(CN) Mengniu Dairy to increase output

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South China Morning Post

http://biz.scmp.com/bizchina/ZZZ2JXUOY6E.html

Thursday, April 7, 2005

 

EARNINGS

Mengniu Dairy to increase output after maiden profits

China's leading milk producer records full-year earnings of 319.39

million yuan

 

The mainland's biggest milk producer, China Mengniu Dairy, will

increase output by 37 per cent this year, after announcing its first annual

results since its listing in June last year.

The company aims to produce 2.75 million tonnes of milk this year, up

from two million tonnes last year and 1.26 million tonnes in 2003.

 

Mengniu also plans to diversify income by developing new products such

as milk powder, specialty milk beverages and yoghurt products.

 

" With mainlanders becoming more affluent, they are increasingly

concerned about health, " said Lei Yongsheng, company secretary and chief

administrative officer.

 

The dairy firm posted net profit of 319.39 million yuan, 6.5 per cent

more than forecast in its listing prospectus last year, and 94.3 per cent

more than the 164.37 million yuan recorded in 2003.

 

Turnover advanced to 7.21 billion yuan, up 77.1 per cent from 2003.

 

ACNielsen said Mengniu captured 22 per cent of the liquid milk market

by volume by December last year, compared with the 17 per cent in December

2003, making the group the leader in the mainland liquid milk sector.

 

The group attributed the increase in turnover to surging consumption

of liquid milk on the mainland, where consumption is still low when compared

with other Asian countries.

 

Liquid milk and ice-cream remained the primary and secondary revenue

contributors respectively, accounting for 84.5 per cent and 11.2 per cent of

sales last year.

 

At the end of last year, the company had 572.3 million yuan cash flow

from operations, up 61.5 per cent from the 354.3 million yuan by the end of

2003.

 

Debt-capital ratio was 27.8 per cent last year, compared with the 38.6

per cent in 2003.

 

Gross margin was 22.27 per cent last year, against 25.07 per cent in

2003.

 

The average price of liquid milk was down 3.8 per cent last year.

 

But Lu Jun, executive director and vice-president, said prices would

remain stable this year and stressed that the firm would not cut prices

further to increase sales.

 

The company will pay a final dividend of 5.85 fen per share.

 

According to IBC Asia and Rabobank International, China's output of

dairy products has increased at an annual rate of 11.6 per cent over the

past 20 years. The China Food Industry Association said that by 2030

domestic consumption would reach 25kg per person per year.

 

However, China's dairy consumption is starting from a low base

compared with cheese-loving Europeans and milk-gurgling Americans.

 

According to official figures, the annual per capita consumption of

dairy products in China is 7kg, compared with a world average of 100kg.