China Mengniu returns to black in 2017, lags forecasts (updated)

Yashili International Holdings

28/03/2018 02:03

* Revenue rises 11.9 pct in 2017
    * Gross profit margin up 2.4 percentage points to 35.2 pct
    * Sees new development opportunities from upgrade of
consumption 

 (Add management comment, details)
    HONG KONG, March 28 Reuters) - China Mengniu Dairy Co Ltd
 2319.HK  said it returned to profit in 2017, helped by low raw
milk prices and solid sales growth for its milk and yogurt
products.
    China's biggest manufacturer said late on Tuesday annual net
profit came in at 2.05 billion yuan ($326.5 million), compared
with a loss of 751 million yuan in the prior year when its unit
Yashili International Holdings  1230.HK  booked a heavy
impairment loss on its goodwill. 
    The result missed a Thomson Reuters StarMine Smart Estimate
of 2.3 billion yuan drawn from 26 analysts. Smart Estimates give
greater weighting to more accurate analysts.
    Revenue rose 11.9 percent to 60.16 billion yuan. Gross
profit margin increased 2.4 percentage points from a year ago to
35.2 percent amid relatively low raw milk prices and an
improving product mix. 
    Chief Executive Officer Jeffrey Lu said the company would
look for opportunities from rising consumption of mid- to
high-end products such as yoghurt, as well as the growing
popularity of milk products among younger consumers.
    "Mengniu will follow closely the trend of consumption
upgrade and move toward the middle and higher end of the value
chain," he said in a statement. 
    Mengniu also said the dairy industry was looking at a
revival of sales of liquid milk and milk powder amid a recovery
in consumer confidence and the roll-out of China's two-child
policy.
   Looking forward, Lu said the dairy product industry was
"expected to maintain relatively fast growth in the next 5 to 10
years".
    Mengniu is stepping up development and sales of premium
products that are gaining favour with Chinese consumers and is
working with partners like Danone Group  DANO.PA  and Arla Foods
to bring more dairy goods to China.
    
($1 = 6.2781 Chinese yuan renminbi)

 (Reporting by Donny Kwok; Editing by Edwina Gibbs and Stephen
Coates)
 ((donny.kwok@thomsonreuters.com; +852 2843 6470; Reuters
Messaging: donny.kwok.reuters.com@reuters.net))