CCM: Condensed Milk Maker Panda Dairy: Net Profit Up by more than 400 percent YoY in 2015

Publish time: 8th June, 2016      Source: CCM
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  On 9 March, Zhejiang Panda Dairy Group Co., Ltd. (Panda Dairy) released its full-year 2015 financial figures with the following highlights:


  Sales: USD55.9 million (RMB366 million), down by 4.3% 

  Net profit: USD11.0 million (RMB72.0 million), up by 448.1%

The company is best known for its sweetened condensed milk and evaporated milk, and also produces sweetened milk sauce (a higher concentrated milk) and small amounts of Mozzarella.

It sells its concentrated milk in two main formats:


  Small packs for retail and foodservice, via distributors throughout the country, organised into 4 sales regions


  Bulk sales to food manufacturers, notably to key accounts which include Unilever, Xiangpiaopiao (local food brand, well known for milk tea) and Danone

It attributes its sharp rise in net profit to:


  Its focus on developing high value-added products in its branded concentrated milk product range and freeing up its dealers to operate more autonomously


  Improved management, which enabled it to make a turnaround from the huge deficit it suffered in 2014


  The continuously decreasing international price of milk powder in 2014-2015. This led to the constant declines in prices of raw milk, benefiting the gross profit margin of its condensed milk business, from 19.2% in 2014 to 36.5% in 2015



Leading role in China's concentrated milk market

In this category there are many brands, however only a few are well recognised nationwide, including Nestle, Panda and Fengxing, with the imported brand Black & White from FrieslandCampina also significant in foodservice. One recent report suggests that Panda's market share has risen in the last few years, as the charts below highlight.

The company seeks to mark itself as different: "We are focusing on the premium segment market, as the leading locally-developed brand. We don't compete with the other smaller low-end brands. Consumers are mainly influenced by the brand when they choose condensed milk.... Even though there are newcomers, it will take a long time for them to establish brand recognition."

According to Panda Dairy's financial report, it made sales of USD51.5 million (RMB337 million) in 2015 from dairy products (mainly concentrated milk, but including a small quantity of cheese). Total local sales of concentrated milk through all channels (foodservice, retail industrial) are estimated at USD275 million (RMB1.8 billion).

Panda Dairy gives its production capacity for dairy products in total at 20,000 t/a. Its principal supply lines comprise:


  Raw milk: Ningxia Panda Dairy Co., Ltd., which purchases raw milk from dairy farmers

  WMP, SMP and whey powder: Sinocean Dairy Commodity Co., Ltd., which imports these via agents

It buys product on Fonterra's GDT auction via Zhejiang Cereals, Oils & Foodstuffs Import & Export Co., Ltd.: in 2015 its purchases from this company reached USD9.2 million (RMB60 million).


                                               Market Shares, Concentrated Milk, China - 2010 vs. 2015



   Note: Panda Dairy = Zhejiang Panda Dairy Group Co., Ltd.
         Fengxing Milk = Guangzhou Fengxing Milk Co., Ltd.
         Dongtai Dairy = Guangdong Dongtai Dairy Products Co., Ltd.
Source: China Fortune Securities


  This article comes from Dairy Products China News 1603, CCM




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  Tag: Dairy   milk