Baby Nutrition & Care business saw strong recovery in the third quarter and the Group saw positive growth in mainland China, Australia & New Zealand and North America markets
Wednesday, 16 November 2022. Leading global health and wellness company H&H Group has announced its unaudited operational statistics for the nine months ending 30 September 2022. The Group reported a positive overall result with its total revenue increasing by 13.4% year-on-year on a reported basis (7.8% on a like-for-like (LFL) basis[1]) to RMB9,184.4 million. This was thanks to a strong third quarter boosted by the healthy growth of its Adult Nutrition & Care (ANC) segment in mainland China and Australia & New Zealand, and the strong growth momentum of its Pet Nutrition & Care (PNC) segment. In addition, H&H is pleased to announce its Baby Nutrition & Care (BNC) segment has returned to growth in the third quarter of 2022.
H&H Group
Akash Bedi, Chief Strategy & Operations Officer at H&H Group and Interim CEO, says it is very promising to see the Group’s BNC segment return to growth and is particularly proud of impressive product innovations across all markets, as well as recent achievements in the Group’s sustainability journey.
“I’m pleased to share that H&H has reported 13.4% total revenue growth on a reported basis for the nine months ending 30 September 2022, boosted by a strong third quarter for the Group. Following a difficult period of COVID-related supply chain challenges and market pressures across the BNC category, our BNC business has returned to positive growth in the third quarter. In keeping with this positive story, our ANC segment in mainland China and Australia & New Zealand continued its growth momentum thanks to innovative new product developments such as Swisse Plus and successful integrated marketing strategies focusing on increasing Swisse brand presence. The Group was also bolstered by positive results from North America, now our third largest market and a major source of revenue.”
Mr Bedi adds, “I’m also proud of the immense progress we’ve made in our sustainability commitments over the past three months. We’ve successfully maintained our A Rating for Hong Kong Quality Assurance Agency (HKQAA), submitted our B Corp BIA in France moving us another step closer to achieving Group-wide B Corp certification, and joined the Ellen MacArthur Foundation Community – one of the most recognised charities working to transition to a circular economy. Earlier this year, we also established the Environmental, Social and Governance Committee of the Board of Directors to lead on the Group’s sustainability strategy. In addition, H&H has progressed its Diversity, Equity & Inclusion (DE&I) strategy, a key area for the business, by developing a Global DE&I statement. In mainland China, we won the Green Sustainability Development Contribution award at the 2002 International Green Zero-carbon Festival in Beijing in recognition of our ESG commitments and developments.
“These results position the Group on a strong trajectory as we head into the final quarter of 2022, and we expect to deliver top-line growth for the full year compared to 2021.”
In mainland China, the BNC business has seen a positive sales turnaround and has returned to growth in the third quarter, thanks to a turnaround in probiotic sales and a narrowing sales decline in the infant milk formula (IMF) business. In the twelve months ended 30 September 2022, market share of the overall IMF market and goat milk IMF market were 5.6%[2] and 4.2%[3], respectively, with high single-digit growth in Biostime’s super premium series. This was thanks to efforts to strengthen brand awareness and rapidly expand reach in lower-tier cities through the Group’s channel expansion strategy, as well as from branding initiatives and focused investments in consumer education. The Swisse brand saw double-digit growth (22.8% on a LFL basis) thanks to a successful omni-channel sales and marketing strategy and focus on enhancing its brand presence, as well as robust consumer demand for beauty products, multivitamins and immune support supplements. Swisse also maintained its number one position online in the vitamin, herbal and mineral supplements (VHMS) market with a market share of 7.2%[4]. Other key highlights include the launch of Swisse Plus in September 2022, bringing effective health and wellness solutions to a higher-end Chinese consumer. This year’s 618 shopping festival, the second largest in China (after Singles Day), was also a huge success and contributed to this double-digit growth. The Pet Nutrition & Care (PNC) segment focused on expanding its online and offline presence and recorded robust growth of 52.3% on a LFL basis in the nine months under review, led by Solid Gold, leveraging increased pet adoption rates and growing consumer spend on premium pet nutrition. However, in the third quarter, supply chain challenges in North America impacted the availability of some Solid Gold products, a situation that is expected to stabilise in early 2023.
In Australia & New Zealand, the Group has maintained strong sales momentum in both domestic and corporate daigou channels, with an uplift of 20.6% on a LFL basis (for the nine-month period). In the twelve months ended 30 September 2022, Swisse maintained its overall share of the Australian VHMS market at 12.2%[5] and achieved the number one new product in the VHMS market with the new Swisse Beauty Collagen + Hyaluronic Acid (based on LTM). The BNC segment saw the launch of Biostime Liquid ‘Ready to Feed’ in five maternity hospitals, the first brand in over 30 years to enter this channel in Australia. In more positive news, the Biostime Human Milk Oligosaccharides (HMOs) product range won ‘Infant and Child Nutrition Initiative of the Year’ at the NutraIngredients-Asia Awards 2022, in recognition for significantly improving infant and child nutrition.
