Chinese Dairy Giant Yili’s Net Profit in Q1 2023 Exceeds CNY 3.62 Bn, Up 2.73% YoY

Consumer Discretionary Author: Zhisheng Wang, Yiran Xing Editor: Yiran Xing May 11, 2023 09:15 AM (GMT+8)

Yili's total revenue in Q1 2023 reached CNY 33.4 billion, the strongest single-quarter performance in Yili's 26-year history.

diary industry

Inner Mongolia Yili Industrial Group Company Limited (hereinafter referred to as "Yili", Chinese: 伊利股份), headquartered in Hohhot, Inner Mongolia Autonomous Region, recently released its 2022 annual report and 2023 quarterly report. In 2022, the company achieved revenue of CNY 123.171 billion, an increase of 11.37% year-on-year, and net profit attributable to its parent reached CNY 9.431 billion, 6.71% higher than in the previous year. In Q1 2023, the company generated operating revenue of CNY 33.441 billion, a year-on-year growth rate of 7.71%, and net income of CNY 3.615 billion, a growth rate of 2.73% from the same period last year, being the strongest single-quarter performance since Yili was listed 26 years ago.

Founded in 1993, Yili is the largest dairy company in China, ranking among the top five in the global dairy industry and the first in the Asian dairy industry for nine consecutive years. Its main products include liquid milk, milk powder, yogurt, ice cream, cheese and other products. In Q1 2023, the company's liquid dairy business generated revenue of CNY 84.926 billion, up 0.02% year-on-year, accounting for 69% of overall revenue in the quarter.

Internationalization has been a crucial strategy for Yili. Currently, Yili has built a global resource system covering Asia, Europe, the Americas, Oceania and other dairy regions, with over 2,000 global partners on 6 continents and in 39 countries. The company has 15 R&D and innovation centers and 75 production bases worldwide, and its products are sold to more than 60 countries and regions. Yili's acquisition of Westland, the second largest dairy in New Zealand, Chomthana, the largest local ice cream company in Thailand, and Canary Foods, a New Zealand dairy company, further accelerated Yili's penetration into the global market. In 2022, the company's international businesses increased sales by 52.2% compared to the previous year.

According to authoritative global market research firm Nilesen’s research, in 2022, the market share of Yili's liquid dairy products was 33.4%, ranking first in the market segment; the market share of infant formula was 12.4%, ranking second in the market segment; the market share of adult milk powder was 25.3%, ranking first in the market segment; the market share of cold beverage business remained the first in the market, leading the cold beverage industry for 28 consecutive years in China.

The major competitors of Yili in the diary industry include Chinese companies such as Mengniu Dairy (Chinese: 蒙牛乳业), Bright Dairy (Chinese: 光明乳业) and Junlebao (Chinese: 君乐宝), as well as international players such as Lactalis from France, Nestle from Switzerland, and Dairy Farmers of America from the US.

Based on current industry trends, Yili Chairman Pan Gang believes that the demand for fertility, which has been affected in the past few years, has begun to gradually ease in the post-pandemic era. The government has also introduced policies to stimulate the fertility rate. In the short term, the milk powder industry is more of a consolidation opportunity. In the past three years, the concentration of the top three in the industry has increased from 32% to 42%. Taking a glimpse into the future, as many small and medium-sized brands gradually withdraw from the market, the infant formula market will consequently enlarge, and the dairy head brands will face more development opportunities.

As of press time, Yili closed at CNY 28.83 apiece, with a market cap of CNY 190.88 billion.