H&H Group’s 2023 full-year results: Whole-family nutrition and health strategy drives revenue up 9.0% to 13.93 billion

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On March 26, H&H International Holdings Limited (stock code: 1112.HK, hereinafter referred to as “H&H Group”), committed to becoming a global leader in the high-end nutrition and health industry, officially announced its 2023 annual results. .

As of December 31, 2023, the group’s revenue was 13.93 billion yuan, a reported growth of 9.0%. Adjusted EBITDA was 2.22 billion yuan, an increase of 12.4%. Revenue from the Chinese market reached 9.97 billion yuan, a year-on-year increase of 4.0%, accounting for 71.6% of the group’s total revenue, making it the largest contributor to the group’s revenue.

Achieved many landmark achievements around the world, consolidated its leadership position and led the future

Nutritional supplements have become the main engine of growth for the group. Nutritional supplements 1 among the three major businesses has achieved rapid growth of 30.0%, accounting for 60.4% of the group’s total revenue, and continues to drive profit growth and take advantage of market opportunities to improve profitability.

Swisse reaches sales milestone. Global sales have reached more than A$1 billion in the 12 months to June 30, 2023, with sales having tripled since acquiring the brand in 20152.

The three major businesses continued to consolidate their leading positions in core markets. Swisse has consolidated its number one position in China’s online and Australian VHMS markets. Biostime has consolidated its market position in probiotic nutritional supplements and high-end infant milk powder for infants and young children in mainland China. The quality of Zesty Paws and Solid Gold is higher than in China and the United States, ranking among the top categories in online and offline channels.

The Group continues to optimize its capital structure and maintain a solid liquidity position while maintaining a high level of cash conversion for the business. The Group successfully issued its first offshore RMB bond on March 20. It was also the first time that offshore RMB bonds were launched in the Nansha Free Trade Zone and funds were collected in the Nansha Free Trade Zone. This issuance is the group’s debut in the offshore RMB bond market, opening up RMB financing channels for the first time, optimizing the capital structure, and successfully leading industrial issuers to set new benchmarks in the international bond capital market.

ANC: Strong double-digit growth globally, Swisse maintains leading position in China and Australia markets

ANC’s total revenue reached 6.14 billion yuan, a year-on-year increase of 34.1%.

Swisse’s Chinese market achieved strong double-digit growth of 37.4% year-on-year, accounting for 66.0% of the group’s ANC sales. Swisse continues to rank first in the online vitamin, herbal and mineral supplement (VHMS) market in mainland China3. In line with the trend of consumption grading, Swisse Swisse will further target the new needs and scenarios of nutrition and health consumption in 2023, through its high-end pharmacy-grade imported nutrition brand Swisse PLUS+, nutritional food brand Swisse Me, and children’s health products specially created for mature elite groups. The in-demand brand Little Swisse builds the “Swisse 1+3” brand strategic matrix to continue to meet the refined nutritional and health needs of different consumers and help the Swisse brand establish a leading position in innovative categories. In 2023, Swisse PLUS+ Milk Thistle Liver Purifying Tablets maintained its leading position in the high-end thistle category in mainland China, and the Swisse PLUS NAD+ series ranked among the top 4 in the anti-aging category. The Swisse PLUS+ series was launched in 2022 and achieved rapid growth in 2023, and Already recorded double-digit revenue contribution from ANC in Mainland China.

The Australia and New Zealand markets achieved strong double-digit growth of 28.7% year-on-year. With its focus on the local market of Australia and New Zealand, expansion of distribution and continued launch of innovative products such as the Swisse gummy series, Swisse ranks first in the overall vitamin, herbal and mineral supplement market in Australia5, and its market share has further increased.

The results of Swisse’s global expansion are gradually showing, with other markets recording strong double-digit growth. The Italian, Hong Kong and Singapore markets continued to drive performance growth, while emerging markets such as Southeast Asia, India and the Middle East showed strong growth momentum. It ranks first in Singapore’s beauty vitamins, herbal and mineral supplements, liver health and men’s health markets6 and ranks second in Italy’s beauty vitamins, herbal and mineral supplements market7.

