China Mengniu Dairy Company Limited

2014 Interim Results

Stock Code: 2319

August 2014

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The presentation is prepared by China Mengniu Dairy Company Limited (the

“Company”) and is solely for the purpose of corporate communication and

general reference only. The presentation is not intended as an offer to sell, or to

solicit an offer to buy or to form any basis of investment decision for any class of

securities of the Company in any jurisdiction. All such information should not be

used or relied on without professional advice. The presentation is a brief

summary in nature and do not purport to be a complete description of the

Company, its business, its current or historical operating results or its future

business prospects. This presentation contains projections and forward looking

statements that may reflect the Company’s current views with respect to future

events and financial performance.

This presentation is provided without any warranty or representation of any kind,

either expressed or implied. The Company specifically disclaims all

responsibilities in respect of any use or reliance of any information, whether

financial or otherwise, contained in this presentation. The Company undertakes

no obligation to publicly update or revise any forward-looking statements,

whether as a result of new information, future events or otherwise.

Disclaimer

3

Sun Yiping, Executive Director & Chief Executive Officer

Bai Ying, Executive Director & Chief Operation Officer

Zhang Ping, Chief Financial Officer

Liu Shengli, Vice President of Sales

Jesper Fournaise Colding, Vice President of Strategy

Zhai Mei, Assistant Vice President of Public Relations

Thibaut Helleputte, General Manager of Mengniu Danone JV

Chris Kwok, Financial Controller & Company Secretary

Li Dongming, Executive Director & Vice President of Yashili

Management Team

Part 1 2014 Interim Results Review

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5

Financial Highlights

RMB Million

For the Six Months Ended June 30

2014

Organic

Change

vs. 2013

2014

Consolidated

2013

Consolidated

Change

vs. 2013

Revenue 24,290.1 17.5% 25,835.8 20,667.9 25.0%

Gross Profit 7,548.6 36.8% 8,381.8 5,518.8 51.9%

Gross Profit

Margin 31.08% 4.38ppt 32.44% 26.70% 5.74ppt

EBITDA 1,793.4 19.3% 2,041.9 1,503.6 35.8%

EBITDA Margin 7.38% 0.10ppt 7.90% 7.28% 0.62ppt

Profit Attributable to

Owners of the

Company 931.0 24.2% 1,048.6 749.5 39.9%

Net Profit

Margin 3.83% 0.20ppt 4.06% 3.63% 0.43ppt

Basic EPS

(RMB) 0.480 14.6% 0.540 0.419 28.9%

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Revenue Breakdown by Segment

Liquid Milk

• Revenue amounted to RMB21,764.8 million,

up 19.2% YoY

• Percentage of revenue down 4.1ppt YoY

Ice Cream

• Revenue amounted to RMB1,988.4 million, up

1.7% YoY

• Percentage of revenue down 1.8ppt YoY

Milk Formula

• Revenue amounted to RMB1,933.8 million, up

390.7% YoY

• Percentage of revenue up 5.6ppt YoY

1H2014

1H2013

Other Dairy Products

• Revenue amounted to RMB148.8 million, up

161.4% YoY

• Percentage of revenue up 0.3ppt YoY

88.3%

9.5%

1.9% 0.3%

Liquid milk Ice cream

Milk formula Other dairy products

Revenue

(RM25,835.8 million, up

25.0% YoY)

Revenue

(RMB20,667.9 million)

84.2%

7.7%

7.5% 0.6%

58.5%26.8%

14.7%

59.9%25.9%

14.2%

UHT milk Milk beverages Yogurt

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Revenue Breakdown of Liquid Milk Segment

UHT Milk

• Revenue amounted to RMB12,737.4 million, up

16.4% YoY

• Percentage of liquid milk revenue down 1.4ppt YoY

Milk Beverages

• Revenue amounted to RMB5,826.2 million, up

23.1% YoY

• Percentage of liquid milk revenue up 0.9ppt YoY

Yogurt

• Revenue amounted to RMB3,201.2 million, up

23.6% YoY

• Percentage of liquid milk revenue up 0.5ppt YoY

1H2014

1H2013

Revenue of Liquid Milk

(RMB21,764.8 million, up

19.2% YoY)

Revenue of Liquid Milk

(RMB18,262.5 million)

