Declining Ausnutria results due to challenges in Chinese market

Ausnutria Dairy Corporation Ltd. (Ausnutria) has published its annual results for 2022. Ausnutria shows a decrease in turnover of 9.1 percent to € 1,054 million compared to 2021. Profit falls by 71.7 percent to € 29.3 million. The operating result amounted to € 65.5 million, a decrease of 58.2 percent. The figures were influenced by one-off impairments on participations (in Australia and New Zealand) and corrections due to system changes that also applied to 2021. In addition, currency developments had a negative impact.

Ausnutria experiences the greatest challenges in the infant nutrition category based on cow's milk. The Kabrita brand continues to lead in the infant and toddler nutrition category based on goat's milk.

Challenges

In Ausnutria's largest market, China, companies in the sector are experiencing strong competition due to the falling birth rate and the adverse effects of the COVID-19 pandemic. Ausnutria also experiences these consequences. The decrease in turnover is mainly due to the decrease in sales of its own brands of infant nutrition based on cow's milk. In 2021, the group has proactively made a series of adjustments to the sales strategy of its Hyproca 1897 cow's milk brand. As part of these adjustments, Ausnutria has further streamlined its distribution channels and introduced stricter control over their stock levels. This also affected sales in 2022. The rising cost price as a result of inflation also has a negative effect on Ausnutria's results.

Growth in goat's milk

Despite the disappointing performance of the entire infant nutrition sector, Ausnutria has recorded a year-on-year growth of 7.1 percent with sales of its own brand of infant and toddler nutrition based on goat's milk, Kabrita. This is partly due to the research that Ausnutria, together with scientific partners, is conducting into the properties of goat's milk and the growing brand awareness.

According to industry statistics, based on actual end-user sales data in 2022, Kabrita's market share in the goat's milk-based infant and toddler nutrition market has increased by more than 5 percent. Ausnutria thus strengthens its position as market leader in this sector.

Ausnutria's strong position in the goat milk category and the opportunities offered by this product group remain an important basis for Ausnutria's investments in the Netherlands. The construction of Ausnutria's new drying tower for semi-finished infant nutrition based on goat's milk in Heerenveen will be completed in early 2024. This factory will operate completely gasless, electrically and without any nitrogen emissions. Ausnutria also announced in October last year that it would further intensify its collaboration with goat cheese producer Amalthea, through a 50 percent interest in the Amalthea cheese factory. Together, the companies want to make the beautiful properties of goat's milk accessible to a wider group of consumers. Ausnutria also opened its own office on the Wageningen Campus at the end of last year. With its new location on the Wageningen Campus, Ausnutria is expanding its network and accelerating its build-up and quality of unique expertise. Bart van der Meer, Executive Director Ausnutria Dairy Corporation Ltd.: “We have built up a strong and leading position in the goat dairy sector, both on the raw materials side and in the product portfolio. We will expand this position on a broader scale in the world in the coming years.”

Collaboration Yili

In January 2022, the share transaction with Yili was completed. Yili has thus become the largest shareholder of Ausnutria with 60%. Yili ranks at the top of the global dairy industry and has been the No. 1 dairy company in China for many years. In the past period, attention has been paid to better acquaintance between the companies in order to learn from each other and further strengthen Ausnutria's position in the market. Bart van der Meer, Executive Director Ausnutria Dairy Corp. Ltd.: “Yili is also an impressive dairy company by Western standards. Tightly organized with appealing results. In 2023, now that China is open again after the lockdowns, we will further intensify our cooperation and also expand our international position outside China.”

Outlook 2023

The outlook in China remains subdued due to the economic situation and lagging birth rates, which are expected to show a recovery in 2025. Developments outside China show a positive trend. Bart van der Meer, Executive Director Ausnutria Dairy Corp. Ltd.: “Outside of China, we are seeing significant growth in America, Middle East and Southeast Asia.”

“Partly due to investments in automation and production processes, efficiency and cost-saving measures, the results will increase substantially in 2023. Also the nutrition products division (probiotic related) in China will contribute to the result in 2023 after years of development.”