The presentation is prepared by China Mengniu Dairy Company
Limited (the “Company”) and is solely for the purpose of corporate
communication and general reference only. The presentation is not
intended as an offer to sell, or to solicit an offer to buy or to form any
basis of investment decision for any class of securities of the
Company in any jurisdiction. All such information should not be used
or relied on without professional advice. The presentation is a brief
summary in nature and do not purport to be a complete description
of the Company, its business, its current or historical operating
results or its future business prospects.
This presentation is provided without any warranty or representation
of any kind, either expressed or implied. The Company specifically
disclaim all responsibilities in respect of any use or reliance of any
information, whether financial or otherwise, contained in this
presentation.
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Sun Yiping, Executive Director & Chief Executive Officer
Bai Ying, Executive Director & Vice President
Wu Jingshui, Executive Director & Chief Financial Officer
Liu Shengli, Vice President in Sales
Jesper Fournaise Colding, Vice President in Marketing
Lu Jianjun, Chief Administrative Officer
Chris Kwok, Financial Controller & Company Secretary
Zhai Mei, Assistant Vice President in Public Relations
Wu Wennan, Investor Relations Officer
3
Results Overview
Business Overview
Future Strategies
Results Overview
Business Overview
Future Strategies
RMB million
2012 2011 Change
Revenue 36,080.4 37,387.8 ↓3.5%
Gross profit 9,054.6 9,592.2 ↓5.6%
EBITDA 2,525.0 2,812.1 ↓10.2%
Profit attributable to owners of
the Company 1,257.1 1,589.3 ↓20.9%
Basic earnings per share (RMB) 0.711 0.908 ↓21.7%
Gross profit margin 25.1% 25.7% ↓0.6ppt
Net profit margin 3.5% 4.3% ↓0.8ppt
6
Liquid Milk
• Revenue amounted to RMB32,337.0M,
decreased by 4.0% YoY
• Proportion to the total revenue decreased
by 0.5ppt YoY
7
Ice Cream
• Revenue amounted to RMB3,171.5M,
decreased by 2.7% YoY
• Proportion to the total revenue increased
by 0.1ppt YoY
Other Dairy Products
• Revenue amounted to RMB571.9M,
increased by 33.6% YoY
• Proportion to the total revenue increased
by 0.4ppt YoY
8
UHT Milk
• Revenue amounted to RMB19,706.2M,
decreased by 5.4% YoY
• Proportion to the liquid milk revenue
decreased by 0.9ppt YoY
Milk Beverages
• Revenue amounted to RMB8,038.8M,
decreased by 3.3% YoY
• Proportion to the liquid milk revenue
increased by 0.2ppt YoY
Yogurt
• Revenue amounted to RMB4,592.0M,
increased by 0.8% YoY
• Proportion to the liquid milk revenue
increased by 0.7ppt YoY
9
Key brands such as Milk Deluxe特
仑苏, Champion冠益乳, Future Star
未来星 and Fruit Milk Drink真果粒
have remained high growth since
launching into the market. These
products have achieved double-
digit growth in 2012 while Youyi C
achieved triple digit growth.
17% 19%
23% 25%
27%
0%
5%
10%
15%
20%
25%
30%
2008 2009 2010 2011 2012
Proportion of high-end products
10
25.6%
22.3%
13.8%
7.5%
30.8%
Liquid Milk Market in 2012
Mengniu A B C Others
28.0%
25.5% 17.8%
6.8%
21.5%
UHT Market in 2012
Mengniu A B C Others
Liquid milk: Includes UHT and chilled
product categories (excluding milk powder,
ice cream and cheese)
Source: AC Nielsen
19.7%
12.9%
20.6% 7.2%
39.6%
Chilled Product Market in 2012
Mengniu A B Junlebao Others
Receivables Turnover (1)
Inventory Turnover Payables Turnover (2)
Net Cash from Operating Activities
(RMB million)
11 (1) Receivables Turnover = [(Average balance of Trade and Bills receivables) / Revenue] x No. of days
0
5
10
2011 2012
6.9 8.3
0
1,500
3,000
2011 2012
2,520.1
2,006.9
(2) Payables Turnover = [(Average balance of Trade and Bills payables) / Cost of Sales] x No. of days
0
15
30
2011 2012
18.8 21.0
(Day)
(Day)
0
30
60
2011 2012
47.5 49.7
(Day)
Results Overview
Business Overview
Future Strategies
Optimised organisational structure,
improved the utilisation efficiency
of resources and aligned decisions
with market trends
Rationalised the brand category,
re-profile a new image and focused
on brands with high growth potential
Proportion of raw milk from ranches of
intensive production models and scaled
farms increased to 93%, ensuring quality of
milk sources
Introduced Arla Foods as a strategic
shareholder, expending cooperation
from ranch and milk sources
management to production
management and product R&D, etc
Established 4 divisions, through 3 ends
interaction to strengthen quality control
management across the milk sources to
production chain
Five Actions
