Chinese milk powder maker Yashili International Holdings Ltd said on Wednesday [14 January 2015] it expects its 2014 net profit to fall about 40 percent, hit by slowing demand for baby formula and higher marketing and compliance costs. The profit warning by Yashili, owned by China Mengniu Dairy Co and French dairy Danone SA, highlights the challenges local and foreign firms face as intense competition makes growth more elusive in the world’s largest infant formula market…Full Article: Chinanews.com Jan 2015

Key Point

  • According to Euromonitor, from 2013 to 2014, Yashili’s market share in China decreased from 5.1% to 4.6%. In addition, rival Beingmate Baby & Child Food Co. announced a 72% profit decline during the first half of 2014.

ChinaAg Comments

  • In June 2013, China Mengniu Dairy agreed to purchase a majority stake in Yashili International for over HK$11 billion ($1.42 billion). Mengniu bought its 75% stake in Yashili from chairman Zhang Lidian’s family and from the Washington DC-based Carlyle Group (private equity firm).
  • In July 2010, Carlyle’s share in Yashili grew 29.2%, but fell to 24.4% in November 2010 after Yashili successfully completed an IPO, which diluted Carlyle’s ownership stake.
  • In September 2009, Carlyle Group acquired a 17.3% stake in Yashili.
  • Founded in 1983 and headquartered Guangdong province, Yashili International is one of the leaders in the pediatric milk formula industry, as well as having a leading position in the soymilk powder market in China. Its leading brands are “Yashily” (soymilk powder and pediatric rice flour), “Scient” (pediatric milk formula), “Zhengwei” (breakfast cereal) and “Youyi” (milk powder for adults).

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