Mengniu recently announced its FY2024 full year financial results, reporting a decrease of 10.1% year-on-year in revenue to CNY88.7bn (US$12.2bn) as well as a significant drop of over 95% in profits for the year to CNY224.6mn (US$30.9mn) from CNY4.9bn (US$660.4mn) the previous year.
The firm attributed these declines to the impact of losses incurred by subsidiary Bellamy’s Organic in Australia (estimated at between CNY3.8bn to CNY4bn / US$522.8mn to US$550.4mn) and China Modern Dairy (estimated between CNY1.35bn to CNY1.55bn / US$185.7mn to US$213.3mn).
“Despite facing the challenges of weak domestic demand and industry turbulence [leading to] a negative impact on net profits, adjustments in [the past year] have enhanced stability and improved the visibility of Mengniu’s sustainable and healthy development,” the firm stressed in its final FY2024 financial results press release.
During its most recent investors meeting, Mengniu CEO Gao Fei urged confidence in the company’s long-term growth, reassuring investors that dividends would be allocated excluding these negative impacts at CNY0.509 (US$0.07) per ordinary share.
“Mengniu is now operating on a One Core Two Wings strategy which will focus first on strengthening our six core business units: ambient dairy, chilled dairy, fresh milk, cheese, ice cream and milk formula,” he told the floor.
“We intend to implement more upgrades and innovations to meet diverse and personalised consumer needs, [particularly] in terms of premium, value-added products.
“For instance, in the ambient milk segment we already have a leading position in the market, and have already seen the success of premium products such as with the Milk Deluxe Desert Organic Pure Milk which is milk from the Ulan Buh desert oasis that boasts a pollution-free environment and organic nutrition for the cows.
“To continue this pattern we are expanding the UHT milk category with a lactose-free milk range to increase our consumer base in China; as well as boost innovation and upgrades in the ice cream category.”
Plans for premiumisation and value-addition extends into the ‘Two Wings’ component of the company’s strategy as well – one of the wings focuses on nutrition and health platforms such as Mengniu’s M-ACTION sports nutrition beverage range.
“The other major ‘Wing’ for us is our overseas platforms, where Mengniu has been firmly driving our international business expansion and optimising our overseas brand assets,” he added.
“The Aice ice cream brand has been a key example of success, securing the No.1 Ice Cream Brand title in Indonesia and ranking second in the Philippines ice cream market.
“Mengniu is committed to international growth, and plan to leverage South East Asia as a bridge to more global markets – this will be made possible via our factories in Indonesia and the Philippines which can widen our reach.”
Cheese expected to grow in importance
Mengniu also views cheese as an important development space and has made concrete operational changes in 2024 to capitalise on this.
“The cheese market share in China and Asia is concentrating towards leading companies here, and we see that there is significant room to penetrate further,” he added.
“This is why we have integrated the Mengniu Cheese segment within our business, which was recently completed in 2024, in order to drive synergies and improve profitability.
“The plan is to continuously enrich our cheese product portfolio and further consolidate market share in this category, via both B2C and B2B channels.”
