按一下以編輯母片文字樣式第二層 - TodayIR按一下以編輯母片文字樣式 –第二層 •第三層 –第四層 » 第五層 Market Share Note: (1) Mengniu’s

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China Mengniu Dairy Company Limited

2014 Annual Results

Stock Code：2319

March 2015

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Disclaimer

The presentation is prepared by China Mengniu Dairy Company Limited (the

“Company”) and is solely for the purpose of corporate communication and

general reference only. The presentation is not intended as an offer to sell, or to

solicit an offer to buy or to form any basis of investment decision for any class of

securities of the Company in any jurisdiction. All such information should not be

used or relied on without professional advice. The presentation is a brief

summary in nature and do not purport to be a complete description of the

Company, its business, its current or historical operating results or its future

business prospects. This presentation contains projections and forward looking

statements that may reflect the Company’s current views with respect to future

events and financial performance.

This presentation is provided without any warranty or representation of any kind,

either expressed or implied. The Company specifically disclaim all

responsibilities in respect of any use or reliance of any information, whether

financial or otherwise, contained in this presentation. The Company undertakes

no obligation to publicly update or revise any forward-looking statements,

whether as a result of new information, future events or otherwise.

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Mengniu

Sun Yiping, Chief Executive Officer & Executive Director

Bai Ying, Chief Operation Officer & Executive Director

Zhang Ping, Chief Financial Officer

Liu Shengli, Vice President of Sales

Jesper Colding, Vice President of Strategy

Zhai Mei, Assistant Vice President in Public Relations

Thibaut Helleputte, General Manager of Mengniu Danone JV

Chris Kwok, Financial Controller & Company Secretary

Yashili

Lu Minfang, Chief Executive Officer

Wen Jieping, Chief Financial Officer

Management Team

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2014 Annual Results Review

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Financial Highlights

2013 2014 +/-

RMB Million

Gross Profit

Gross Profit Margin

EBITDA

EBITDA Margin

Net Profit Margin

Profit Attributable to

Owners of the Company

Basic EPS

(RMB)

Revenue

5

Note: Yashili was consolidated into Mengniu’s financial statement since August 2013.

43,356.9 50,049.2 15.4%

11,697.2 15,433.6 31.9%

26.98% 30.84% 3.86ppt

3,247.4 4,283.9 31.9%

7.49% 8.56% 1.07ppt

1,630.9 2,350.8 44.1%

3.76% 4.70% 0.94ppt

0.904 1.210 33.8%


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Revenue Breakdown by Segment

Note: Others refers to cheese and plant-based food business, etc.

RMB Million

6

2013 +/- (%) % of

Revenue +/- (ppt)

Ice Cream

Milk Formula

Others

Liquid Milk

Total

2014

43,036.1 13.5%

2,716.1 -10.2%

3,961.0 81.9%

336.0 32.5%

86.0% -1.4ppt

5.4% -1.6ppt

7.9% +2.9ppt

0.7% +0.1ppt

50,049.2 15.4% 100.0% /

37,902.8

3,023.4

2,177.3

253.5

43,356.9


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Revenue Breakdown of Liquid Milk Segment

RMB Million

7

Milk Beverage

Yogurt

UHT

2013 +/- (%) % of

Liquid Milk

Revenue +/- (ppt) 2014

Total

23,701.6 7.5%

11,920.6 14.3%

7,413.9 36.7%

55.1% -3.1ppt

27.7% +0.2ppt

17.2% +2.9ppt

22,053.3

10,425.5

5,424.0

43,036.1 13.5% 100.0% / 37,902.8


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Market Share

Note: (1) Mengniu’s market share includes the market share of Mengniu, Danone and Junlebao brands

(2) Source: Nielsen retail research

Liquid Milk

UHT Products

8

Chilled Products

(excluding Fresh Milk) Chilled Products

27.3% 26.9%

22.7% 23.7%

11.7% 9.7%

8.3% 8.9%

30.0% 30.8%

2013 2014

Mengniu A B C Others

27.2% 27.0%

25.7% 27.2%

15.2% 12.7%

7.1% 6.9%

24.8% 26.2%

2013 2014


28.2% 28.0%

20.6% 20.0%

12.9% 13.6%

9.0% 9.0%

29.3% 29.4%

2013 2014


32.0% 32.0%

16.2% 14.8%

14.9% 15.7%

10.4% 10.4%

26.5% 27.1%

2013 2014



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Cash Flow & CAPEX

(RMB Million) (RMB Million)

