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A603.1 Yizi International’s second quarter performance reappeared strong strength, and various business data exceeded expectations.
On July 26, Eastern time, Yizi International released its financial results for the second quarter and the first half of 2022. According to the financial report data, Yizi international achieved a net income of US $7.274 billion in the second quarter, an increase of 9.5% year-on-year, mainly due to its 13.1% organic net income growth. Among them, the net income of emerging markets increased by 22.4%, and that of developed markets increased by 3.7%. Pricing and sales volume have greatly promoted the growth of organic net income.
According to the official financial report, the gross profit of Yizi international increased by US $10million in the second quarter, but the gross profit margin decreased by 330 basis points to 36.3%, which was mainly caused by the decline of adjusted gross profit margin and the decline of derivatives’ market value earnings. The operating revenue increased by US $55million and the operating profit margin was 12.7%, a year-on-year decrease of 40 basis points, mainly due to the decline in derivatives’ market value earnings, the decline in adjusted operating profit margin and the rise in acquisition and integration costs.
Detailed financial report of Yizi in the second quarter
Luca zaramella, executive vice president and chief financial officer of Yizi international, said in a conference call on July 26: “our second quarter results showed strong strength again, and the results of all business data exceeded expectations. We achieved a positive revenue growth of 19%, of which the sales volume portfolio contributed 5 percentage points. This shows that our long-term strategy of supporting the brand and our investment in capabilities are returning.”
Image source: newton.com.tw
Thanks to the orderly business management in Europe and the strong growth of local food retail business, Yizi’s European market increased by 10.8% in the second quarter; Affected by the double-digit growth of chewing gum and candy businesses and the rise in biscuit prices, Yizi’s North American market increased by 9.2%. Although other investments increased by 6.3%, due to supply chain problems, the sales portfolio of the North American market fell by 1%.
AMEA market (Asia, Middle East and Africa) increased by 13.2% in this quarter, and the sales portfolio increased strongly by 8.7 percentage points, showing a good momentum. Driven by the chocolate and biscuit business, the Indian market increased by nearly 30% in this quarter. In addition, the Chinese and Southeast Asian markets have also achieved single digit growth.
The Latin American market increased by 33% and achieved double-digit sales portfolio growth. It can be seen that the overall strength of the Latin American market is relatively strong, and the business of the whole line has shown a slight growth. The CFO said that these increases were related to the effective pricing measures driven by sales volume.
According to the specific business
Yizi’s chocolate and biscuit businesses have shown sustained strong growth. Among them, the biscuit business achieved a revenue growth of 10.4% in this quarter, of which nearly 2 percentage points came from the sales mix; The chocolate business grew by more than 30%, with sales increasing by 9% in both developed countries and emerging markets. In addition, Yizi’s gum and candy business is also growing. Products that have achieved strong growth include Oreo, chips ahoy and redbus.
In terms of cash flow and return on capital
At a fixed exchange rate, Yizi’s earnings per share increased by 9.1% in the second quarter. This high-quality growth is mainly driven by operating income related to revenue.
Thanks to strong growth and profitability, Yizi achieved $1.6 billion in free cash flow in the first half of the year, and returned $2.5 billion to shareholders in the form of dividends and share repurchases. In addition, Yizi’s quarterly cash dividend also increased by 10%, and now the quarterly cash dividend per class a common share is $0.385. In the past three years, the dividends of Yizi have increased by more than 35%.
Continuously optimize the investment portfolio
It can be seen that in order to better optimize its investment portfolio, Yizi has made continuous acquisitions / mergers in recent years.
On June 21, Yizi acquired Clif Bar & company, an American manufacturer of organic nutrition energy rods, with a huge amount of US $2.9 billion (equivalent to about 19.5 billion yuan). Through this acquisition, Yizi not only pocketed many “trend brands” in the U.S. market, including Clif, Luna and Clif kid, but also expanded Yizi’s global snack bar business to more than $1billion.
Dirk Van de put, chairman and CEO of Yizi, attaches great importance to this acquisition. He said that Clif’s corporate purpose and culture are highly consistent with Yizi. Yizi hopes to jointly increase the sales share of the two companies through cooperation with Clif’s team.
“With the acquisition of Clif, we have announced the plan to divest our gum & halls business in developed markets, enabling us to focus on our portfolio and further invest in the faster growing chocolate and biscuit business. We believe that Yizi’s brand strength, mature strategy and increasing investment can enable us to achieve attractive and sustainable growth for the rest of 2022 and beyond.” The CEO said in a conference call.
But in fact, Clif is only the latest example of Yizi’s efforts to reshape and optimize its portfolio through strategic m&a. Since the new growth strategy was announced in 2018, Yizi has successively completed nine acquisitions in these years. These acquisitions not only strengthened and supplemented Yizi’s product portfolio, but also filled some of its possible weaknesses, created more than $2.8 billion in annual revenue for Yizi, and achieved a high single digit average growth rate.
Taking this year as an example, in 2022, in addition to announcing the collaboration with Clif, Yizi also completed the acquisition of chipita, a European croissant and bakery snack brand, and ricolino, a confectionery company under the binburg group in Mexico. “Implementing a strong patient strategy based on all our product portfolio algorithms allows us to drive sustained growth.”
Mr. Dirk Van de put, chairman and CEO of Yizi International
In terms of financial reports, Yizi international performed quite well in the first half of the year, with sales continuing to grow, especially the chocolate and biscuit business showing a strong development prospect. To this end, Yizi has raised its annual organic net income growth forecast to 8%. It is not difficult to see that Yizi is ready for the company’s sustainable profit growth in the future.
In response, Dirk Van de put, CEO of Yizi, said that in the future, Yizi will meet and cope with the changing operating environment through flexible pricing and cost control to offset the impact of inflation. At the same time, he also believes that relying on the company’s sustained and stable performance is enough to help the company achieve a virtuous cycle, obtain strong net income and gross profit, and help the company conduct further brand investment, distribution and acquisition in the future.
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