Want Want China (151) H1 2024 earnings summary

Executive summary

• Revenue for 1H FY24 declined 3.5% year-over-year to RMB10,876.6 million, mainly due to weaker popsicle sales in snack foods, but overseas and emerging channels saw double-digit growth.

• Gross profit margin improved to 47.3%, up 2.1 percentage points year-over-year, driven by lower raw material costs and effective expense control.

• Net profit attributable to equity holders rose 7.6% to RMB1,863.4 million, with net margin increasing to 17.1%.

• Channel diversification, rapid growth in emerging and overseas markets, and organizational restructuring supported performance.

• Organizational restructuring was implemented to enhance agility and resource allocation for sustainable growth.

Financial highlights

• Operating profit increased 2.6% year-over-year to RMB2,540.7 million, with operating margin up 1.4 percentage points to 23.4%.

• Basic and diluted EPS rose 8.2% to RMB15.78 cents.

• Cash & bank balances at RMB15,425 million as of September 30, 2024; net cash position of RMB9,094.1 million.

• Capital expenditure for the period was RMB359.0 million, focused on plant and equipment upgrades.

• Total borrowings at RMB6,330.8 million, with 98% denominated in RMB and at fixed interest rates.

Outlook and guidance

• Management expects continued benefit from lower raw material costs in the second half of FY2024.

• Focus on leveraging the Chinese New Year peak sales season and ongoing product and channel diversification.

• Continued emphasis on brand differentiation, product innovation, digital marketing, and overseas expansion.

• Ongoing exploration of diversified emerging channels and OEM partnerships.