattle and eliminating unprofitable cows at a faster speed can the industry accelerate its turnaround.
In an interview with a reporter, the management of a dairy enterprise said that although it was not easy for dairy enterprises to go, China's dairy industry still showed strong development resilience. First, enterprises are constantly adjusting product structure to meet market demand; Second, constantly strengthen scientific and technological innovation and build innovative dairy industry; Third, focus on diversified development to break through.
For the industry prospect, Lu Minfang, vice chairman of Mengniu Group, believes that although the growth of domestic dairy industry is under pressure in the short term, dairy enterprises still need to work hard to bring more value to consumers. With the improvement of the health awareness of domestic consumers, low sugar, low fat, zero addition, formula optimization, nutrition enhancement and other segments of the track will become the new direction of innovation, upgrading and competition for dairy enterprises. At the same time, the diversification of channels will also bring new development opportunities for dairy enterprises.
