China Mengniu Dairy Company Limited (2319.HK)

2015 Interim Results

August 2015

2

Disclaimer

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 does 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.

Mengniu

Sun Yiping, Chief Executive Officer & Executive Director

Bai Ying, Chief Operation Officer & Executive Director

Zhang Ping, Chief Financial Officer

Liu Shengli, Vice President of Sales

Zhai Mei, Assistant Vice President of Public Relations

Thibault Helleputte, General Manager of Mengniu Danone JV

Chris Kwok, Financial Controller & Company Secretary

Yashili

Lu Minfang, Chief Executive Officer & Executive Director

Li Dongming, Vice President & Executive Director

Wen Jieping, Chief Financial Officer

Management Team

2015 Interim Results

5 5

Financial Highlights

RMB Million

Gross Profit

Gross Profit Margin

EBITDA

EBITDA Margin

Net Profit Margin

Profit Attributable to

Owners of the Company

Basic EPS

(RMB)

Revenue

For the Six Months Ended June 30

2014 Consolidated

2015 Consolidated

+/-

25,835.8 25,564.4 -1.1%

8,381.8 8,142.8 -2.9%

32.44% 31.85% -0.59ppt

2,041.9 2,315.6 +13.4%

7.90% 9.06% +1.16ppt

1,048.6 1,338.7 +27.7%

4.06% 5.24% +1.18ppt

0.540 0.689 +27.6%

2015 Excluding

Yashili

Vs. 2014 Excluding

Yashili

24,402.9 +0.5%

7,573.3 +0.3%

31.03% -0.04ppt

2,289.3 +27.8%

9.38% +2.00ppt

1,296.9 +39.3%

5.31% +1.48ppt

0.667 +39.1%

6 6

Revenue Breakdown by Segment

2014 +/- (%) % of Total

Revenue +/- (ppt)

Ice Cream

Milk Formula

Others

Liquid Milk

RMB Million

Total

2015

21,940.9 +0.8%

1,664.3 -17.3%

1,783.5 -7.8%

195.7 +31.5%

85.8% +1.6ppt

6.4% -1.3ppt

7.0% -0.5ppt

0.8% +0.2ppt

25,564.4 -1.1% 100.0% /

21,764.8

1,988.4

1,933.8

148.8

25,835.8

For the Six Months Ended June 30

Note: Others refer to cheese and plant-based food business, etc.

7 7

Revenue Breakdown of Liquid Milk Segment

Milk Beverage

Yogurt

UHT

RMB Million

2014 +/- (%) % of

Liquid Milk

Revenue +/- (ppt) 2015

Total

10,710.4 -13.4%

5,657.8 -2.9%

5,572.7 +56.0%

48.8% -8.0ppt

25.8% -1.0ppt

25.4% +9.0ppt

12,365.3

5,826.2

3,573.3

21,940.9 +0.8% 100.0% / 21,764.8

For the Six Months Ended June 30

UHT Milk Beverage Yogurt

Premium Pure Milk Pro-biotic Drink Room Temperature Yogurt

Premium Milk Beverage Chilled Yogurt

Flavored Milk Basic Milk Beverage

Kids’ Milk

Basic Pure Milk

8 8

Note: (1) Mengniu’s market share includes the market share of Mengniu, Danone and Junlebao brands

(2) Source: Nielsen Retail Research

Market Share

Liquid Milk

UHT Products

Chilled Products

9

Revenue Breakdown by Brand Cluster

9

（1） Revenue of Mengniu’s four major brand clusters as a percentage of revenue of Mengniu – excluding Yashili.

Brand 1H2014 1H2015 +/- (ppt)

Star

Brands

34.2% 39.6% +5.4ppt

Opportunity

Brands

4.7% 3.1%

-1.6ppt

Profit Contributor

Brands

8.7% 7.1%

-1.6ppt

Backbone

Brands

41.9% 36.6%

-5.3ppt

Continuous optimization of product mix and brand portfolio management

improved profitability

3.8ppt

Cash Flow & CAPEX

(RMB Million)

Net Cash Inflow from

Operating Activities Capital Expenditure

(RMB Million)

10

1H2014 1H2015

1,439.7

1H2014 1H2015

1,485.1

SG&A Expenses

(RMB Million) (RMB Million)