2013 2014

Net Cash Inflow from

Operating Activities Capital Expenditure

9

2,812.9

346.9

118.5

Biological Assets

Equity Investment

Plants & Equipments

2,508.1

9,729.4

359.0

3,278.3

12,596.5

2013 2014

3,283.7

1,546.5

3,079.9

1H2014


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8,168.2

10,563.7

18.8%

21.1%

1,605.81,941.2

SG&A Expenses

(RMB Million) (RMB Million)

Expenses % of revenue

2013 2014 2013 2014

3.7%

3.9%

S&D G&A

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Operating Efficiency Index

(Day) (Day) (Day)

22.7

36.5

6.8 6.9

48.4 51.4

2013 2014 2013 2014 2013 2014

Inventory Turnover Receivables Turnover(1) Payable Turnover(2)

11

(1) Receivables Turnover = [(Average Balance of Trade and Bills Receivables / Revenue] x number of days

(2) Payables Turnover = [(Average Balance of Trade and Bills Payables) / Cost of Sales] x number of days


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12

2014: Foundation Enhancement,

Innovation and Integration

2014 Key Words


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13

Innovation: Brand Building and Product Innovation

Clearer Brand Proposition Closer Alignment with the

Internet Era

Launched “Cloud Ranch”

Initiated marketing innovation with mobile apps Moved from claims on pure functional benefits

to a clearer brand proposition

Product & Packaging Innovation


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14

Integration: Established Internationalization Strategy

A B C

Join Hands

with Global

Leading

Players

Leverage

Global

Resources

Global

Technology

Innovation

Center

Ranch

Management

Quality

Control

Product

R&D

Production

& Operation


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Integration: Drive Growth of Chilled Business

Topline Growth

Operation efficiency

improvement

Margin increase

Portfolio Management

Focus on 3 high

margin brands: Yoyi

C, Champion, Bio

Streamline SKU

Enhance taste and

packaging

1 Operating Efficiency

Optimization

Improve asset

utilization rate

Enhance production

and supply chain

management efficiency

Cost control and

efficiency improvement

2 Prudent OPEX and

CAPEX

Focus A&P on high

margin brands

Reasonable

investment return

Prudent CAPEX

3

Leverage best

practice of Danone

Execution of R&D, operation,

marketing and sales strategies

Our Vision

Become the indisputable leader of

chilled products in China by offering safe,

high quality and superior products through a more

diversified portfolio


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Integration: Accelerate Transformation in Yashili

Brand streamline and repositioning

— Yashily: New Zealand milk sourcing, positioning a rich spectrum of

products

— Scient: Europe milk sourcing, targeting mid-range to high-end market

International cooperation

— Cooperating with Arla in introducing direct imports of co-brand Arla Merla

— Reached strategic alliance with Danone and accelerated

internationalization

Marketing model innovation by introducing membership bonus

point system

Speed up exposure to E-commerce by setting up dedicated team

and developing proprietary products for online platform

Reinforced distribution in maternity stores and introduced

proprietary products

Enhanced strengths in supermarkets and KA channels

Implemented organization restructuring for a refined authorization and

approval system

Enhanced operation and management efficiency for responsive and

decision making capabilities

Conducted various trainings to improve business operation efficiency

Organization Restructuring

Channel

Transformation

Brand

Upgrade


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Integration: Expand into Plant-based Food Business

Introduced 100% original nut

grinding technology from

WhiteWave

Launched Almond & Walnut

flavored plant-based protein

beverages in mid-December

— Single-serve

— Multi-pack

Built distribution network

Positive retailer and

consumer feedback

To focus on marketing and

brand building in 2015

Business Highlight


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Integration: Build up a Win-Win Ecosystem

