H&H announces Q3 2024 Results

Media release – 2024 Q3 Results

Tuesday 19th November 2024. Leading global family nutrition company, Health and Happiness (H&H) International Holdings Limited ("H&H Group" HKSE: 1112), has today announced its operational results for the nine months ending 30 September 2024. The Group reported a single-digit revenue decline of 6.1% on a reported basis (6.4% on a like-for-like (LFL) basis) to RMB 9,647.6 million, mainly due to a decline in infant milk formula (IMF) sales in mainland China which saw ongoing industry challenges in the super-premium IMF segment and the required time to complete the entire transition cycle for its new 'GB' series. Nonetheless, H&H achieved healthy growth across its Adult and Pet Nutrition & Care segments and further growth in the nutritional supplements category[^1].


Nick Mann, Group CEO and CEO for Asia, Australia and New Zealand at H&H Group, says that while it has been a challenging period, the Group remains steadfast in its strategic focus to deliver healthy growth levels and market share gains.


"During the first nine months of the year we've navigated persistent challenges across mainland China's super-premium IMF segment, leading to a decline in our Baby Nutrition and Care (BNC) segment (25.3%), and ultimately a decline in Group revenue. Despite this, it's very promising that we've maintained our no.3 position in the super-premium IMF category in mainland China, with our market share growing from 11.8% to 13.1%[^2], and reaching 14.0% in September 2024[^3]."


"Our largest segment, Adult Nutrition and Care (ANC) grew 8.2% on a reported basis, fuelled by solid performances in our key markets of mainland China and Australia & New Zealand, where we solidified our leading market positions, as well as achieving notable success in our expansion markets. Equally, our Pet Nutrition and Care (PNC) segment saw a steady increase in sales (5.4% on a reported basis), with the growth of Zesty Paws remaining on track at the double-digit level after performing well in its home market of North America, while working to establish its presence in the UK, Europe and Asia. Meanwhile, Solid Gold continues to make progress with its channel optimisation and portfolio premiumisation initiatives. Most notably, high-margin nutritional supplements now make up 68.2% of Group revenue, expanding by 4.2% on a reported basis. This category remains a strategic priority and key growth driver for the Group."


"As a purpose-driven business, we are particularly proud of the substantial progress we've made in our sustainability journey. In November 2024, we received B Corp certification and completed a new USD 540 million sustainability-linked term loan drawdown in the same month, and fully prepaid the term loan due in June 2025, marking the completion of our major refinancing initiatives for 2024. With all global entities now B Corp certified one year ahead of schedule, this milestone marks a significant step forward in our commitment to positive social and environmental impact, using business as a force for good. These achievements reflect our commitment to responsible business practices and dedication to drive progress across our value chain, benefiting people, pets and the planet."


The Group maintained a healthy level of liquidity with a cash balance of RMB1.86 billion, following the successful completion of major refinancing exercises planned for 2024.


Mainland China remains H&H's largest market, making up 65.9% of total Group revenue. Overall revenue declined by 12.5% decrease year-on-year in the first nine months of 2024, led by a double-digit revenue decline in the BNC segment and 10.9% decline in the PNC segment. This was partially offset by the ANC segment reporting 6.7% growth, with mainland China contributing a significant 64.2% of total Group ANC sales.


Mr Mann notes, "Growth of our ANC segment in mainland China remains on track, led by the continued strong growth of innovative categories such as the Swisse Plus+ range, which made a double-digit contribution to total ANC revenue in mainland China. Cross-border e-commerce sales played a pivotal role in this momentum, generating 76.9% of mainland China ANC revenue and growing by 7.8%. Our focused mega-brand strategy continues to deliver results, effectively targeting growing consumer segments through product innovation and strategic marketing, driving Swisse to remain the no.1 brand in the mainland China online VHMS market[^4] and no.2 in the overall VHMS market[^5]."


"Our IMF business in mainland China faced challenges in the super-premium segment, resulting in a 24.3% decline in sales," continues Mr Mann. "This decline reflected both a 23.0% contraction in the overall super-premium IMF segment[^6] and the time required for us to complete the new 'GB' transition cycle. As part of this transition, we have depleted old 'GB' products, replaced our Pi-Star Flagship series, introduced our new Pi-Star series and increased our efforts to acquire a new customer base. Notably, we're seeing other positive trends, including the market share of our Pi-Star Family rebounding to 4.3% in the baby specialty store channel[^7] in September, as well as Biostime acquiring new customers, expanding its brand awareness and receiving a higher volume of search terms across key platforms, paving the way for future success."