Expenses % of revenue

S&D G&A

1H2014 1H2015 1H2014 1H2015

11

5,897.1

5,565.3

962.0

1,093.7

12 12

Operating Efficiency Index

（Days） （Days） （Days）

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

(1) Receivables Turnover = [(Average Balance of Trade and Bills Receivables / Revenue] x Number of Days

(2) Payables Turnover = [(Average Balance of Trade and Bills Payables) / Cost of Sales] x Number of Days

1H2014 1H2015 1H2014 1H2015 1H2014 1H2015

51.2 52.7

7.1 10.7

36.5

44.8

2015: Review and Prospects

14

Challenges and Opportunities in 2015

Challenges Opportunities

External External

Internal Internal

Changing consumer demand

Oversupply of raw milk

Intensified market

competition

Consumption premiumization:

strong consumer demand for

premium nutritious and

healthy products

Room for market penetration

remains huge

Operational efficiency is yet

to further improve

Further improvement in

brand power

Controlling force over retail

end

15

Stronger Route-to-Market

Coverage Penetration Efficiency

Completed information infrastructure setup covering Mengniu to retail outlets

SAP — ERP

SAP — CRM

WSP — Wei Sales Platform

Speeding up execution of route-to-market initiatives

Launch of information systems like SAP make effective and

efficient channel management become achievable

To increase number of directly-controlled retail outlets and their

sales contribution

Strengthen distributors

Substantialize sales companies

Develop CBUs

16

Continuous Product and Packaging Innovation

Ice Cream

4-packed

Minion Latte

Suan Suan Ru

100ml Flavored Pro-biotic

Drinks and

340ml Low-sugar

Yoyi C

Flavored Milk Beverages

and RT Yogurt

Future Star

Yellow Peach Oat and

Walnut Oat Flavors

Champion

Customized

premium

Hi·Milk

Prime Ranch Pure Milk

of 2.0 version – full chain traceable

One QR code

for each box

One QR code

for single pack

Awarded

“The Best

Innovation

Commercial

Brand”

17

Room Temperature Business Strategy: Focus on

Star Brands, Increase Market Share of Backbone Brands

Milk Deluxe: Maintained leading

position among high-end milk products

UHT Yoghurt: Quickly seized market

shares in both UHT yoghurt and children

UHT Yoghurt markets

Marketing theme: 10th Anniversary

Achieved steady growth

Robust sales growth performance

Significant growth in market share and

distribution rate

RT Yogurt：

Quickly gain RT yogurt market share, first mover in

kids’ RT yogurt

Milk Deluxe：

Strengthen leading position in premium

UHT milk

18

Chilled Business Strategy: Strengthen Leading

Position in Chilled Product Market

Breakthrough

Focus

Three high gross margin brands：Yoyi C,

Champion and Bio

Improvement of operational efficiency

Market share gain in key markets

Innovation

New SKU launch through strict consumer

test

100ml pro-biotic drink market

Market performance of Future Star kids’

yogurt

2015：Sustainable Growth

Revenue&

profitability

Ideal factory Cost out,

value in

Champion Oats Flavor

Launched in June

Champion Ready-to-Drink

Launched in July

Bio “Additive-free”

Launched in June

19

Milk Formula Business Strategy: Upgrade and

Transformation

Focus

Brand

Distribution channel transformation: Online

channel, maternity store channel

Based on a clearer brand positioning,

focusing on key products

e

Milk sources from New Zealand and

Europe

Endorsements by Danone’s and Arla’s

management and quality expertise

Strengthen brand promotion

Align and integrate resources with

Danone, Arla etc and enhance strategic

alliances

Integrate professional management

teams of Yashili and Danone to enhance

quality control, improve customer service

and organizational capability

Cooperate with international research

institutes to enhance innovation / R&D

capability

Channel Transformation

Brand Upgrade

Resources Integration

20

Promoting Brand Power through Enhanced

Marketing strategy

A Focused Strategy Build Corporate Brand

Reinforce Synergies between

Mother Brand and Sub-brands

Marketing resources continuously

focus on star brands

Strengthen brand building of

mother brand and ensure

continuous media investment

Establish shared phenomenon

marketing platforms by consolidating

marketing resources of mother brand

and sub-brands

Digital Innovation

Marketing renovation driven by

digital innovation to build up digital

assets

Digitalized products

21

Establish R&D plan in focus areas

Set up cross-functional teams e.g.

marketing, R&D and operation

Higher headcount than Arla, esp.

