Profits shrink, can Bright keep the low-temperature milk leader?_Bright Dairy_Cost_Market

Original title: Profit shrinking, can Guangming keep the low-temperature milk faucet?

In the context of rising costs, Bright Dairy is facing a situation of increasing revenue but not increasing profits. Although Bright Dairy attributes the increase in revenue but not profit to the rise in raw material costs and feed costs, in addition to costs, there were “veteran guards” such as Yili and Mengniu in the past, and “new hope” and other “new recruits” market. The competitive situation also puts a lot of pressure on Bright Dairy.

Gross profit margin declines

On the evening of March 28, Bright Dairy’s 2021 performance announcement showed that the company’s annual revenue was 29.206 billion yuan, a year-on-year increase of 15.59%; net profit was 592 million yuan, a year-on-year decrease of 2.55%; after deducting non-recurring gains and losses, net profit Obtained 433 million yuan, a year-on-year decrease of 6.5%.

Judging from the financial report, Bright Dairy’s revenue growth but net profit decline is not unrelated to its substantial increase in operating costs. Data show that in 2021, the total operating cost of Bright Dairy will be 23.846 billion yuan, an increase of 21.08% over the same period last year. Among them, the operating cost of dairy products increased by 21.56% year-on-year to 20.559 billion yuan; the operating cost of animal husbandry increased by 15.49% year-on-year to 2.223 billion yuan.

The increase in operating costs has led to a decline in its profitability, which is also reflected in the gross profit margin data. In 2021, Bright Dairy’s dairy gross profit margin will drop by 3.7% year-on-year to 19.63%; animal husbandry’s gross profit margin will be 2.92%, a year-on-year decrease of 3.77%. In terms of products, during the reporting period, the gross profit margin of Bright Dairy’s liquid milk products decreased by 3.57% to 27.15% year-on-year; the gross profit margin of other dairy products decreased by 5.32% to 4.47% year-on-year.

Regarding the reasons for the increase in costs and shrinking profits in the performance performance, Bright Dairy attributed it to the increase in raw material costs and feed costs in the announcement. In order to further understand the performance and future development of Bright Dairy, a reporter from Beijing Business Daily contacted and interviewed the relevant person in charge of Bright Dairy, but the relevant person in charge only said that “the relevant content is subject to the announcement of Bright Dairy”.

In addition to rising costs and declining gross profit margins, Bright Dairy’s overseas business is hardly optimistic. According to the financial report data, New Zealand New Wright, a subsidiary of Bright Dairy, achieved an annual operating income of 6.743 billion yuan, a year-on-year increase of 6.68%, and a loss of 40 million yuan in the current period. In this regard, Bright Dairy explained in the announcement, “The sharp rise in the price of raw milk in New Zealand, the reduction in shipments caused by insufficient shipping capacity, the sharp increase in international shipping costs, and the impact of the epidemic on key customers’ cross-border sales channels have made New Zealand New Wright. facing temporary external challenges”.

According to the data, Synlait New Zealand is mainly engaged in the production and sales of industrial milk powder, infant milk powder, cheese, and liquid milk, and its products are sold in New Zealand and around the world. The announcement shows that in order to improve performance and product structure, New Zealand Synlait has increased the development of cheese business and milk powder business, and launched products such as fresh liquid milk and room temperature cream with environmental protection concepts; in terms of organizational structure, New Zealand Synlait has implemented the organization Structure adjustment and personnel structure optimization to further reduce operating costs.

Front and rear pinch

From the data point of view, rising costs have affected the performance of Bright Dairy to a certain extent, but in addition to costs, the dairy industry has “veteran guards” such as Yili and Mengniu in the past, and then there is market competition such as “new hope” and other “new recruits”. The situation also puts a lot of pressure on Bright Dairy.

“In addition to rising general operating costs, in a market environment with limited growth in consumer demand and increasingly fierce competition, Bright Dairy will also increase competition costs in terms of promotion and marketing in the process of competing for market share.” Chanson Capital Director Shen Shen Moe said.

According to Zhu Danpeng, an analyst of China’s food industry, Bright Dairy mainly focuses on the low-temperature milk business, while the normal-temperature milk and milk powder business is weak, and the entire product line is far behind Mengniu and Yili. The low-temperature milk market is limited by the regional radius, and it is difficult to expand on a large scale in a short period of time. With the entry of giants Yili and Mengniu, and the division of dairy companies in various regions, it is difficult for Bright Dairy’s low-temperature milk market to grow further.

In terms of market share, Bright Dairy is still the “low-temperature milk leader”, but the gap between its market share and Yili and Mengniu is getting smaller and smaller. According to statistics, as of 2020, Bright Dairy has a market share of 15% in the low-temperature milk market, temporarily ranking first. The market share of Yili’s low-temperature milk business is 14.8%, and the market share of Mengniu is 11.2%. As a new brand, New Dairy has a market share of 6% in the low-temperature milk market.

Facing the market competition of “front and back”, Bright Dairy intends to use the capital market to start a national strategic expansion. Bright Dairy’s 2021-2025 strategic plan released at the end of March 2021 proposed, “It will actively use capital means to speed up the national layout and build a new pattern of industry competition. At the same time, accelerate the construction of industrial clusters in the Yangtze River Delta and other regions, and develop new high-quality Milk source base and advantageous regional market”.

Subsequently, Bright Dairy started its national expansion. In terms of external investment, in March 2021, Bright Dairy completed the acquisition of 100% equity of Shanghai Dingying Agriculture and Dafeng Dingsheng Agriculture; in October 2021, Bright Dairy acquired 60% of Qinghai Xiaoxiniu Biological Dairy Co., Ltd. for 612 million yuan; In December 2021, Bright Dairy completed a non-public offering of 154 million shares and raised 1.93 billion yuan, of which 1.355 billion yuan was used for pasture construction and 575 million yuan was used to supplement working capital.

“The market environment that Bright Dairy is currently facing has undergone major changes compared with the previous one. In addition to the increasingly consolidated leading advantages of national leading companies, other regional dairy companies have also entered the capital market one after another, weakening Bright Dairy’s first-mover advantage. , making Bright Dairy’s nationwide expansion at this time even more pressure.” Shen Meng said that the market layout of low-temperature milk needs to be supported by more solid pasture resources, because low-temperature milk products have a certain production and sales radius, but Bright Dairy has a nationwide scope. The layout of pastures in China cannot yet better support the national low-temperature milk expansion strategy.

Beijing Business Daily reporter Guo Xiujuan Wang XiaoReturn to Sohu, see more

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