Sales of high-margin paediatric probiotic and nutritional supplements declined by 32.4% due to a high base in 2023 and continued lower traffic and sector-wide challenges across the supplements business within the pharmacy channel, primarily driven by a 38.4% decrease in paediatric probiotics. While Biostime maintained its leading position in paediatric probiotics in mainland China, paediatric nutritional supplements continued to achieve strong growth, increasing 104.5% over nine months and now representing 12.8% of total paediatric probiotic and nutritional supplements sales.


PNC sales in mainland China declined by 10.9% as we implemented brand premiumisation and restructured the Solid Gold business. Despite this, Solid Gold maintained its leading position in mainland China's online premium cat dry food category. The restructuring is showing progressive results, with new high-margin pet food and supplements products now contributing 13.1% of total PNC revenue in mainland China.


Mr Mann adds, "I'm very pleased to share our success at the recent Double 11 sales event, the biggest online shopping festival in China, reaffirming our effective e-commerce strategy and the strength of our core brands. Swisse achieved robust GMV growth and secured the No. 1 position in the nutritional supplements category across major e-commerce platforms, including Tmall, JD.com, Douyin, and Vipshop[^8], while Biostime saw positive GMV growth across IMF and probiotics."


Mr Mann goes on to comment, "Across our Australia and New Zealand market, we are very proud of the considerable progress we've made over the past nine months, resulting in 10.2% growth. We've maintained our leading no.1 position in the overall Australian VHMS market[^9] thanks to our continued strategic focus on the domestic market, and innovative product portfolio led by ranges such as Swisse Gummies which holds no.2 market share at 15.8%[^10]. We've also been recognised as the Fourth Great Place To Work® in Australia for 2024, underscoring our commitment to cultivating an empowering and inspiring workplace."


In North America, revenue expanded by 6.3%, with Zesty Paws sales growing 10.6%, thanks to continued growth across Amazon and key retailers, maintaining its position as one of the most recognised pet supplements brands in the US. Solid Gold saw a slight decrease in sales (6.7%) as a result of ongoing channel optimisation and portfolio premiumisation efforts, aimed at driving long term profitability.


Across the Group's other territories (7.4% overall growth), where revenue from Asian markets expanded by 29.5%, there was strong growth momentum in H&H's expansion markets including Hong Kong SAR, Thailand, India, Malaysia and Middle East, reinforcing the importance of these markets in the global expansion of the business.


Mr Mann concludes, "For the 2024 full year outlook, we expect our ANC segment to maintain its healthy and sustainable growth trajectory in mainland China, retaining our no.1 position online and gaining further market share in overall market in mainland China. In Australia & New Zealand, we anticipate a steady growth as we focus on cementing our leading position through our innovative new first-to-market Nootropics range for cognitive health, and Smart Melts range offering a new dissolvable format, while strengthening our leadership in the Sleep category with a second year of our award-winning "Go the Swisse to Sleep" marketing campaign."


"We anticipate our BNC business to remain under pressure, predominantly across the IMF and paediatric probiotics business. As the decline in the overall super-premium IMF segment in mainland China is expected to narrow slowly, we are focused on acquiring new consumers and expanding channel distribution. Our PNC business is on track, led by Zesty Paws and its international expansion, while Solid Gold's restructuring and premiumisation efforts continuing to impact the brand in the short term."


Revenue by product segment and geography (unaudited)

All financial data are unaudited and recorded in RMB million

Revenue by product segment

	Nine months 2024	Nine months 2023	Reported Change	LFL Change[^11]	Three months 2024	Three months 2023	Reported Change	LFL Change
Nutritional Supplements	6,574.9	6,306.9	4.2%	3.8%	2,149.7	2,114.6	1.7%	1.0%
- VHMS Products	4,955.8	4,520.3	9.6%	9.4%	1,697.6	1,643.6	3.3%	3.0%
- Paediatric probiotic and nutritional supplements	622.5	912.9	-31.8%	-31.8%	114.0	169.4	-32.7%	-32.7%
- Pet supplements	996.6	873.7	14.1%	12.6%	338.1	301.6	12.1%	13.0%
Infant Formulas	2,402.3	3,144.6	-23.6%	-23.6%	603.9	930.9	-35.1%	-35.1%
Others[^12]	670.4	826.9	-18.9%	-19.3%	201.9	252.0	-19.9%	-19.5%

