September 6, 2006

China's Mengniu charges ahead with 60 percent increase in revenue 

China's Mengniu Dairy Co. Ltd, China's top dairy products manufacturer, posted RMB 7.5 billion (US$ 950 million) of revenue in the first half of 2006, up 58.7 percent on-year, Yao Tongshan, the company's inspector general of financial affairs, said in Hong Kong Tuesday (Sep 6).

Net profit reached 343.4 million RMB (US$43.2 million) during the first six months in 2006, an increase of 39.3 percent compared with the same period of 2005.

The popularity of the company's new range of value-added products has enabled the group to thrive despite intense market competition.

According to an AC Nielsen survey, Mengniu remained the largest milk seller on the Chinese mainland, with 31.7 percent of the country's liquid milk market, up from 28.6 percent in December 2005.

However, the company's rising advertising costs has dragged down its net profit margin to 4.6 percent in the first half of 2006 from 5.2 percent in 2005. 

Increase in prices of raw milk and sugar also cut into profits.

Lei Yongsheng, Mengniu's chief administrative officer, said the company would keep its advertising and marketing costs below 1 billion RMB (126 million US$) for the year.

The company is confident it would bring satisfactory returns to shareholders in the second half of 2006, Lei said. Meanwhile, it would improve quality control, management capabilities and implement its internationalization strategy.

China's rising consumer demands for quality dairy products would provide boost growth in the company, Lei said.