“support/ administration” and

“inspection/ control” functions

Enhance employees’ productivity

Consolidating Global Resources

— Excellence Management and Benchmarking Strategy House

Route to Excellency

Partners Benchmarking

Mengniu KPI & Analysis

Improvement Advices and Recommendation

Benchmark with global partners to realize excellence management

in R&D and operations

Join Hands

with Global

Leading

Players

Leverage

Global

Resources

Global

Technology

Innovation

Center

Ranch

Management

Quality

Control

Product

R&D

Production

&

Operation

Disclaimer

This document is prepared by Yashili International Holdings Ltd （the “Company”）for corporate communications and general reference only. The document does not constitute an offer to sell or subscribe for any securities of the Company in any jurisdiction or serve as the basis of related investment decisions. All information included herein should not be used or relied on before obtaining professional advices. This document is a brief overview of the Company and does not constitute a complete description of the Company and its business activities, current and historical operating results and future operating prospects. Any information contained herein is provided without any express or implied representation or warranty. The Company disclaim any liability for any loss or damages howsoever arising from the use of this document or reliance upon any financial or other information in this document.

Agenda

II. 2H Business Strategies

III. Q & A

I. 1H Results Review

H1 Results Review

Financial Highlights

RMB million 1H2014 2H2014 1H2015 Percentage change

Y-o-Y H-o-H

Revenue 1,545.7 1,270.7 1,161.5 -24.9% -8.6%

Gross profit 819.9 625.1 563.5 -31.3% -9.9%

Gross profit margin 53.0% 49.2% 48.5% -4.5% -0.7%

Profit attributable to equity shareholders of the Company

209.4 39.4 75.6 -63.9% 91.9%

Net profit margin 13.5% 3.1% 6.5% -7.0% 3.4%

Basic earnings per share (RMB cents):

5.9 1.1 1.7 -71.2% 54.5%

Yashily pediatric milk power Revenue amounted to RMB774.4 million, decreased Y-

o-Y by 24.8% Percentage to total revenue increased by 0.1 percentage

point from last year

Scient pediatric milk power Revenue amounted to RMB112.7 million, decreased Y-o-Y by

58.8% Percentage to total revenue decreased by 8 percentage point from

last year

Nutrition food and others Revenue amounted to RMB274.5 million, increased Y-

o-Y by 13.4% Percentage to total revenue increased by 8 percentage

point from last year

Breakdown Of Sales Revenue

66.7% 9.7%

23.6%

66.6% 17.7%

15.7%

雅士利婴幼儿 施恩婴幼儿 营养食品及其他

1H2014 Sales revenue: RMB1,545.7 million

Yashily Pediatric

Scient Pediatric

Nutrition food and others

1H2015 Sales revenue: RMB1,161.5 million

Selling and distribution

Administrative expenses

Income tax charges

Sales, Administrative Expenses And

Income Tax Charges

572.0 523.6

37.0% 45.1%

2014H1 2015H1

101.3

71.0

29.3

14.1

15.7%

6.6% 6.1%

12.3%

(RMB million) (RMB million) (RMB million)

1H2014 1H2015 1H2014 1H2015 1H2014 1H2015

Operation Efficiency Indicators

（1）Balance of inventory at the end of the year divided by costs of sales in the year, then multiplied by 180 days. （2）Balance of receivables at the end of the year and bill receivables at the end of the year divided by turnover during the

year, then multiplied by 180 days. （3）Balance of payables at the end of the year and bill payables at the end of the year divided by procurement amount

during the year, then multiplied by 180 days.

