Ausnutria's golden era is coming to an end

Since its founding in 2003, Ausnutria has performed exceptionally in the more than 20 years of its existence. From a nondescript company founded in 2003 by a man named Yan Weibin from Changcha City, it grew into an international infant nutrition company specializing in goat dairy. Things got better almost year after year. Ausnutria's turnover peaked at €2021 billion in 1,2. The profit rose to almost €144 million. However, things did not get any better for the time being.

Stagnation in China
Turnover for 2022 fell to €1.054 million, profit plummeted to €29,3 million. These are still black figures, but the disappointing results, especially in the important Chinese sales market, due to a stagnant economy, necessitated significant cost savings and a reorganization of activities. It's in the middle of that now.
The reorganization also affects the Dutch part of Ausnutria, although only 2022 of the company's 741 employees worked there at the end of 4.290. Nearly 3.300 worked in China itself. The vast majority of production takes place in the Netherlands. 

Most capacity in the Netherlands
In 2020, according to a presentation by Yan Weibin, Ausnutria had a production capacity of almost 170.000 tons (since expanded). Of this, 95.000 tonnes of capacity was in the Netherlands, 45.000 tonnes in Australia and New Zealand. 28.000 tons could be produced in China. Despite the reorganization, the construction of a new large, electrically heated drying tower in Heerenveen will continue, Ausnutria reported last autumn.

However, it was not only the market that Ausnutria was confronted with, but also with itself. And especially in the Chinese part of it. Until 2011, Ausntria developed mainly within China and was mainly a trading company. In that year it took over the Dutch infant food manufacturer Hyproca. Its owners, with Ids Jorna and Bart van der Meer as its main shareholders, received a minority stake in Ausnutria Nederland, via Dutch Dairy Investors (DDI), plus an interest in the Chinese parent company. This acquisition started a phase of rapid further growth and acquisitions in the Netherlands, but also abroad.

Wrinkles
That was not entirely without ripples, however. In 2012, Ausnutria was punished by the Hong Kong stock exchange for tampering with its figures. The stock was banned from trading for approximately two years. At that time, Bart van der Meer helped the company to put its affairs in order, after which trading in the Ausnutria share could resume. During this internal cleaning, founder Yan Weibin had to take a step back. Not he, but Bart van der Meer became CEO.

Yan Weibin's reputation had taken a hit, as happened to many Chinese entrepreneurs of that period. Yan Weibin was one of many Chinese entrepreneurs of that time who achieved rapid success in an obscure way. He was also in real estate, agricultural technology and data and was also good with regional politics. Despite the step back, he remained a major shareholder in Ausnutria.

Van der Meer creates order
After the cleaning by Van der Meer, there seemed to be no cloud in the sky until 2021. Ausnutria grew rapidly and sold increasing volumes of infant formula to China year after year, both based on goat's milk and cow's milk. In the Netherlands, a large new factory was built in Heerenveen for this purpose. This was initially going to replace a number of the existing production lines, but that did not happen. All capacity was needed.

Only a few activist investors, such as the Canadian Blue Orca Capital, questioned the success story, including in 2017 a biting analysis. It did not seem to bother Ausnutria until the summer of 2023, when the company had now fallen into the hands of Yili, also from China. It started in 2022 with a share of almost 60 percent, which increased to around 2023 percent in 70.

Short return Yan Weibin
Last summer, accounting problems again emerged, problems that partly resembled the problems that had already been identified and repaired ten years earlier. The new errors related to the period 2020 to March 2023, but seemed less serious this time. Ausnutria was no longer punished by the stock exchange in Hong Kong, but a new investigation was initiated, by Ausnutria itself (or by Yili). In addition, Yan Weibin, who had succeeded Van der Meer as CEO at the beginning of 2023, was replaced again, apparently now permanently. He also had to relinquish his position as chairman of the supervisory board and many other positions (he had actually held all top positions from the beginning of 2023). However, he had already lost his majority stake. His co-manager Ng Siu Hung (Mrs Ng) also had to leave the field. Van der Meer remained as executive manager.

Yili management does things differently
In September last year, Yili put his own manager at the helm, Ren Zhijang. He is now the new CEO and will, together with Van der Meer and the new CEO for Ausnutria Netherlands, Richard Hickson, chart the further course of the company. The latter came over from Westland Milk Products, which is also part of Yili and was probably put forward by the Chinese. In any case, the Dutch influences within the management are not increased by the changes, as former CEO Jeroen Kiers did not have to voluntarily make way last year.

The new management will cut expenses. The question is what this means for Ausnutria's position in Dutch goat dairy, where it is the dominant party, partly due to the series of companies it controls, by promising to always pay 0,4 cents more for goat milk than the competition and by keeping the market 'clean'. Ausnutria has so far required suppliers to deliver all their residual flows such as whey to it.  

Stock market value evaporates considerably 
The poorer results do not leave the stock price unaffected. During the peak years, the share once peaked above 17 Hong Kong dollars. At the beginning of 2024, the rate is on track to drop to 2,50 Hong Kong dollars. At the end of last year, Ausnutria had a price-to-earnings ratio of more than 20, which is relatively high. Especially in relation to other participants on the Hong Kong stock exchange. This probably indicates that the price is still overvalued, despite the already strong growth. Another option is that investors still have latent confidence in the company.