China's Mengniu Dairy H1 profit increases 14 percent

China's Mengniu Dairy Co posted a rise of 14 percent in profit in the first half of this year as the country's largest liquid milk producer begins to recover from the melamine-tainted milk scandal that began a year ago.

Although sales fell 12 percent to RMB12.1 billion (US$1.77 billion), the company's net income rose to RMB661.9 million or RMB0.424 per share in the six months ended June from RMB582.9 million or RMB0.409 per share a year earlier, Mengniu said in a statement to Hong Kong's stock exchange.

Last year, China's health ministry said milk powder manufactured by Sanlu Group contained melamine, an industrial chemical used to make plastics. Subsequently, a total of 22 dairy companies, including Mengniu, were found to have sold products containing the toxic chemical, which caused the deaths of at least six children and sickened 300,000 others in China last year.

According to Mengniu, revenue from liquid milk, which accounts for 85 percent of total sales, dropped 13 percent to RMB10.3 billion. Meanwhile, sales of UHT milk products fell 18 percent to RMB6.34 billion while revenue from milk beverages dipped five percent to RMB2.95 billion.

Mengniu received a major boost in July after COFCO and Hopu Investment Management Co agreed to buy a 20 percent stake in the company in a deal valued at US$789 million, making the investors the biggest stakeholders in the diary producer.

US$1=RMB6.827 (Sep 8)