August 31, 2011
China's top dairy product maker Mengniu Dairy Co Ltd posted a 27.6% rise in first-half net profit to RMB789.75 million (US$123.7 million) on the back of solid sales growth.
The company was confident that its profit margin in the second half would be in line with the first half, said Chief Financial Officer Wu Jingshui.
Gross profit margin for the period was 26%, almost unchanged from 26.2% a year earlier, despite higher prices for raw milk and other raw materials, while net profit margin remained unchanged at 4.3%, Mengniu said.
"We are confident we can at least maintain (first-half) margin levels in the second half," Wu said, adding that the company might raise product prices and adjust its product mix to offset an estimated 3-5% rise in raw milk costs in 2011.
Market expansion and stricter government safety controls had "created a healthy environment to nurture the future development of the dairy industry in China", Chief Executive Yang Wenjun said in a statement.
Mengniu would continue to develop small to mid-size ranches to boost the proportion of raw milk from ranches and "ensure product quality", Yang said.
Product contamination scandals last year hurt the dairy industry and major players including China Mengniu Dairy, Bright Dairy & Food Co Ltd and Inner Mongolia Yili Industrial Group Co Ltd.
The authorities seized more than 100 tonnes of melamine-tainted milk powder, the latest case after similarly contaminated milk powder was blamed for causing the deaths of at least six children and poisoning about 300,000 in 2008.
Mengniu said turnover for the first half rose 28.7% to RMB18.58 billion (US$2.91 billion) from RMB14.43 billion (US$2.26 billion) a year earlier.
Revenue from the liquid milk segment increased 30.8% to RMB16.29 billion (US$2.55 billion), accounting for 87.7% of total revenue, the company said.
Wu said he expected slower growth in sales volume in the remainder of the year compared with the first half because of a relatively high base in second half of last year.