For North America, now H&H Group’s third largest market and a major source of revenue, it was another positive result with a 20.2% increase in total revenue year-on-year (on a LFL basis) for the nine months ended 30 September 2022, despite overall growth in the third quarter as impacted by the transition of Solid Gold’s business on Amazon from a wholesale model to a marketplace model. This was offset by a particularly strong third quarter for Zesty Paws, which saw a record month on Amazon in July with over 35,000 new customers coming to the brand over the two-day Prime event in July 2022. In addition, Zesty Paws was selected as part of Newsweek’s list of ‘America’s Best Petcare Brands 2022’ in the Digestive Support for Dogs category. Offline market presence grew to more than 7,700 stores and 3,800 stores for Zesty Paws and Solid Gold, respectively, including major chains such as Walmart, Target, Petco and PetSmart, which is creating stronger channel synergies and brand awareness that will propel future growth. Innovation was front of mind for the third quarter too with the launch of new innovative products including functional cat bites with CBD and functional dental products for dogs. It was a similar story for Solid Gold, which launched a new calming supplement chews powered by proprietary Bioboost™ and won a Pet Innovation Award for Dog Food Product of the Year 2022 for its Nutrientboost™ product.
In other territories, H&H Group saw great success in Asia, with Zesty Paws being the first pet supplement brand to operate a flagship store on Hong Kong SAR’s leading e-commerce platform, HKTVmall. In the third quarter, Swisse extended its number one beauty supplement brand status in the Singapore market[6] and saw steady growth in Vietnam (a market newly entered this year). In France, Biostime grew by strong double digits in the nine months under review while maintaining its number one and number two position in the organic cow and organic goat infant milk formula categories, respectively, within the French pharmacy channel. Total revenue contributed by other territories declined by 10.2% on a LFL basis in the nine months under review, mainly attributed to strategic refocusing and restructuring, particularly in Europe, in order to improve profitability.
Looking ahead to the rest of the year and into 2023, H&H is pleased to share that it expects to deliver expanded top-line growth for the full 2022 Financial Year compared to the 2021 Financial Year, with its ANC and PNC segments continuing their growth momentum and BNC segment further stabilising. With the Group anticipating market challenges associated with rising inflation and supply chain disruptions, it is proactively looking at solutions including product and channel mix optimization, increasing the price of selected SKUs, as well as through spending efficiency improvements and alternative sourcing across our business. The BNC segment will remain a priority area for the Group in striving to maintain the current growth momentum while looking to expand Zesty Paws and Solid Gold in mainland China. H&H also aims to achieve a healthy debt level in the coming three years while maintaining a consistent dividend payout ratio of 30% of adjusted net profit to reward its shareholders.
Revenue by product segment and geography (unaudited)
The unaudited consolidated revenue of the Company by product segment and geography for the nine months and for the three months ended 30 September 2022, and the comparative figures for the same periods ended 30 September 2021 is as follows:
View the financial results table here: https://rlw.co/dl4
[1] Like-for-like (“LFL”) basis is used to indicate change of this period compared with same period of previous year, excluding the impact from acquisitions and foreign exchange changes.
[2] According to Nielsen, an independent research company, the share of Biostime in the overall IMF market in mainland China was 5.6% for the twelve months ended 30 September 2022 as compared with a market share of 5.9% for the twelve months ended 30 September 2021.
[3] According to Nielsen, an independent research company, the share of Biostime in the overall goat milk IMF market in mainland China was 4.2% for the twelve months ended 30 September 2022, which improved from a market share of 4.1% for the twelve months ended 30 September 2021.
[4] According to research statistics by Earlydata, an independent data provider, Swisse ranked first in the China online supplement market with a market share of 7.2% for the twelve months ended 30 September 2022, compared with 6.3% for the twelve months ended 30 September 2021, which is different from the data of 5.8% published by the Group in its Unaudited Operational Statistics for the Nine Months Ended 30 September 2021 due to statistics adjustments including data from VIP.com.
[5] According to research statistics by IQVIA, the share of Swisse Wellness Group Pty Ltd in the overall Australian VHMS market was 12.2% for the twelve months ended 30 September 2022 as compared with 12.2% for the twelve months ended 30 September 2021.
[6] No.1 position with value share of 13% for the twelve months ended 30 September 2022 according to Nielsen.
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About H&H Group
H&H Group is a global health and nutrition company. Dynamic, courageous and ambitious in its mission to make people healthier and happier, the Group strives to inspire wellness while contributing positively to the needs of society and the planet. The Group has three business segments – Baby, Adult and Pet Nutrition and Care – supporting whole-family health and happiness, with premium brands providing nutrition and wellness solutions backed by science. Consumer brands include Biostime, Swisse, Zesty Paws, Solid Gold Pet, Dodie, Good Goût, Aurelia London and CBII. The Group is headquartered in Hong Kong SAR and listed on the Hong Kong Stock Exchange (“H&H INTL HLDG” stock code 1112), with a second head office in London. H&H operates in 18 countries and has more than 3,300 team members. www.hh.global/#/Home
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