Revenue by business segment

	Nine months 2024	Nine months 2023	Reported Change	LFL Change	Three months 2024	Three months 2023	Reported Change	LFL Change
Adult nutrition and care products	4,983.3	4,606.5	8.2%	7.9%	1,707.7	1,668.3	2.4%	2.0%
Baby nutrition and care products	3,203.4	4,286.5	-25.3%	-25.3%	771.9	1,170.5	-34.1%	-34.1%
Pet nutrition and care products	1,460.9	1,385.4	5.4%	4.3%	475.9	458.7	3.7%	4.5%

Revenue by geography

	Nine months 2024	Nine months 2023	Reported Change	LFL Change	Three months 2024	Three months 2023	Reported Change	LFL Change
Mainland China	6,362.3	7,271.2	-12.5%	-12.5%	1,820.9	2,195.0	-17.0%	-17.0%
ANZ	1,527.9	1,376.0	11.0%	10.2%	552.0	546.4	1.0%	0.0%
North America	1,211.8	1,125.1	7.7%	6.3%	396.0	388.6	1.9%	2.8%
Other Territories	545.6	506.1	7.8%	7.4%	186.6	167.5	11.4%	10.9%

Group Total

	Nine months 2024	Nine months 2023	Reported Change	LFL Change	Three months 2024	Three months 2023	Reported Change	LFL Change
Group Total	9,647.6	10,278.4	-6.1%	-6.4%	2,955.5	3,297.5	-10.4%	-10.5%

For media inquiries, contact:

H&H Group

Annabel Jenkins
+44 7514535600
annabel.jenkins@hh.global

Think Alliance Group

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

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[^1]: Nutritional supplements include Biostime probiotic supplements, Biostime paediatric products, Swisse vitamin, herbal and mineral supplement ("VHMS") products, and Solid Gold and Zesty Paws pet supplements.
[^2]: According to research statistics by Nielsen, an independent research company, market share data for the past twelve months ended 30 September 2024.
[^3]: According to research statistics by Nielsen, an independent research company, market share data for the one month ended 30 September 2024.
[^4]: According to research statistics by Early Data, an independent data provider, Swisse ranked No. 1 in the China online VHMS market with a market share of 7.9% for the twelve months ended 30 September 2024 as compared with 7.9% for the twelve months ended 30 September 2023.
[^5]: According to research statistics by Kantar Worldpanel, an independent research company, market share data for the past twelve months ended 30 September 2024.
[^6]: According to research statistics by Nielsen, an independent research company, market share data for the past twelve months ended 30 September 2024.
[^7]: According to research statistics by Nielsen, an independent research company, market share data for the one month ended 30 September 2024.
[^8]: According to Tmall statistics, Swisse's overseas flagship store ranked No. 1 in sales in the health foods/dietary supplements category on Tmall during the period from October 15 to November 13, 2024. According to JD.com statistics, Swisse ranked No. 1 in GMV in the Nutrition and Health category under JD Health from 8:00 p.m. on October 14 to midnight on November 11, 2024. According to Douyin's statistics, Swisse's overseas flagship store ranked No. 1 in sales in the overseas dietary supplements category from October 8 to November 11, 2024. According to Vipshop's statistics, Swisse ranked No. 1 in sales in the nutritional supplements category from October 14 to November 11, 2024.
[^9]: Based on total market unit sales, according to research statistics by IQVIA, an independent research company, market share data for the past twelve months ended 30 September 2024.
[^10]: According to research statistics by IQVIA, an independent research company, market share data for the past twelve months ended 30 September 2024.
[^11]: For illustrative purpose, the exchange rates of AUD1=RMB4.7319 and USD1=RMB7.1094, and AUD1=RMB4.6975 and USD1=RMB7.0148 have been used for the preparation of the unaudited consolidated revenue of the Company for the nine months and for the three months ended 30 September 2024 and comparative figures for the same periods ended 30 September 2023, respectively.
[^12]: Others include pet food from Solid Gold, baby food and snacks from Good Goût, baby accessories from Dodie and other skincare products.