On 13 June, Synutra International, Inc. (Synutra), listed in the US, released
its Q4 FY2016 and full year financial figures:
Q4 2016
Its net sales of USD86.1 million in Q4 were down by 21.8% YoY. This mainly
comprised sales of nutritional food including powdered milk formulas down by
23.5% to USD80.4 million.
“During this period, the combined sales volume of powdered milk formulas was
down by 7.2% and the corresponding sales price on average by 17.6%,” explained
Synutra: “The volume fell from 7,356 tonnes in Q4 FY2015, to 6,827 tonnes (in
the latest Q4).” In respect of the fall in average sales price, it highlighted
“The change in product mix, larger discounts and unfavourable exchange rate.”
(The RMB has strengthened against the US dollar for several years before this
position reversed last year: the government tried to defend the currency with
slight devaluations in summer 2015, leading to the stock market crash).
In addition, profitability also decreased:
-
Gross profit: down from USD54.20 million in
Q4 FY2015 to USD38.90 million
-
Gross profit margin (nutritional food):
down from 51.4% to 48.8%
According to its Tmall flagship store, the average sales price of its Super
Youbo, Youbo Ai and Youbo Caesarean is down by RMB20/can. Multibuys can mean
the price per can achieved could be down by RMB50-100/can. Discounts and gifts
are the order of the day.
FY2016
Overall in FY2016 Synutra's net sales fell 11.8% to USD365 million, and its
sales of powdered milk formulas slipped by 15% to USD328.6 million. The only
positive was that its gross margin was 48.4% (vs. 45.8% in FY2015), continuing
the upward trend in this indicator since 2013.
In FY2017, Synutra expects to make net sales of USD500-550 million, hoping to
benefit from increased sales of powdered milk formula and its newly launched
UHT milk.
Synutra's Business Structure (by Sales), FY2016
Note: FY2016: April 2015-March 2016.
Source: Synutra International, Inc.
Synutra's Financial Figures, FY2012-2016
Note: Fiscal year from April to next March.
Source: Synutra International, Inc.
CEO Zhang Liang: Synutra is facing challenges
On 13 June, Zhang Liang, the company's President and CEO, announced that
Synutra is facing several challenges in the nutritional food business,
including market competition, low birth rate (16.5 million new births in 2015,
down by 320,000 according to the National Bureau of Statistics), policy
uncertainties and unfavourable exchange rates.
Nor has setting up in France proven easy. “At the project in France (100,000
t/a), the adjustment of the 2 drying towers has been taking longer than
expected,” he continued: “The plant is expected to run from July this year, and
to supply China from Q2 FY2017.” Synutra incurred a one-time USD8.8 million
loss under its long-term purchase agreement with Sodiaal, due to the delay in
its ability to start purchasing the French group's milk.
To date Synutra still has 40 powdered milk formula brands, such as Youbo
Fangsheng, Youbo Professional, Youcong, Gold Care Plus and My Angel. The
registration policy to be implemented soon will inevitably cut down this range
- how Synutra will use the newly established capacity overseas remains to be
seen.
Meanwhile it has started to import UHT milk from France: in January it launched
the Dutch Cow brand onto the Chinese market, priced at RMB9.8/500 ml. The
product label shows “3.5 g protein and 3.8 g fat”. By May, the new brand's
sales volume had doubled every month.
“In the long run, we hope to make full use of our leading position in the
domestic formula market. In the next two quarters, we will import premium
products from the French plant,” claimed Zhang Liang. Organic infant formulas
seem a likely next step, and possibly other organic lines - in the spring
Sodiaal publicised that it anticipates raising its organic milk collect to 150
million L by 2020 compared with the 50 million L collect to date.
This article comes from Dairy Products China News 1606, CCM
About CCM:
CCM is the
leading market intelligence provider for China’s agriculture, chemicals, food
& ingredients and life science markets. Founded in 2001, CCM offers a
range of data and content solutions, from price and trade data to industry
newsletters and customized market research reports. Our clients include Monsanto,
DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.
For more
information about CCM, please visit www.cnchemicals.com or get in touch with us
directly by emailing econtact@cnchemicals.com or calling
+86-20-37616606.
Tag: dairy milk