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Market Share

Liquid Milk UHT Products

Chilled Products

1H2013 1H2014

25.5% 25.2%

22.8% 23.7%

12.3% 10.0%

7.5% 8.0%

31.9% 33.1%

Mengniu A B C Others

1H2013 1H2014

27.3% 27.6%

25.5% 27.0%

15.8% 13.0% 7.3% 7.0%

24.1% 25.4%

Mengniu A B C Others

1H2013 1H2014

19.5% 18.5%

18.7% 18.3%

13.5% 13.9%

7.2% 7.7%

41.1% 41.6%

Mengniu A B Junlebao Others

839.5 979.2

1,387.1

2,751.8

57.8

57.8

124.1

40.2

40.2

Plants & Equiments

Equity Investment

Biological Assets

12,596.5

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2,331.6

1,578.5 1,546.5

Cash Flow & CAPEX

Net Cash Inflow from

Operating Activities

(RMB Million)

Capital Expenditure

(RMB Million)

1H2013 1H2014

Organic

1H2014

Consolidated

1H2013 1H2014

Organic

3,715.4

1,485.1

1,077.2

1H2014

Consolidated

801.4860.0

962.03,806.9

5,325.2

5,897.1

18.4%

21.9% 22.8%

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(RMB Million) (RMB Million)

S&D G&A

SG&A Expenses

1H2013 1H2014

Organic

1H2013 1H2014

Organic

Expenses Percentage of total revenue

3.9%

3.5% 3.7%

1H2014

Consolidated

1H2014

Consolidated

48.5 50.0 51.2

8.7

7.37.1

16.4

28.636.5

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1H2013 1H2013 1H2013

Operating Efficiency Index

Inventory Turnover Receivables Turnover (1) Payables Turnover (2)

（1）Receivables Turnover = [Average Balance of Trade and Bills Receivables / Revenue] x No. of days

（2）Payables Turnover = [Average Balance of Trade and Bills Payables / Cost of Sales] x No. of days

(Day) (Day) (Day)

1H2014

Organic

1H2014

Consolidated

1H2014

Organic

1H2014

Consolidated

1H2014

Organic

1H2014

Consolidated

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Part 2 1H2014 Business Overview

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2014: Implementation of Winning Strategy

Strengthen milk sources

to secure quality supply

Expand retail network

to enhance penetration

Focus on star brands

to optimize product mix

Bolster innovation

to reinforce leading position

Optimize incentive plan

to strengthen talent pool

Integrate strategic resources

to implement five-year plan

Healthy

Development

of the Industry Consumer

Experience Quality and

Safety

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第三部分 2014年展望

2014 Key Words

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O

O2O T

TBM

P

WSP

Innovation: Embracing Digital Marketing

System Innovation Marketing Innovation E-commerce

From

“Scan me,

I take you to

the farm”

to

“Cloud-viewable”

＞20% marketing

spending on digital media

Establish Information &

Innovative Development

Team

Develop applications to

build up an integrated

digital marketing platform

Strengthen digital

capabilities

Promoting new products

Services for distributors

Consumer insights

214 mil views

187 mil participants

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Sustainable Profitable Growth

1. Portfolio Management 2. Operating Efficiency

Optimization

3. Prudent OPEX and

CAPEX

Focus on 3 high margin

brands: Yoyi C, Champion

Yogurt, Bio

Reduce the number of

SKUs

Upgrade taste and

packaging

Increase utilization rate

Enhance production and

operation efficiency

Cost control and efficiency

improvement

Focus A&P on 3 major

brands

Prudent CAPEX

Revenue Operating

Margin

Integration (1): Mengniu & Danone

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Integration (2): Mengniu & Arla

Import Business Technology Sharing Lean Management

Project

Established China-Denmark Milk

Technology Cooperation Center

Commenced fingerprint spectrum

project and developed raw milk

testing technology

Introduced quality management

from Arla Gaarden and built ranch

technology standardization system

Went through value chain to

identify value-added points

Launched「Lean」projects,

including quality

improvement, supply-

demand balance, etc., to

lower the cost, improve

quality and shorten the

production cycle

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Integration (3): Mengniu & Yashili

