Tue. Oct 4th, 2022
H&H Group delivers first half business growth in 2022 Interim Results led by strong revenue across 3 product segments

  • Group income grew 9.8% on a reported foundation to RMB5,955.4 million within the first half of 2022
  • Adjusted EBITDA declined 1.0% with a secure 17.7% adjusted EBITDA margin
  • Adjusted web revenue declined 26.9% because of greater finance prices from incremental debt stemming from the Group’s Zesty Paws acquisition and web revenue on a reported foundation declined 5.2%
  • The Group efficiently drew down a 3-year time period mortgage facility, refinancing all current mortgage amenities to enhance its capital construction and liquidity place
  • Interim dividend payout ratio of 30% of adjusted web revenue introduced
  • The Group stabilised its market place within the toddler milk formulation enterprise with a 5.7% share, and achieved gross sales turnaround in probiotic dietary supplements, in Child Vitamin & Care (BNC), a phase which contributed the most important portion of the Group’s complete income at 53.4%
  • Grownup Vitamin & Care (ANC) delivered strong income progress of 14.9% on a like-for-like (“LFL”) foundation and Pet Vitamin & Care (PNC), bolstered by final yr’s acquisition of Zesty Paws, noticed 35.4% progress on an LFL foundation as each segments retain momentum in core main markets while increasing into new markets in Asia and the US
  • Income from mainland China returned to a progress pattern, attaining progress of three.4% on an LFL foundation and accounting for 73.8% of complete Group income
  • Income from Australia and New Zealand (ANZ) grew 24.0% year-on-year on an LFL foundation, with strong income progress in all channels
  • The Group made purposeful strides in its sustainability progress, together with sustaining its MSCI ESG Analysis ranking of ‘A’ while shifting nearer to attaining B-Corp certification

International household diet and wellness supplier, Well being and Happiness (H&H) Worldwide Holdings Restricted (“H&H Group” HKSE: 1112), has at this time introduced its interim outcomes for the six months ended 30 June 2022, delivering worthwhile progress for the primary half of the yr.

In the course of the Interim Interval, complete Group income grew 9.8% year-on-year (YoY) on a reported foundation to RMB5,955.4 million while web revenue declined 5.2% on a reported foundation to RMB475.1 million. The Group noticed constructive income progress throughout its two enterprise segments – Grownup Vitamin and Care (“ANC”), and Pet Vitamin and Care (“PNC”) while seeing restoration in some components of the Child Vitamin and Care (“BNC”) phase regardless of going through difficult situations, together with rising inflation, provide chain points, and industrial challenges.

Office image, H&H London

Workplace picture, H&H London

H&H Group’s Chief Government Officer and Government Director, Laetitia Albertini, stated the enterprise was happy to ship constructive outcomes, fostered by a mix of brand name power and product innovation, together with proactive efforts to broaden the Group’s attain to new and current markets.

“These interim outcomes have positioned the Group on a robust trajectory for the rest of 2022. Throughout our three enterprise segments, we’ve constructed momentum that’s paving the way in which to accelerated worthwhile progress regardless of encountering varied challenges and impacts. This speaks volumes to the resiliency of H&H’s manufacturers, our product high quality, and our consumer-led strategy to innovation and advertising inside our product portfolios,” Mrs Albertini stated.

The Group’s BNC phase is recovering, reporting a 3.5% decline, because it continues to grapple with long-term structural challenges it’s going through in mainland China, significantly within the toddler milk formulation (IMF) class. While the IMF class noticed a 3.1% lower YoY, income from probiotic dietary supplements elevated 6.4% to compensate. Regardless of the obstacles the {industry} is grappling with, at 53.4% the BNC phase is the Group’s largest contributor to total income.