Value to business partners

Closer business partnership

New business cooperation model

More shared values and interests

Win-Win

Ecosystem

Resources

Pooling &

Sharing

108 business partners jointly work on CSR

initiatives

Seek innovation with 24 global

leaders focusing on

milk sourcing, quality control,

R&D and production

Value to Mengniu Enhanced competitiveness

Maximum benefits by leveraging

global best practices and leading

technologies

Increased brand influence by

pooling efforts in fulfilling CSR roles


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19

Performance: Continued Efforts in Quality

Enhancement Quality and Safety

Management System

Milk Source

Quality Center

Operations

Quality Center

Sales

Quality Center

Sourcing Procurement/

Production Retail

From supervision to technical

support

From supplier engagement

to technique standardization

From process monitoring to

systematic management

From standards establishment to

incorporating QC into every process

Professional inspection equipments

Quality standard benchmark: International & European

standards

Technical exchange with Arla, Danone, Asure Quality, Lloyd's

Comprehensive training on quality control expertise and

management capabilities

Technical Guarantee Talent Training


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20

Performance: Corporate Structure Improvement

and System Upgrade

Launched SAP-ERP, CRM

system

Integrated multi-brands’ digital

asset management to build up

a Mengniu membership

system

Reinforced implementation of

fine management over sales

distribution

System

Further SKU streamline

Standardized new product

launch procedures

Chilled business introduced

pilot run of category

management model

Production model of chilled

business revised by

benchmarking against

Danone

Management

Talent structure optimization

Continuously push forward a

streamlined organization by

enhancing regional

organization capability

Implementation of Mengniu

Way

Organization


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Performance: Drove Revenue and Profit Growth

Through Effective Portfolio Management

Brand 2012 2013 2014

Star

Brands 30.5% 34.9% 34.5%

Opportunity

Brands 1.5% 3.1% 5.2%

Profit

Contributor

Brands 10.2% 8.3% 6.3%

Backbone

Brands 49.2% 44.0% 41.9%

Note: Only states revenue of Mengniu’s four major brand clusters as a percentage of Mengniu’s stand-alone revenue

Revenue Breakdown by Brand Clusters *


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Openness & Transparency: Enhanced Consumer

Communication and Consumer Experience

Consumer Experience Consumer Communication

30 million clicks

All-round delivery of “A Drop of Goodness”

Redefined brand elements

Affectionate

Passion

Heart-led

innovation

Open

Warm Mengniu Factory Opening

Day

• Positive feedback received

• 1.19 million visitors during the

year

Mengniu Life

Experience Hall

in Chengdu

• Vivid brand

exposure

• Direct consumer

interaction


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23

2014 Recap: Convey “Little Happiness Matters”

through “A Drop of Goodness”

Quality

Enhancement

Consumer

Engagement

Brand

Building

System

Upgrade

Ecosystem

Establishment

Internationa-

lization

Pursuit


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2015: Start off from a Better Mengniu


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Better Sales and Distribution Channels

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Coverage Penetration Efficiency

Channel Development 1

Enhance development and coverage of

traditional channels and convenience stores

Boost catering and other special channels

Develop emerging online channel

Resources Focus 2

Continuous Transformation

of Distribution Model 3

Execution at POS 4

Focus major resources on key brands and

key markets

Reinforce market execution of backbone

brands to gain market share

Simplify channel distribution to reinforce

control over retail end

Continue execution of CBU model that

focus on ice cream

Trial implementation of CBU model in

UHT products

Optimize display

Increase investment in freezer to promote

the sales of chilled and ice cream products

Enhance investment in shopping guides

to increase sales output


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Better Integration of Resources

26

Added value from leading technologies and

management expertise

Added value from strategic alliances

Global Resources Cross- Border Marketing Resources

Danone’s stake in Mengniu: 9.9%

Danone’s stake in Mengniu & Danone

JV: 20%

Danone’s stake in Yashili: 25%

Comprehensive cooperation in chilled

and milk formula businesses

Arla’s stake in Mengniu: 5.3%

Introduce sophisticated management,

ranch management expertise,

technology for cheese research &

development

WhiteWave’s stake in Mengniu &

WhiteWave JV: 49%

Comprehensive cooperation in plant-

based food business

Launch a new model of O2O

cooperation, Yoyi C is introduced

into quality restaurants on

dianping.com platform

Utilize the internet to redefine milk,

develop more closer relationship

with consumers

Sign partnership agreement with

NBA China, cooperate in the fields

of media, activities, promotion and

product packaging design

Forge strategic alliances in system

integration, innovation and digitalized

management transformation


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Ice Cream

Minion Four-pack

Latte

Suan Suan Ru

100ml

Flavored Pro-biotic

Milk Drink

Yoyi C

Better Continuous Innovation

27

Cross-border Innovation

Promotes Category Growth

More Product and Packaging Innovation in 2015 Category Innovation

Flavored Milk Drink

Future Star


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Better Room Temperature Business Strategy: Focus on