（days）

215

180

3

8

93

78

Inventory turnover days (1) Receivables turnover days (2) Payables turnover days (3)

（days） （days）

1H2014 1H2015 1H2014 1H2015 1H2014 1H2015

Cash Flow And Capital Expenses

(RMB million) (RMB million)

407.9

201.8

1H2014 1H2015

Net cash flow from operations Capital expenditure

1H2014 1H2015

H2 Business Strategies

Industrial policies keep changing, which affect the integration of the supply chain, rationalization of the product lines and launch of new products

The gradual shrinking of supermarket channel made enterprise transformation an important issue while the execution of new sales and marketing strategies requires time and cost input

In the face of increasingly intensified market competition, enterprises are subject to the challenge of stabilizing product price while maintaining market advantages

Op

po

rtunities

Ch

allenges

Non-compliance enterprise shall exit the market upon introduction of new policies to the milk powder industry

The rise of overseas direct purchase and haitao.com and the transformation towards cross-border e-commerce affects the competitive landscape of the industry

Future Opportunities And Challenges

Reform

Optimization

Upgrading

Integration

H2 Operating Strategies

Maternal and

child

Supermarket

E-commerce

Reform—Channel Transformation

To focus on maternal and child chain stores, with the channels serving as the driving force + the brand serving as the pulling force

To leverage on high-end brand name for materialization of brand transformation

To strengthen our terminal services so as to lay down a solid foundation for the channel

To adjust focus of product sales, step up efforts in exploration of high-end adult powder market

To rationalize market distribution structure and hold steady channel advantages

To step up efforts in respect of international hypermarket chains to enhance reputation of the brand in the high-end market

To accelerate BBC channel transformation and expansion

To enhance new user acquisition in mobile terminals, explore cross-border e-commerce business

To strengthen strategic cooperation with e-commerce platform, step up our efforts to tap on the resources presented by regional e-commerce operators

Reform—Sales Model We will conduct sales model reform for obtaining competitive strengths: by way of disintermediation, shortening value chain, defining clearly profit allocation, strengthening terminal implementation and system monitoring

Sales strategies

Supply models

Implementation system

Profit allocation

• Focus on maternal and child chain stores and key stores

• Direct supply of high-end products, disintermediation

• Focus on single store contributions

• To strengthen implementation of sales / sales guiding

• To monitor and manage procurement, sales and inventory

• Automated sales system

• Perfect product matrix • Effective sales policies • pulling force from the brand

+ driving force from the channels

• To uphold the principal of fairness

• Focus on gross profit from front office

• To stabilize channel profit

Logistic distributors

Brand Sales personnel

under systematic management

New direct supply model

Retailers

Brand Distributors Retailers

Product seller

Traditional distribution model

Optimization—Product Mix

Low-end

Mid-end

High-end

Pediatric formula milk powder

Ultra high-end

High-end adult milk powder

To define clearly the price positioning and consumer group of the sub-brand in the channel

Focus on the pediatric formula milk powder while stepping up efforts in exploration of high-end adult milk powder market

Optimization-organization

and structure

• To further strengthen the first

class organizational function

• To define clearly division of

labor

• To strengthen the building of

the sales team

Improving organizational

function

• To attach importance to the

connection between pioneer

team and front desk

• To enhance cost control of

the back office

• To emphasis on overall

synergy of the team

Integration of front and

back office

• To obtain target management

system certification

• To connect information

systems

• To integrate corporate

culture with internationalized

practices

Optimization in personnel

structure

Professionalism

--Brand marketing and

communication

--To support by

digitalized platform

--To share users’

experience

--To be endorsed by

international resources

--To present international

R&D results

--To produce in overseas

facilities

--PRC and new European

standards in various

countries

--Quality and safe milk

sources

--Comprehensive quality

system

Internationalization

High quality

Upgrading—Brand Reshaping Through the rationalization and reshaping of the brands, we will dedicate our efforts in the creation of “professionalism, internationalization, high quality” brand image of Yashily

LOREM

Integration—Resources Sharing We will integrate resources-rich platforms, including COFCO, Mengniu, Danone and Arla, enhancing the business connection and strategic alliance among all parties, so as to create an entire ecology chain within the diary industry.

To adapt from the international high-end R&D results, highly standardized quality assurance system, advanced production processes from (amongst others) Danone and Arla

To enhance R&D quality and production level

China factory New Zealand factory Dumex Shanghai factory

To optimize domestic and overseas production capacity allocation

New Zealand: To conduct production for Yashily brand while processing for Dumex

Europe: To conduct production for Scient and Arla Merla, further optimization of resources allocation

To integrate global back office supply chain system

Q & A