“We can not overlook the challenges our BNC phase is encountering in mainland China, from declining beginning charges to rising competitors and rising inflation. These are industry-wide points that we’ve navigated effectively via prioritising a channel enlargement technique, in addition to branding initiatives and targeted funding in shopper schooling. We now have additionally continued to realize market share within the tremendous premium cow milk IMF and goat milk IMF markets, each of which characterize a serious a part of our IMF enterprise. We now have stayed on the forefront of this phase of our enterprise, attentive to altering shopper wants while capitalising on new alternatives for progress,” Mrs Albertini stated.

The ANC enterprise phase noticed its income develop 14.9% on a YoY LFL foundation to make up 34.4% of the Group’s total income in H1. The Group continued its ANC enlargement in Asia – over the previous few years it has entered a number of new markets, together with Hong Kong SAR, Singapore, Malaysia, Thailand, Indonesia, and India, and, most lately, Vietnam. Swisse continues to strengthen its No. 1 place within the magnificence complement model class in Singapore.

In the meantime, the Group has seen main success and robust income progress in its PNC phase, which noticed a 35.4% enhance YoY on a LFL foundation. Pet dietary supplements and diet manufacturers, Strong Gold and Zesty Paws, acquired by the Group in 2021, contributed 12.2% to the Group’s total income as they continued their on-line and offline expansions in each the US and mainland China markets. Zesty Paws maintained its main place in each Amazon and Chewy platforms and has additionally entered Costco on-line shops within the US. Zesty Paws and Strong Gold at the moment are current in additional than 7,744 shops and 4,200 shops respectively throughout the nation, together with main chains, akin to Walmart, Goal, Petco, and PetSmart.

“Between our ANC enlargement into Asia and robust double-digit income progress in PNC, we’re setting the stage for progress with our vary of premium manufacturers. We’re thrilled to see our core markets delivering gratifying gross sales performances while we’re solely at the beginning of our journey of introducing Swisse, Biostime, Zesty Paws, and Strong Gold into burgeoning markets world wide, the place we’re seeing promising progress potential for our manufacturers,” Mrs Albertini stated.

Regional Highlights
Mainland China accounted for 73.8% of complete Group income, led by a 6.5% enhance YoY in gross sales in Biostime branded probiotics, a 12.9% uptick within the ANC phase and a 108.6% enhance within the PNC phase. Within the BNC phase, there has additionally been an rising urge for food in mainland China for goat milk IMF – the Group reported 7.5% progress for this product class in H1.

Mainland China accounted for 61.1% of complete ANC income, pushed by strong regular commerce gross sales within the area. The Group reported web gross sales of RMB167.9 million within the first half of 2022 in its PNC phase. Strong Gold is garnering momentum because it ranked No. 1 within the imported cat meals class on the Tmall platform and No. 2 within the premium cat dry meals class while the model obtained seven new licenses to promote pet meals merchandise on offline channels within the nation to propel its progress to over 5,000 pet shops and hospitals.

“Our H1 outcomes reveal a gradual turnaround for H&H Group in mainland China, the place we continued to ship wholesome income progress in response to shopper demand for high quality merchandise for the entire household regardless of provide chain challenges. It’s on this market that we’ve seen main returns for our strategic efforts in branding initiatives and funding in shopper schooling. We anticipate this payoff will proceed effectively into the remainder of 2022,” Mrs Albertini stated.

Exterior of mainland China, Biostime-branded enterprise continued strong double-digit progress of twenty-two.0% in France because it maintained its No. 1 rating within the natural IMF and goat IMF classes within the pharmacy channel. Biostime, Dodie, and Good Goût have been recognised as ‘Entreprise à Mission’ (purpose-led corporations) in France.

In Australia and New Zealand, the Group achieved a 24.0% on an LFL foundation enhance in income YoY, with the expansion supported by the rising demand for immunity-boosting merchandise and the launch of revolutionary new merchandise, together with Swisse’s Nutra+ vary and Swisse Collagen+ Hyaluronic Acid Tablets.

The US is now our third largest market, attaining 21.9% progress on a LFL foundation for the primary half of the yr. This market, fuelled by Zesty Paws and Strong Gold gross sales, attributed 9.6% of the Group’s complete income.

