March 28, 2014

Acquisition and reforms boost Mengniu's 2013 profit by 25%

China Mengniu Dairy Co., Ltd.'s (Mengniu Group) revenue rose significantly by 20% on-year to RMB43.36 billion (US$6.98 billion) in 2013, while net profit soared 25% on-year to RMB1.63 billion (US$262.35 million).

The acquisition of Yashili, which made five months of contribution, helped the group boost its revenue. The group's own revenue grew by 16% to RMB41.86 billion (US$6.74 billion) in 2013.

The group's gross profit surged 31% to RMB11.70 billion (US$1.88 billion), representing a steady increase of 2% on-year. Excluding Yashili's contribution, the group's gross profit hit RMB10.92 billion (US$1.76 billion) and gross profit margin reached 26%. Excluding Yashili, the group's net profit reached RMB1.54 billion (US$247.89 million), while basic earnings per share amounted to RMB0.851.

Mengniu Group says that the reforms the company has made in 2013 facilitated its profit growth. The group fine tuned its internal structure, improved its quality control system, extended its sales network and optimised its product portfolio during the past year.

Tapping into the development trends in the Chinese market, the group has also made efforts to enhance its product offering, especially high-end dairy products, demand for which is growing rapidly in China.

Sun Yiping, CEO of Mengniu Group, said, "In 2013, we have faced challenges brought by the tighter supply and the hikes in the prices of raw milk. As a consumer-driven company we aim to ensure product quality through improvement in our systems and procedures and advances in technology delivered by shouldering our responsibility."

"By closely monitoring market conditions, we have enhanced Mengniu's brand, focused on key products and integrated our sales channels. These initiatives have substantially boosted the group's revenue and profit," she added. "We have also embarked on a comprehensive expansion of our business portfolio and capitalised on the opportunities arising from industry-wide consolidation and internationalisation by forging a number of strategic partnerships. These efforts have helped us lay a solid foundation for our long term development."