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Ausnutria seemingly unaffected by new China infant formula rules as revenues rocket

By Gary Scattergood+

15-Mar-2017
Last updated on 15-May-2017 at 16:32 GMT2017-05-15T16:32:13Z

AusNutria is one year into its 'Golden Decade', according to chairman Yan Weibin.
AusNutria is one year into its 'Golden Decade', according to chairman Yan Weibin.

Revenues at Hong Kong-listed infant nutrition company AusNutria soared by 30.3% to RMB2,740.3 million (US$396 million) for 2016, despite intense market competition, most notably due to new regulations in China.

Gross profits increased by 90.7% to RMB1,124.9m, while the basic earning per share was RMB17.04 cents, representing an increase of 247.8% compared with the same period last year.

New infant formula laws were introduced by the China Food and Drug Administration last year, effectively raising barriers to entry, and also causing widespread discounting as local firms sought to shed inventory before the new rules were enforced - with international players feeling most of the force.

But Ausnutria, which has production sites in China, the Netherlands and Australia, said it had taken steps to adjust to the new landscape.

“The group seized on the opportunities by implementing its clear strategic layout in order to adapt to the new policy; in July 2016, the group acquired a factory in Changsha that included a plot of land for expansion in the future; in August 2016, the group acquired Nutrition Care, a professional high-end nutritional product brand with production facilities based in Australia, to expand in the rapidly growing international nutritional product market.

“Moreover, in September 2016, the group teamed up with the second largest dairy co-operative in New Zealand, Westland, to form a joint venture for the establishment of a new manufacturing plant in Rolleston, in order to enlarge the group's strategic presence as a top-notch global milk source,” it added.

Golden decade

Group chairman Yan Weibin said the results of this new business strategy targetting international expansion, acquisitions and joint ventures was proving successful.

"2016 was the first year of the "Golden Decade" strategic plan announced by the company at the end of 2015. The group continued to reform the business structure and strategies, increase efforts on building a global infant formula supply chain and established the overseas nutritional business operations.

“In addition, the group's products have gained increasing recognition by the marketing channels and consumers, driven by a rapidly developing market network and enhancing consumer services with our clear brand positioning and promotional strategies.”

Figures show revenues of the group's goat milk-based and cow milk-based infant formulas across China increased by 49.3% to RMB1,682.4 million.

The goat milk-based brand Kabrita continues to maintain its leading position in the imported goat milk-based infant formula sector in China. For the year under review, sale of Kabrita increased by approximately 43.9%, accounting for around 29.1% of the group's total revenues.

According to data from the Chinese customs, the market share of Kabrita has been ranked the top imported goat milk-based infant milk formula in China for the past three consecutive years. 

Yan added the group's cow milk-based brands, including Allnutria, Hyproca, Puredo, Mygood and Eurlate, also continued to grow.

Meanwhile the firm’s private label business increased by 71.9% to approximately RMB472.1m, accounting for 17.2% of the group's total revenue. 

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