Star Brands, Increase Market Share of Backbone Brands

28

Better

2015

CNY

Better

Communi-

cation

in the 10th

year

Better

Category

Innovation

Better

Channel

Plan

10th Anniversary – Starts off from a Better Beginning in 2015

Milk Deluxe: No.1 – Strengthen leading position in premium UHT milk

RT Yogurt: No.2 – Quickly gain RT yogurt market share, first

mover in kids’ RT yogurt

Position Free

Additive

Taste Pure

Packaging High-

end

Consumer

Perception No.1

Blind Test No.1

Popularity No.1


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Better Chilled Business Strategy: Strengthen

Leading Position in Chilled Products Market

29

Breakthrough

Yoyi C 100ml

Market performance

in kids’ yogurt

Investment

Increase investment in basic yogurt

Enhance investment in freezer

and improve POS sales output

Focus

Key markets

Increase

market share

Yoyi C

Strengthen

the beverage

Champion

To become

“Milk

Deluxe” in

yogurt

category

Bio Expand

coverage and

penetration


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Better Milk Powder Business Strategy:

Advancement of Specialized Management

30

Focus

Brand

Resources Integration

Distribution channel: Online channel,

maternity store channel

Based on clearer brand positioning,

focus on key products

e

Milk sources from New Zealand and

Europe

Endorsement by Danone and Arla

Strengthen brand promotion

Align and integrate resources with

Danone, Arla etc and enhance

strategic alliances

Integrate professional management

team of Yashili and Danone, enhance

quality control, improve service level

and organizational capability

Integrate with international research

institutions to enhance innovation and

R&D capability


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Better Operation: Supply Chain Management

31

1 Fine Management Projects

across Supply Chain 2 3

Focus Fast Responsive

Integrated Planning of

Production, Supply, Selling

SAP


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Annual Results Presentation 2014


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» 第五層 This document is prepared by Yashili International Holdings Ltd （the “Company”）for corporate communications and general reference only. The document does not constitute an offer to sell or subscribe for any securities of the Company in any jurisdiction or serve as the basis of related investment decisions. All information included herein should not be used or relied on before obtaining professional advices. This document is a brief overview of the Company and does not constitute a complete description of the Company and its business activities, current and historical operating results and future operating prospects. Any information contained herein is provided without any express or implied representation or warranty. The Company disclaim any liability for any loss or damages howsoever arising from the use of this document or reliance upon any financial or other information in this document.

Disclaimer

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Agenda

step step

Results

Review

Operation

Strategies

2015 Q&A

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Results

Review

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人民币百万元 2014年 2013年变动百分比

收入 2,816.40 3,890.00 -27.6%

毛利 1,445.00 2,080.10 -30.5%

毛利率 51.3% 53.5% -2.2%

经营溢利 255.00 481.70 -47.1%

本公司股权持有人应占溢利 248.80 437.60 -43.1%

净利润率 8.8% 11.2% -2.4%

每股基本盈利（人民币分） 6.99 12.30 -43.2%

经营现金流量金额 301.19 140.90 113.8%

Financial Summary

RMB million 2013 2014 Percentage

change

Revenue 3,890.00 2,816.40 -27.6%

Gross profit 2,080.10 1,445.00 -30.5%

Gross profit margin 53.5% 51.3% -2.2%

Profit attributable to equity holders of the Company

437.60 248.80 -43.1%

Net profit margin 11.2% 8.8% -2.4%

Basic earnings per share (RMB cents)

12.30 6.99 -43.2%

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Sales revenue (RMB2,816.4 million）

2014

2013 Yashili paediactric milk formula • Revenue amounted to RMB1,832.9 million, representing a decrease of 31.1% year-on-year • Percentage of total revenue decreased by 3.3 percentage points from last year

Scient paediactric milk formula • Revenue amounted to RMB437.9 million, representing a decrease of 33.7% year-on-year • Percentage of total revenue decreased by 1.4 percentage points from last year

Nutrition foods and others • Revenue amounted to RMB545.6 million, representing a decrease of 4.1% year-on-year • Percentage to total revenue increased by 4.8 percentage points from last year

Sales Revenue Breakdown

65.1% 15.5%

19.4%

Yashili Paediatric milk formula

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人民币分 2014年 2013年變動百分比

每股基本盈利（人民币分）（附注2） 6.99 12.30 -5.3%

每股摊薄盈利（人民币分） - 12.20 -

每股净资产（人民币分）（附注3） 90.00 87.00 3.0%

建議每股末期股息（人民幣分） 0.63 3.69 -83.0%

股息分派比率 30.0% 30.0% 0.0%

Sales and distribution expenses

Administrative expenses

Income tax expenditure

(RMB million) (RMB million) (RMB million)

Sales, Administrative Expenses and

Income Tax Expenditure

137.40

60.90

23.8%

19.7%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

-

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

Year 2013 Year 2014

Effective income tax

Effective income tax rate

219.20

193.20

5.6% 6.9%

0.0%

5.0%

10.0%

15.0%

20.0%

-

30.00

60.00

90.00

120.00

150.00

180.00

210.00

240.00

Year 2013 Year 2014

Administrative expense

Proportion of Administrative expense

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Operation Efficiency Indicators

（1） Inventory balances at year end divided by cost of sales for the year and multiplied by 365 days.

