Want Want China (151) H2 2023 earnings summary

Executive summary

• FY23 revenue rose 2.9% year-over-year to RMB 23,586.3 million, with gross margin improving by 2.7 percentage points to 46.6%.

• Operating profit increased 15.7% to RMB 5,609.8 million, and profit attributable to equity holders grew 18.4% to RMB 3,990.5 million.

• Earnings per share climbed 18.7% to RMB 33.65 cents.

• Cash generated from operations increased by RMB 1,167.7 million to RMB 6,752.9 million, reflecting improved working capital efficiency.

• Share repurchases totaled 70,138,000 shares, about 0.6% of total issued shares.

Financial highlights

• Dairy products and beverages segment revenue grew 7.4% year-over-year, with Hot-Kid milk and O-bubble drinks both achieving double-digit growth.

• Rice crackers segment revenue increased 2.3%, with overseas and emerging channels up double-digit.

• Snack foods segment revenue declined 5.5%, but candy revenue hit a new record high and gross margin improved to 44.0%.

• Gross margin improved to 46.6% from 43.9% due to lower costs for some raw materials and enhanced production efficiency.

• Inventory turnover days decreased to 81 (from 90), and cash conversion cycle improved by 11 days to 65.

Outlook and guidance

• Plans to maintain channel diversification, accelerate overseas expansion, and leverage new manufacturing in Southeast Asia.

• Focus on scenario marketing, digital marketing, and enhancing consumer interaction.

• Continued improvement in resource allocation efficiency, channel profitability, and supply chain optimization.

• Gross profit margin for dairy products and beverages expected to improve further in 2024 due to lower milk powder costs and tariff adjustments.