On March 1, GLONGHUI | Youran Animal Husbandry (09858.HK) announced that in 2023, the company expects to record (i) losses attributable to company owners of approximately RMB 1,030 million to RMB 1,070 million (profit attributable to company owners of RMB 415 million for the year ended December 31, 2022); and (ii) cash EBITDA of approximately RMB 3,832 million to RMB 3,872 million (2022: RMB 3,591 million), an increase of approximately 6.7% to 7.8 million yuan over 2022 %.
The main reason for the expected loss: 1. Changes in the fair value of the Group's biological assets in 2023 will be expected to generate losses of about RMB 3,593 million to RMB 3,633 million (2022: loss of RMB 1,617 million), mainly due to factors such as the decline in the sales price of raw milk in 2023 and the decline in the beef and breeding cow market prices. 2. The gross margin of the Group's raw milk business in 2023 was about 28.6%, down about 2.8 percentage points from 31.4% in 2022. The main reason for the decline in the gross margin of raw milk is that the price of raw milk declined due to the phased imbalance between supply and demand of raw milk. The Group's average sales price for a single kilogram of raw milk in 2023 fell by about 6.0% compared to 2022. The increase in gross profit brought about by the Group's increase in raw milk sales in 2023 compared to 2022 did not fully offset the impact of the decline in gross margin on profits.
Facing the economic environment and industry challenges, the Group continued to optimize its herd structure in 2023 and explore business potential through implementing measures such as technological empowerment, business innovation and lean management. On December 31, 2023, the number of dairy cows kept in the Group was about 583,000, accounting for about 48.8% of adult cows, an increase of 2.4 percentage points; in 2023, the annual yield of adult cows in the Group (excluding Secco Star) was about 12.3 tons, an increase of about 5.1% over 2022; the feed business implemented product upgrades and structural optimization, and gross margin increased steadily compared to 2022, and took the lead in establishing county service centers in the industry at the end of 2023 to promote link nodes and solve last-mile industry pain problems; breeding business China has cultivated the No. 1 dairy cow in the genome registered by the American Animal Breeding Association, and its competitive strength in the market has been further strengthened.