（2） Balances of trade and bills receivables at year end divided by turnover for the year and multiplied by 365 days.

（3） Balances of trade and bills payables at year end divided by cost of sales for the year and multiplied by 365 days.

Year 2013 Year 2014

179 191

Inventory turnover days(1)

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Cash Flow and Capital Expenditure

8

Net operating cash flow


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Operation Strategies 2015

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2014 Development Timeline

April June July November

Became one of the four pilot enterprises in the “infant and toddler powdered formula quality and safety traceability” program

Obtained the “production license for infant and toddler milk powder”, the first in Guangdong province

Chosen as one of the “Top 500 most valuable brand in China” with a brand value of RMB12.626 billion, and ranked fourth among domestic dairy brands

Signed a cooperative supply contract with Euroserum, establishing a mutual strategic alliance

August

Mengniu, Danone and Yashili jointly entered into a subscription agreement, Danone became the second largest shareholder of Yashili

October September

Convened structural reform initiation meeting, and officially kick started the Group’s structural reform

Signed a collaboration agreement with Massey University in New Zealand at the presence of government officials from the PRC and New Zealand

Official opening of the Group’s Guangzhou headquarters

December

Fully implemented the “IPO” management model

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Focus Brand Resource Focus on key channels to

gain more market share

Focus on key brands to build a high-end brand image

Focus on consumer experience and systematic management to increase consumer loyalty

Brand upgrade by improving brand recognition through key brands

Build brand identity by introducing fully imported New Zealand products to meet consumer demand

Increase brand advertising and brand influence/competitiveness in conventional and new media

Consolidate shareholders (Mengniu, Danone, etc) resource platforms, full incorporation and strategic upgrade

To join efforts with PRC and

overseas expert teams, enhance quality control, service level and corporate strength

To join hands with international research institution, enhance innovation/research standard

Development Plan in two to three

years

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Brand

Upgrade

Channel

Transformation

Resources

Consolidation

2015 Operation Strategies

产品优化

Product

Optimization

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品牌定位

产品个性

Brand Orientat

ion

Product Personalization

1 Brand Upgrade

Brand Reshaping

Focus on Star Products

Professional Image

Target Group

Word-of-Mouth

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2 Product Optimization

Enhancing Product Portfolio

Product Positioning

and Categorization

Core Products Propositions

Product Structural Upgrade

Specific Product Promotion

Guided by strategic branding, rationalizing main brands and sub-ordinate brands

Stronger propositions of core products, bringing professional image to consumers

Optimizing product structure, winning high-end market share, building star products

Greater product promotion and advertising, expediting project progress and objectives

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» 第五層 Maternal-

Child

Mall &

Supermarket

Online

3 Channel Transformation

Focus on maternal-child channel Provide direct-sales product portfolio Improve gross-profit margin Provide value-adding services

Consolidate channel competitive edge Optimize and rationalize membership stores Focus on acquiring new customers Task-management on provision of shopping guide to new customers

Exclusivity of channel-specific products Actively promote online sales activities Encourage distributors to go online

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4 Resources Consolidation

Rich resources from superior platforms

Imported quality overseas milk source

Tapping premium milk source from New Zealand and Europe, ensuring product safety

System Built on Extensive Data

Enhance user experience and provide personalized service through the membership bonus point system

High standard supply chain

Introducing fully imported products from New Zealand, increasing product competiveness

Online & offline synergy

Combining the Internet with conventional channels, creating online & offline synergy e

积分APP

CRM

16


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Thank You！


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Thank You！ Q&A

Documents

按一下以編輯母片文字樣式 第二層 - TodayIR按一下以編輯母片文字樣式 –第二層 •第三層 –第四層 » 第五層 Market Share Note: (1) Mengniu’s

按一下以編輯母片文字樣式第二層 - TodayIR按一下以編輯母片文字樣式 –第二層 •第三層 –第四層 » 第五層 Market Share Note: (1) Mengniu’s