March 9, 2005

 

China's Yili registers lower growth in 2004 due to keen competition

 

 

The Shanghai-listed company reported yesterday that Yili, one of China's leading dairy producers, saw business expand 38 percent last year,

 

As per the annual report of stock exchange for 2004, Inner Mongolia Yili Industrial Group Co Ltd posted an income of more than RMB 8.7 billion (US$1.05 billion) which is up by 38.67 percent as compared to last year's figure of RMB 6.3 billion (US$761 million).

 

The company registered total profits of RMB 378.9 million (US$45.76 million), a year-on-year increase of 18.81 percent.

 

Its net profit hit RMB 239.1 million (US$28.88 million), representing an earning per share of RMB 0.61 (7.4 US cents) and an increase of 19.81 percent over the 2003 figure of RMB 199.6 million (US$24 million).

 

But the company's growth in 2004 was far lower than that seen in previous years as well as expectations.

 

In 2003, the company posted a 57.09 percent growth in business income and a 40.61 percent increase in net profits.

 

It is expected to grow by more than 50 percent annually in coming years to become one of the world's top 20 dairy firms by 2012.

 

"It is natural that Yili had a slower 2004," said Zhu Weihua, an industry analyst with Merchants Securities.

 

In previous years Yili enjoyed rapid business expansion, and based on its already huge sales it would be impossible for the company to maintain such a high level every year, he added.

 

Meanwhile, intensifying competition has trimmed the profit margins of all the industry's players.

 

However, Yili will record stable growth in coming years due to the huge potential of China's dairy market.

 

Zhu expects the dairy firm's business to grow by some 33 percent this year.

 

Last year, the China Securities Regulatory Commission launched an investigation into the company as it was suspected of breaching securities laws and regulations.

 

Its business was somewhat affected, the company said in its report. But the company adjusted quickly to achieve this year's still impressive figures, it said.

 

The company added it will continue expanding its business and sharpening its market edge, in order to achieve its goal of becoming one of the world's leading dairy companies.