BNC: Probiotics and nutritional supplements business grows steadily, upgrading product portfolio to consolidate market position

BNC’s total revenue was 5.91 billion yuan, and its infant probiotics and nutritional supplements business grew 9.1% year-on-year. Consumer demand for nutritional supplements for infants and young children has increased significantly. Biostime has launched innovative products for the infant nutritional supplement market segment, such as lactoferrin + probiotics, DHA algae oil + ARA gel candy, calcium tablets and other nutrients Supplements, accelerate the improvement of the comprehensive nutrition matrix layout for infants and young children, and promote the continued growth of the market share of infant probiotics and nutritional supplements. At the same time, Biostime continues to consolidate its leading position as an infant and child probiotic nutritional supplement brand in mainland China8.

Ultra-high-end infant formula milk powder maintains solid market share and maintains stable profit margins. Although the overall infant formula milk powder industry in China faces systemic challenges, the group continues to increase its investment in nutritional supplements to mitigate the impact of the decline in milk powder, causing BNC to narrow its decline to 11.7%. Biostime has further strengthened its ultra-high-end milk powder category layout. As of December 31, 2023, Biostime’s seven infant milk powder series have successfully passed the “New National Standard” certification of the State Administration for Market Regulation and successfully completed the omni-channel transition. According to Nielsen, an independent research data provider, the retail sales of Biostime’s ultra-high-end infant formula milk powder accounted for 12.4% of the market, and its market share increased, ranking 4th9.

Biostime consolidates its leading position in the French market and further expands its share of French pharmacy channels. Biostime strengthens the international layout of its infant formula business and launches a new generation of infant formula products in France – the “Inostime” series of infant formula containing lactoponin LPN and breast milk oligosaccharide HMO. During the reporting period, Biostime continued to rank first in the organic infant formula milk powder category and goat milk market category in French pharmacy channels, with market shares of 41.6% and 41.9% respectively10.

PNC: Double-digit growth in the global market, omni-channel layout boosts steady increase in share

PNC’s total revenue reached 1.87 billion yuan, a year-on-year increase of 18.2%. Currently, the number of pets in the world is increasing day by day, the high-end pet nutrition supplements and the humanization of pets are on the rise, and the Chinese pet market is in a period of rapid development with the pet ownership rate and pet nutrition consumption upgrading. PNC’s sales in China increased by 20.8% year-on-year. PNC has further strengthened its communication with consumers in both online and offline markets. Solid Gold ranks second in China’s online high-end cat dry food category11.

In the North American market, PNC business revenue achieved strong year-on-year growth of 17.2%. Zesty Paws has further improved its online and offline omni-channel layout, rapidly expanded its distribution network, and entered well-known retailers and independent pet stores such as Walmart, Target, PetSmart, CVS, and Tractor Supply to increase its retail penetration and expand its consumer base. , continues to rank first on Amazon, and within a short period of time, it successfully ranked first in Walmart’s offline pet supplement category12. With a complete omni-channel strategy, Zesty Paws’ offline retail sales have maintained considerable growth, ranking fourth in this channel with a market share of 10.0%13. In 2023, Solid Gold will leverage the synergy of the merger of PNC’s business As a result, the company launched innovative products in the U.S. market and entered Walmart channels, making steady progress in North America and completing the transition to the Amazon online mall model for the first time.

Fulfill the commitment to sustainable development and move towards the goal of B Corp certification

Since its birth, H&H Group has insisted on being a responsible enterprise, delivering a low-carbon, environmentally friendly, healthy and happy lifestyle, and actively responding to the group’s four core sustainable development impact areas – “increasing health awareness”, “reducing environmental footprint”, ” Support equitable development” and “improving corporate governance”.

In December 2023, the group officially obtained B Corp certification in Mainland China, Australia and New Zealand, the United States, the United Kingdom and France, pushing the group towards the goal of fully obtaining B Corp certification in 2025.

