The Hong Kong-listed company said in a statement revenue for the period was CNY49.03 billion (US$7.54b), down 2% year-on-year, and net profit CNY2.37b (US$3.64 million), up 0.7%.
According to Mengniu’s financial report, its flat performance was influenced by the continuous slump in sales of the group’s infant formula business, represented by Yashili International Holdings, a subsidiary that holds 51% stake of the group.
Yashili’s sales of infant formula has experienced a successive fall since 2012, down to CNY2.21b (US$340m) for the 12 months ended December 31, 2015, a fall of 21.4% year-on-year.
The report said oversupply in the market and volatility of raw milk prices in the last two years have dragged down the group’s performance. Competition has also intensified, with stronger marketing campaigns emerging, initiated by foreign dairy companies in conjunction with domestic milk producers’ moving down the value chain.
By category, liquid milk remained the largest earner with revenue registered at CNY43.33b (US$6.66b), accounting for 88.4% of the total revenue for the period, indicating a two percentage point increase from the previous year.
Mengniu Dairy enjoys the largest market share in China for liquid milk, gaining a slight increase in market share in 2015 through some of its flagship products in this segment, including Telunsu, Guanyiru and Chunzhen.
Of Mengniu’s total revenue from liquid milk, both UHT and milk drink saw a decline in share from a year ago, with UHT milk accounting for 49.3% compared to 55.1% and milk drink accounting for 24.1% compared to 27.7%. However, sales of yoghurt gained to reach a share of 26.6% compared to 17.2% last year.
The evolving trend in Mengniu’s liquid milk market share augurs well with its growth plan in the future, according to Yiping Sun, chairperson of the Inner Mongolia-based company.
“While the annual results failed to reflect our expectations, we anticipate our performance will improve in the foreseeable future through continuous efforts in optimising product structure and information cost management. I am confident that improvement will be reflected in the entire value chain and our profitability will remain sustainable,” she said.
Despite increasingly competitive pressure on domestic brands, she expected to see a significant comeback in infant formula business this year, adding that the company would not take price discounting in the marketplace.
