Mengniu achieves sales target
Cara Loong and Kandy Wong
China Mengniu Dairy, the country's biggest liquid milk supplier, said first-quarter sales rose more than 20 per cent, although it was still facing falling prices and high raw material costs.
Chairman Jiao Shuge said after an annual general meeting yesterday that Mengniu met its internal sales target in the first three months and beat the industry average of 20 per cent. But he said sugar prices soared in the first quarter this year. The competitive dairy market also made it difficult for milk producers to raise prices easily, he said.
Mengniu plans to launch new high-end products every month to ease pricing pressure on older products, a report from investment bank Merrill Lynch says.
The group, which competes with Inner Mongolia Yili Industrial Group, has launched two high-end products this year - OMP Milk Deluxe and Milk Supreme.
OMP was priced at seven to eight yuan higher per packet than its other standard milk product while Milk Supreme was priced four to five yuan higher.
'The gross profit for the high-end milk products is 100 per cent higher than the standard milk products which often have a 20 per cent to 25 per cent profit margin,' said president Niu Gensheng.
Net profit rose 43 per cent last year, helped by strong growth in liquid milk asChinese were getting used to dairy products.
The Dairy Association of China expects per capita dairy consumption to almost double to 24kg in 2010 from 13kg now.
Mengniu executive director and vice-president Yang Wenjun said due to China's economic growth, supply could exceed demand in the short run.
Shares of Mengniu rose 1.04 per cent yesterday, closing at $9.75. The stock has gained 47.73 per cent so far this year.