The group’s overall performance has been recognized by external independent evaluation agencies. In 2023, it continued to receive an environmental, social and governance “A” rating from Morgan Stanley Capital International (“MSCI”), which was upgraded to “A” in February 2024. “AA” rating; in September 2023, the Hong Kong Quality Assurance Agency raised the sustainability rating of H&H Group from “A” to “A+”.

Full-year outlook: Consolidate the nutrition and health strategy for the whole family and strengthen the layout of nutritional supplement categories

In terms of ANC, the Chinese mainland market remains the focus of the growth strategy and the main driving force for growth. Swisse will continue to grasp the market demand in mainland China and strengthen the “1+3” brand strategic model of Swisse, Swisse PLUS+, Swisse Me and Little Swisse. , more accurately grasp the needs of different customer groups for high-quality nutritional supplements and promote further growth. In the Australian and New Zealand markets, we will further consolidate our leading position, steadily increase channel sales, promote the growth of core categories such as immunity, beauty and nutrition, and expand market share.

In terms of BNC, the Group will continue to expand its market share in categories such as DHA, calcium tablets, gummies and functional innovative probiotic products in mainland China, further enhance the performance of its probiotics and nutritional supplements business, and maintain the leading position of Biobiotics probiotics in the mainland China market. Brand status. In addition, the birth rate of infants and young children in China is expected to stabilize, and the group will stabilize the income level of its infant formula milk powder business through the competitive “new national standard” ultra-high-end product series.

For PNC, Zesty Paws will continue to develop its omni-channel strategy, maintain its leading position in the US market, and explore new market opportunities. In addition, Solid Gold will introduce new products, increase nutritional supplement categories in the Chinese market, enrich its product portfolio, and promote business development; it will further improve Solid Gold’s product supply layout in the Chinese and American markets.

Looking forward to the future, Mr. Akash Bedi, CEO of H&H Group and CEO of North America, Europe, the Middle East and India, said: “The group will continue to deepen the nutrition and health layout of the whole family, delve deeply into China, look globally, and fully realize the potential of the nutritional supplement category. Expand the nutritional supplement category layout of the three business pillars of adult nutrition and care products, infant nutrition and care products, and pet nutrition and care products to support sustainable growth, realize the group’s vision, and become a global leader in high-end nutrition and health industry The goal keeps moving forward.”

1Nutritional supplements include Swisse vitamin, herbal and mineral supplement products, Biostime probiotic supplements, Biostime infant and toddler products, and Solid Gold and Zesty Paws pet supplements.

2Swisse Global’s net revenue growth from the twelve months ended June 30, 2015 (prior to the acquisition by H&H) to the twelve months ended December 31, 2022 .

3According to research statistics from independent data provider Early Data, in the twelve months ended December 31, 2023, Swisse ranked first in China’s online vitamin, herbal and mineral supplement market, with a market share of 8%, compared with 7.6% for the twelve months ended December 31, 2022.

4 According to research statistics from independent research company Early Data, market share data for the past twelve months as of December 31, 2023.

5 According to research statistics from independent research company IQVIA, market share data in 2023 based on total market unit sales.

6 According to research statistics from independent research company Nielsen, market share data for the past twelve months as of December 31, 2023.

7 Market share data for the past twelve months as of December 31, 2023, according to research statistics from independent research company IMS IQVIA.

8 According to research statistics from independent research company Kantar Consumer Panel, market share data for the past twelve months as of December 31, 2023.

9 According to research statistics from independent research company Nielsen, market share data for the past twelve months as of December 31, 2023.

10 According to research statistics from independent research company GERS, market share data for the past twelve months as of December 31, 2023.

11 According to research statistics from independent research company SmartPath, market share data for the past twelve months as of December 31, 2023.

12Based on Nielsen data, MAT 30 Dec 2023

13Based on research statistics from independent research firm NielsenIQ Byzzer, market share data for the 52 weeks ended December 30, 2023.

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