Financial Services Association, March 28 (Reporter Wu Weiling) After Yili, the majority shareholder, sent a management team to take full charge in September last year, Aoyou (1717.HK) handed over the first annual report since the new team joined. In an environment where the domestic birth rate is declining, Ausu, which is in the infant formula industry, unexpectedly recorded a slight decline in revenue in 2023. However, there is no shortage of bright colors in the annual report. Profits for milk powder have improved, and the overseas market for goat milk powder has increased by more than 40%.

According to the financial report released on the evening of the 27th, Ausu achieved revenue of 7.382 billion yuan in 2023, a decrease of 5.3% compared to 2022; gross profit of 2,853 billion yuan, a decrease of 15.9%; and attributable net profit of 174 million yuan, a decrease of 19.4%.

Regarding changes in performance, Ausu explained that competition within the industry has intensified mainly due to external factors in the decline in domestic birth rates. However, the improvement in Jiabeite's overseas performance and growth in the nutrition segment compensated for some of the decline in performance.

Affected by the continuing decline in the birth rate, China's infant formula industry is under pressure. According to Nielsen IQ data, omni-channel sales of infant formula in China fell 13.9% in 2023. Among them, offline channels fell 17.5%, and online infant formula sales also fell 1%.

It is worth noting that the overseas market of Jiabeite, a subsidiary of Ausu, increased significantly, and revenue improved month-on-month. According to financial data, Jiabeite achieved revenue of 3.283 billion yuan, accounting for 44.5% of the company's total revenue, of which overseas markets achieved revenue of 385 million yuan, an increase of 44.7%. In the second half of 2023, revenue increased by 21.2% month-on-month, and actual retail terminal prices gradually rebounded.

In the nutrition segment, revenue of 285 million yuan was achieved in 2023, an increase of 113.9% over the previous year. The increase was mainly due to the merger of subsidiaries, and the investment ratio gradually increased from 27.5% to 82%. Its probiotic brand, Eisen, ranks first among the brands in terms of purchasing probiotics for children.

Milk powder business performance was under pressure, with annual revenue of 2,562 billion yuan, a year-on-year decrease of 12.4%. Ausu said that the overall market for infant formula has shrunk, mainly due to declining birth rates and reduced demand. In 2023, Ausu further adjusted its milk powder business, and the profitability of the milk powder business improved year-on-year after the adjustment.

Currently, Jiabeite's overseas market and nutritional products division have become the company's focus. According to the company, Jiabeite infant formula goat milk powder (0-12 months) officially passed the US FDA review in July 2023 and went on sale in the US in early 2024; in terms of probiotics, in November of last year, the Jinqi Bioprobiotics Huai'an Gigafactory was officially put into operation. The first phase of the factory project can ferment 8 types and 33 strains of probiotic powder every year. At this point, the company has achieved a full industry chain layout from R&D and production to sales under its own brand.

Looking ahead to 2024, Ausu said that it is expected that the industry volume reduction trend will continue, consumer demand will diversify, and the competitive situation will become more severe. The company plans to achieve continuous high growth in Jiabeite's international business and nutritional products business; continue to expand and strengthen its core business and brand; and at the same time adhere to the internationalization strategy to achieve sales breakthroughs in core markets such as the US and the Middle East.