Total revenue was pulled down by underperforming categories like paediatric nutrition and infant milk formula.
Total revenue shrunk 6.3 per cent from RMB14bn (US$1.9bn) to RMB13.1bn (US$1.8bn).
The company also recorded a net loss of RMB53m (US$7.4m) for the year, down 109.2 per cent from a profit of RMB581.8m (US$80.2m) from a year ago.
The net loss was contributed by factors such as a 4.6 per cent decline in gross profit to RMB7.9bn (US$1.1bn) and a 29.2 per cent drop in EBITDA to RMB1.4bn (US$193.7m).
H&H Group released its FY24 results yesterday (March 25).
A breakdown showed that sales from its nutritional supplements business grew by 4.9 per cent from RMB8.4bn (US$1.2bn) to RMB8.8bn (US$1.2bn).
The nutritional supplements portfolio is also the company’s largest revenue driver, comprising 67.7 per cent to its total revenue in 2024.
The portfolio has also been growing in revenue. In 2023, it contributed 60.4 per cent to the company’s total revenue.
A decade ago, the portfolio only made up nine per cent of H&H Group’s total revenue.
The acquisition of Australia-origin supplements firm Swisse at a cost of A$1.67bn (US$1.1bn) back in 2015 was a major drive to H&H Group’s supplements business growth over the years.
The continued growth of its supplement business has shown the sector’s resilience over the years, said Nick Mann, Group CEO and CEO of Australia, New Zealand and Asia at H&H Group.
“We are increasingly seeing health and wellness supplements remain a highly resilient sector around the world, withstanding both high and low inflationary conditions and volatile currency environments,” he said.
Ageing populations in developed economies, rising health consciousness, and increasingly well-educated consumers, are also making supplements a core part of consumers daily routines, he said.
”It is a trend that we’ve been tapping into and we are reaping the benefits, as nutritional supplements now represent 67.7 per cent of our Group revenue and over 80 per cent of the Group’s EBITDA, a significant transformation over the last 10 years, when nutritional supplements accounted for only nine per cent of total revenue, reflecting our successful pivot towards higher-margin, structurally growing markets.“
Adult nutrition cushions infant nutrition sales dip
Adult and pet nutrition were the growth drivers for H&H Group’s nutritional supplement business - both of which have cushioned the 32.3 per cent sales drop from its paediatric nutrition business.
A breakdown shows that sales from its vitamins, herbals, minerals and supplements (VHMS) - mostly comprising of adult nutritional products - was up 10.4 per cent from RMB6bn (US$831m) to RMB6.6bn (US$918m).
Paediatric probiotic and nutritional supplements, however, fell 32.3 per cent in sales from RMB1.2bn (US$167m) to RMB821m (US$113.2m).
Infant formula sales also shrunk 24.2 per cent from RMB4.4bn (US$606m) to RMB3.3bn (US$459m).
The reasons for decline include delayed launch of its new product series and a contracting super-premium infant milk formula market.
“Year 2024 was a challenging period for our BNC (baby nutrition and care) segment in mainland China as the transition to the new ‘GB’ series meant depleting our old ‘GB’ IMF products and replacing our Pi-Star flagship series, while the launch of our new Pi-Star sub-series took longer than expected.
“In addition, we faced a contracting super-premium IMF market, although this appeared to stabilise in the final few months of 2024.
“Despite this volatile environment, we remained steadfast in our determination and successfully grew Biostime’s share in this category from 12.4 per cent to 13.3 per cent reaching a peak of 14.5 per cent in December 2024,” said Mann, citing data from Nielsen.
CBEC drives China sales
Mainland China is the company’s largest adult nutrition market, with cross-border e-commerce (CBEC) the main sales channel.
The CBEC channel was said to have expanded by 9.6 per cent last year, contributing to 78.1 per cent of its total revenue in Mainland China.
“Our ANC segment in mainland China continues to perform extremely well which is down to a few factors: strategically aligning with evolving consumer preferences through successful product launches in innovative categories, reinforcing our PPAE (Premium, Proven, Aspirational and Engaging) model and megabrand strategy, and skilfully tapping into the ongoing demand for health supplements,” said Mann.
High adult nutrition series Swisse Plus+ was highlighted for its double-digit contribution to the adult nutrition sales in mainland China.
Some of the notable products are Swisse Liver Cleanse and nicotinamide adenine dinucleotide (NAD+). The series has reported success in mainland China in FY23 as well.
Swisse Me, which features multivitamin and pre-, probiotic gummies, is another line of products for adult nutrition.
Swisse is also said to have maintained high market shares in beauty, liver health, and men’s health in Singapore, and beauty in Italy, H&H Group said, citing IMS IQVIA and GERS respectively.
The company said it would continued to grow its supplements business in developing markets and tap on portfolio premiumisation.