Outlook for H2
Wanting forward for the rest of the yr, the Group is well-positioned to maintain the expansion momentum it mapped out in H1. To handle rising inflation and provide chain points, the Group has a mixture of proactive initiatives, together with product combine optimisation, rising the value of chosen SKUs, and implementing enhancements in sourcing and spending.

Within the BNC class, the Group plans to shift its BNC phase into constructive progress all year long, with the intention of stabilising its market place within the IMF enterprise in mainland China, and persevering with progress momentum within the probiotic class.

The Group can be projecting strong progress in core markets in its ANC enterprise phase, from e-commerce and offline gross sales in mainland China, paired with regular home market gross sales in ANZ, and strong income progress in its burgeoning markets in Southeast Asia.

The US will proceed to be the most important market with each on-line and offline gross sales within the PNC class, while the Group targets additional progress in mainland China.

“Throughout the Group, we’ve a lot to sit up for in H2 as we keep dedicated to sustaining total income progress for the total monetary yr. The outlook for us is extremely promising – we count on to make strong progress throughout our three enterprise segments as we proceed our mission to make thousands and thousands of individuals and their pets more healthy and happier via our premium diet and private care options,” Mrs Albertini stated.

“Our enlargement into Asia will probably be a key focus for us and, consequently, we’re diversifying into extra channels to additional bolster this progress trajectory in Southeast Asia,” she stated.

As well as, the Group drew down a 3-year time period mortgage facility with an mixture principal quantity of US$1.125 billion in June 2022 to refinance all its current mortgage amenities. This new mortgage facility is a sustainability-linked mortgage with three ESG (Environmental, Social, Governance) targets that can unlock curiosity financial savings when every goal is met. This profitable refinancing association has drastically improved the Group’s capital construction and liquidity place.

Sustainability Progress
The Group maintained its MSCI ESG Analysis ranking of ‘A’ as sustainability touched each facet of the enterprise within the first half of 2022, and throughout the Group’s 4 core sustainability affect areas: ‘Advancing the Story of Good Well being’, ‘Lowering Our Footprint on the Planet’, ‘Honouring Human Rights and Equity’, and ‘Supporting Good Governance’.

“As a enterprise that prioritises sustainability, we’ve made purposeful choices, primarily based on science, to Scale back Our Footprint on the Planet. Our sustainability technique consists of lately finishing our Group-wide world carbon footprint evaluation while we’re taking actionable steps to outline our greenhouse fuel emissions discount targets, following the Science Based mostly Targets initiative (SBTi) framework. We’re additionally targeted on Advancing the Story of Good Well being, via each our product portfolio – launching a powerful 104 new merchandise while successful 23 product awards – in addition to investing in the neighborhood via the H&H Basis. Within the first half of the yr, we donated US$1 million into neighborhood programmes, together with assist to the Pink Cross in response to the Australian flooding disaster. Together with our mission to make folks more healthy and happier is our dedication to a long-term imaginative and prescient for progress that advantages society and the planet,” Mrs Albertini stated.

In one other vital milestone, the Group has developed and accredited company-wide Animal Welfare and Animal Testing insurance policies and established an ESG committee to handle the Group’s sustainability technique and to boost the standard of disclosure.

The Group can be on monitor to attain Group-wide B Corp certification by the top of 2025, which is a serious milestone in its sustainability technique. Groups in Australia, New Zealand and mainland China have submitted their B Corp functions, while the Group’s UK, France and US groups are within the utility course of.

FINANCIAL RESULTS
View the monetary outcomes desk right here: https://www.realwire.com/writeitfiles/H_H_Group-Outcomes.jpg

For media inquiries, contact:
H&H Group
Carmen Chai
carmen.chai@hh.world

H&H Group
Annabel Jenkins
+44 7514535600
annabel.jenkins@hh.world

Suppose Alliance Group
Matthew Schultz
+852 3481 1161
matt.schultz@think-alliance.com

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