China Mengniu Dairy Co posted first-half revenue up 6.6 percent to 27.26 billion yuan ($4.1 billion) on the previous year, beating market expectations and taking its share price up more than 10 percent on Thursday [25 August 2016], but the company also reported that profit declined in the six months to June. Benefiting from active brand promotion and marketing, the company reported in its interim results, released on Wednesday that its gross profit margin increased by 1.8 percentage points year-on-year to 33.7 percent…Full Article: ECNS.cn Aug 2016

Key Point

  • China Mengniu Dairy’s net profit decline was partially due to losses from China Modern Dairy and a decline in raw milk prices. China Mengniu Dairy has a 25.41% stake in China Modern Dairy.

ChinaAg Comments

  • In April 2016, Yashili New Zealand began selling infant formula products in North Island supermarkets.
  • In November 2015, the Mengniu-Yashili plant in Pokeno (near Auckland), New Zealand, opened after a three year construction process.  The factory has an annual production capacity of 52,000 MTs and was slated to begin exports to China in early 2016.
  • In 2014, Yashili recorded a net profit loss of 40% due to poor demand and rising costs.
  • 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.
  • 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 May 2013, Kohlberg Kravis Roberts (KKR) divested of its 27% stake in Modern Dairy to China’s Mengniu Dairy.
  • Founded in July 2012, Yashili New Zealand opened its first factory in November 2015 with a staff of 96 people.
  • Founded in 2005 and headquartered in Ma’anshan, Anhui Province. China Modern Dairy (HKG:1117) is China’s leading raw milk producer. The Beijing-based private equity firm, CDH Investments, has invested in both China Modern Dairy and China Mengniu Dairy.
  • Founded in 1999 and headquartered in Hohhot, Inner Mongolia Region, China Mengniu Dairy (HKG:2319) is one of the leading dairy product manufacturers in China, with “MENGNIU” as its core brand. In addition to milk, the company also produces and distributes ice cream, infant formula, yogurt, and cheese.

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