(1) Optimise Organisational
structure
(2) Rationalise Brand Category
(5)Strategic Cooperation with
Arla Foods
(4) Quality Management System
(3) Milk Source Quality
1 Streamline Vertical Structure
• Streamlined vertical structure to reduce communications between sales headquarter and points-of-
sale to enable quick response
2 Horizontal Integration
• Strengthened the horizontal integration of internal sales functions and coordination of sales and
marketing functions
• Effectively integrated product categories and built a centralised platform to enhance the utilisation
efficiency of resources
3 Enhance Professional Capabilities
• Strengthened professional capabilities of sales and marketing management, in particular undertook
breakthrough innovations in market research, product category planning and channels marketing
• Deployed more sales and marketing resources in major regions to speed up market responses and
bolster effective decision-making
14
4 Bolster Regional Efforts
•Future Star未来星
• XinYangDao新养道
• Awakening Youth Milk焕轻
• Champion冠益乳
• Youyi C优益C
• Mengniu Arla欧世蒙牛
Luxurious, exclusive, pure
nutritional choice
Satisfy needs for daily
nutrition
• Pure Milk纯牛奶
• Basic Yogurt基础酸奶
• Breakfast Milk早餐奶
• Flavoured Milk风味奶
A wide variety for
great enjoyment Tailor-made for
special needs
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• Milk Deluxe特仑苏
• Arla Foods爱氏晨曦
Luxurious
Nutrition
Daily
Nutrition
Leisure
Nutrition
Professi-
onal
Nutrition • Suan Suan Ru
酸酸乳
• Fruit Suan Suan Ru
果蔬酸酸乳
• Latte奶特
• Sui Bian随变雪糕
• Deluxe蒂兰圣雪
16
Investment Method
Investment
Self-built and self-operated
Management Method
Strategic partnership
Entrusted management
Upgrade
Quality Administration
Centre in Milk Sources
Quality Administration
Centre in Operation
Quality
Administration
Centre in Sales
Quality and Safety Management System
17
Planting
Breeding
Primary Processing
Product Development
Procurement
Production
Ex-warehouse
Logistics
Sales
Customer Feedback
18
Supported by agricultural departments of China and Denmark — China-Denmark Milk Technology and Cooperation Centre
Advanced ranch and quality management system
Introduction and interaction of international experts
Product innovation and R&D
Long-term cooperation with suppliers
International quality management system
Brand value of “Closer to Nature”
Results Overview
Business Overview
Future Strategies
9%
12%
9%
21%
17%
15%
13%
8%
22%
UHT product Chilled product Frozen product
Market size by categaory
%, RMB100 million
CAGR %
11%
15%
8%
7%
36%
30%
55%
23%
7%
21%
2010-2011
12%
2011-2017
2%
25%
27%
1%
Soy milk
2,051
0% 4%
20%
9%
1% 3%
23%
26%
2011
1,845
0% 4%
20% 22%
3%
10%
2% 4%
23%
23%
2012
Cheese
1%
Infant milk formula
Ice cream
Yogurt
Probiotic drink
Fresh milk
Milk beverage
UHT milk
2017E
3,525
2%
Milk powder
3%
23%
27%
2010
1,600
0% 4%
19%
7% 8%
1%
12% 16%
Other products 20
0
100
200
300
400
500
600
Comparison of liquid milk expenses per capita (yuan)
0
20
40
60
80
100
120
Comparison of liquid milk consumption per capita (kg/person)
Source: China Dairy Industry Yearbook, USDA, CITIC Securities
21
Source: China Dairy Industry Yearbook, Euromonitor, CITIC Securities
1 Foundation
2 Steps
3 Strengths
4 Breakthroughs
Cross-departmental collaboration
Upgrade and transformation, achieving
balanced development
Strengthen in supply-chain, chilled
products and high-end products
Breakthrough in star products, channel
expansion, milk powder and imported
products
22
Brand
Focused Standards
Establishment
Network
Exploitation
Selling Power
Enhancement
23
跃动真我
Profit Contributor
Brand
Quality
+ Happiness
Opportunity
Brand
Backbone Brand
Star Brand
冰淇淋
Beyond
2013
24
Integration
Production
25
Marketing
Milk Source
奶粉
26
Infant and Adult
Formula
Expansion
Sales Channel
Expansion
Imports
Expansion
27
Comprehensive Quality
Management
Public Relations System
Human Resources Planning
ERP and CRM
Information Management
文化
Culture
系统 System
人 Talent
Sunshine, nobility, responsibility and innovation
Transparent communication and highly effective implementation capability
Capable teams of international professionals
Innovative thinking and practices
SAP information system
Supply chain management
Advanced management procedures and outstanding operational management
Communication
Integration
●
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29
Products of the Best Quality
Most Professional
Most Devoted
Century-old
Mengniu
Thank You!
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Values:Sunshine, Nobility, Responsibility and Integrity