On the evening of March 27, Uni-President released its first results announcement (for 2017) after its 10th listing anniversary. As a special milestone, Uni-President's financial report was impressive, especially the net profit, which showed a net profit of RMB 878 million for 2017, up 44.6% from the previous year. In other aspects, Uni-President's 2017 revenue was RMB 21.296 billion, up 1.5% from the previous year. The gross margin was 33.1%, down 1.3 percentage points from the previous year.

Uni-President analyzed the reasons for the increase and decrease in its 2017 business data in the announcement: Regarding the decline in gross margin, under the pressure of rising raw material costs, the gross margin decreased by 1.3% to 33.1% compared with 2016. As for the increase in net profit, the reason was that management controlled operating expenses appropriately, and the profit attributable to shareholders of the company was RMB 878.2 million, up 44.6% from the same period in 2016.

It is worth mentioning that in the instant noodle sector, compared with Master Kong's growth, Uni-President saw a slight decline of 0.7% from the same period last year, with instant noodle revenue of RMB 8.1626 billion. In the beverage sector, however, there was growth, up 2.3% from the same period last year. The announcement pointed out that this was due to the recovery of growth in "Ah Assam Milk Tea," "Uni-President Green Tea," and "Uni-President Iced Black Tea." Why this increase and decrease?

Instant Noodle Business:

High growth of Tang Daren, is the decline due to mid-to-low-end instant noodles?

In 2017, the Group's instant noodle business revenue was RMB 8,162.6 million. Under the strategy of retaining the strong and eliminating the weak, focusing on promoting upgraded products, "Tang Daren" lived up to its mission and showed high growth, improving the product structure of instant noodles. Thanks to optimized product structure and precise management of marketing expenses, despite the pressure of rising raw material costs, it still improved efficiency, with a profit of RMB 411.8 million, reaching a new record high.

The announcement showed that Tang Daren achieved high growth, while the description of Laotan Sauerkraut Noodles was only about marketing and promotion, without disclosing related performance data. It is speculated that the slight decline of 0.7% in instant noodles may come from mid-to-low-end instant noodles.

Beverage Business:

After years of declining sales, iced black tea and green tea showed impressive growth

In 2017, Uni-President Group's beverage business revenue was RMB 12.465 billion, up 2.3% from the same period last year, with a profit of RMB 1.015 billion.

  • Tea Drinks: In 2017, the tea beverage business revenue was RMB 5.964 billion, up 0.8% from the same period; during the 2017 beverage peak season, "Uni-President Iced Black Tea" and "Uni-President Green Tea" performed impressively, reversing the sluggish sales of the past few years, with both revenues returning to positive growth.

Tea Drinks 2018 Plan: In 2018, the tea beverage business will lay out a new category, "chilled tea," focusing on locking in "freshness" and launching in key cities in East China.

  • Juice: In 2017, the Group's juice business revenue was RMB 2.0389 billion, focusing on key brands and key markets. "Uni-President Duo Juice" focuses on "Uni-President Fresh Orange" and "Hai Zhi Yan" focuses on lemon flavor, to build better revenue and profitability.

Juice 2018 Plan: Gradually launch juice products of different temperature layers and different concentration levels to meet consumers' diverse needs, with a richer juice product portfolio.

  • Milk Tea: In 2017, the Group's milk tea business revenue grew by 19.3%, with a market share of 71.8%, continuing to hold the leading position in the market.

Milk Tea 2018 Plan: Strengthen the brand image of "Ah Assam" milk tea's "good mood."

  • Coffee: In 2017, the Group's coffee business grew by 12.1% from the same period last year, mainly due to the growth driven by "Yaha Iced Coffee."

Coffee 2018 Plan: Focus on promoting "Yaha Iced Coffee."

  • Packaged Water: The Group focuses on the two natural mineral water brands "ALKAQUA" and "Bama Spring," providing consumers with high-quality natural mineral water choices. In 2017, the water business revenue grew by 18.4% from the same period last year.

Packaged Water 2018 Plan: The "ALKAQUA" brand is expected to launch a new 1.5L family pack to tap into the first-tier city market.

Uni-President's Confidence in 2018 Is Not as Strong as in 2017

According to the announcement, Uni-President's expectations for 2018: Raw material prices are full of uncertainty in 2018, which may cause management to face more challenges, and timely adjustment of various operational strategies will test management's ability to respond to industry changes.

The editor specifically looked up the 2016 financial report, where Uni-President's expectations for 2017 were: The Group remains optimistic about development in 2017, with the economy progressing steadily.

Comparing the two, Uni-President's confidence in 2018 is not as strong as in 2017. The rise in raw material prices is not a trivial matter for a giant like Uni-President.

Postscript: As an FMCG company known for product innovation, Uni-President's performance in 2017 cannot be called excellent. The high-frequency new product launches of the previous two years are now unsatisfactory; in 2017, there was more "secondary innovation" on old products. It is worth noting that the significant increase in net profit this time was explained in the announcement as "appropriate management of operating expenses." The editor cannot help but question: Can management's control of operating expenses alone lead to a 44.6% increase? What do you think about this? Feel free to leave us a message, and let's discuss together!

-END-