Focus on building an infant nutrition platform

Promote Yashili’s operation reform

Introduce strategic cooperative resources

to Yashili

Through disposal of nutrition drinks

business (Yashili (Zhengzhou)),

Yashili focus on infant nutrition

products businesses

Develop the maternal and baby,

e-commerce channels in

response to market change

Launch dedicated products for

different channels

Diversify milk sources

Collaborate with Arla to launch

imported Arla Merla infant formula by

end of this year

Joint Venture Progress

Establish Joint Venture with start-up activities on

track

Receive government approvals

Complete initial capital injection

Complete acquisition of Yashili (Zhengzhou)

Obtain approvals from Yashili independent

shareholders

Carry out construction and modification work to

the facility

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Integration (4): Mengniu & WhiteWave

(51%)

(49%)

Next Step

To launch nutritious, healthy and innovative plant-

based beverage products by end of 2014 To shape the future of plant-based food and

beverages in China with WhiteWave (NYSE:

WWAV) while leading the development of dairy

industry

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Investment: Investment along the Industry Value Chain

Mengniu’s Stake

~ 43%

~ 28%

~ 4%

~ 4%

(1117.HK)

(1431.HK)

(1432.HK)

25% of raw milk was

sourced from farming

companies which we

have equity investment

69% of raw milk was

sourced from our

cooperative farms

Leveraging small capital for big resources: To secure supply of

premium raw milk through small capital investment

Performance: Launch of SAP System to Improve

Operational Efficiency

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SAP-ERP SAP-CRM 2.0

Pilot run at 3 plants, aiming to cover 50%

of plants by end of 2014

Cover 4 categories: UHT, chilled

products, ice cream and cheese

Apply in supply chain, quality

management and finance modules

Pilot run in 3 sales regions, aiming to

cover all sales regions by end of 2014

Cover 4 categories: UHT, chilled

products, ice cream and cheese

Cover management over comprehensive

range of sales procedures

Optimize operational efficiency,

provide accurate data support for better decision-making

Business and

finance management alignment Sophisticated management of sales

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Brand

focus

Gross

margin

Marginal

profit

Market

potential

…

Performance: Key Brands to Profits

Categorize key brands

Star Brands Backbone

Brands

Profit

Contributor

Brands

Opportunity

Brands

More resources invested in star

brands and opportunity brands

Effective and selective

capital allocation

CAPEX

investment in

brands with

growth potential

Yoyi C,

Just

Yoghurt

Strict portfolio management

& efficiency enhancement

Gross margin improved

Optimize SKUs

Launch “Design to

Value” initiatives:

refining packaging,

recipes…

Brand value

increased

Brand image

improved

Emphasizing

Mengniu’s social

responsibility

Rebuild mother brand

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Performance: Key Brands to Profits

＊Revenue of Mengniu’s four major brand clusters (excluding milk formula, cheese and

Junlebao) as a percentage of Mengniu’s organic revenue.

Star brands

Backbone brands

Profit

Contributor brands

Opportunity brands

UHT

Yogurt/

Probiotic

Beverage

Milk

Beverage Ice Cream Fresh Milk

1H2013 1H2014

* % of Mengniu Revenue

34.3% 35.3%

43.7% 41.9%

10.5% 8.7%

3.5% 4.7%

Performance: Reinforce Sales Execution

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Improve Retail

Management &

Service Quality

Increase market

penetration

Innovate in sales

information

management

Strengthen

distributor

management system

Build up sales

organization

capabilities

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Open & Transparent Culture

Achieve cross-division, cross-system and cross-

cultural integration to build a stronger team

Build an innovative and efficient management

system to improve strategy execution

Build an attractive reward and incentive system to

motivate talents

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Interpret “Little Happiness Matters” through

“A Drop of Goodness”

A

Brand

Positioning

Reinforcement of “Little Happiness

Matters”

B

Image

Upgrade

Brand new image for consumers

C

All-round

Communication

Deliver the message “A Drop of Goodness”

to the public

员工版 羽泉版

Star Citizens

Affectionate

Warm

Passion

Open

Heart-led

innovation

Brand Manifesto

Brand Elements

Upgrade VI System

Helin XI Experience Hall

“Each and every drop” Song and MV

Meng Federal

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THANKS! 阳光

Sunshine

高尚 Nobility

责任 Responsibility

创新 Innovation