Company Special: 'Organic growth' makes Yili No 1 for dairy in China

On Friday, Yili officially issued its Financial Statement for 2014, which shows it leads the domestic dairy industry in both revenue and profit. It realized total operating revenue of 54.44 billion yuan ($8.75 billion) and profit of 4.17 billion yuan last year, with the growth rate of its net profit after taxation 71.19 percent year-on-year. Yili's "Organic Growth" model, accompanied by the steady implementation of its "Internet+" and "Industry Chain Finance" strategies, means the company is on course to realize its goal of ranking among the top five companies in the global dairy industry by 2020.

According to the company's financial statement, Yili's price per share has reached a new historical high of 1.35 yuan and its net assets income rate has risen to 23.66 percent. The year 2014 also produced a one-off cash bonus of around 2.4 billion yuan, which brought its shareholders huge returns and made Yili the first 100-billion-yuan dairy company in China. Its ratio of expenses to sales shows a declining tendency.

Securities analysts have pointed out that the rise in returns and investment returns as well as the declining ratio of expenses to sales shows Yili's highly effective cost control capabilities and the high managerial and operating standards of the company.

The Financial Statement also reveals that sales of liquid milk, milk powder, yoghurt and cool drinks have developed in a balanced way, with the sales performance of these products all achieving robust growth. Yili's star products constitute important sources of revenue and net profit growth. According to data from Nelson Statistics, the sales of Yili's Satine Milk have grown by 60 percent, sales of QQ Star Winnie the Pooh Nutritional Juice Yogurt grew by around 150 percent, and sales of Pro-Kido Growing-up Formula Milk, a high-end infancy formula, realized growth of 91 percent. The growth rates in sales of Changqing and Meiyitian, two star yogurt sub-brands, were 113 percent and 90 percent respectively. Zhenxi Ice Cream, launched on the market in January, and walnut dairy products, a newly launched range of plant protein products, have recorded significant sales and have huge potential for future growth. Moreover, the company's e-business has witnessed growth of more than 800 percent. In the Statistics for Sales Results of Chinese Commodities for 2014 released by the China General Commerce Association and the Chinese National Commercial Information Center, Yili ranks No 1 in five markets in China, including the milk powder market, cool drink market, liquid milk market and children's milk market.

Experts for the dairy industry note that Yili's outstanding performance and market occupancy reflects consumers' trust in the company and its industry chain partners and highlights the initial effects of the "organic growth" model for dairy companies pioneered by Yili. This model embodies overall, balanced, sustainable and healthy development by concentrating on profundity, scope, height and precision. Profundity means the company will further intensify its leading advantages in dairy sources and will seek to build the world's leading quality control and food security risk prevention system. Scope means it will complete its international layout and capacity layout so as to realize the integration of its global resources and serve the global market. Height means it will boost its research and development strengths and improve the value of its brands. Precision means continually improving the efficiency of its supply chain and cultivating channels for targeted marketing.

Moreover, these four core competitiveness will be further enhanced as the two strategies of "Internet+" and "Industrial Chain Finance" are implemented.

It is known that Yili has been actively exploring the big data analysis of information provided by its over 5 million sales terminals and 1 billion consumers, in order to sustainably meet the demands of customers, realize precision marketing and optimize its supply chain. Meanwhile, Yili is implementing cross-boundary cooperation with emerging Internet companies, including the three domestic Internet titans Baidu, Alibaba and Tencent, to help realize its long-term progress.

Yili is also cooperating with financial institutions, such as the Bank of China and China Construction Bank, to effectively address the financing demands of companies in its supply chain and realize joint development of its complete industry chain. In the future, Yili aims to provide better and more convenient financial services to companies both upstream and downstream by fully tapping the role of Internet finance, in order to intensify win-win cooperation.

zhuanti@chinadaily.com.cn

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