Shares of China Mengniu Dairy, the biggest liquid milk maker on the mainland, slid yesterday as net earnings came in lower than expected and founder Niu Gensheng was shifted to a non-executive position. Mengniu reported a net profit of 1.12 billion yuan (HK$1.27 billion) last year, compared with a net loss of 948.6 million yuan in 2008, when the milk industry was rocked by the melamine scandal. Revenue grew 7.7 per cent to 25.7 billion yuan. Mengniu said the dairy industry had recovered from the melamine crisis of 2008. The chemical was found in widespread use in the production of infant formula and dairy products on the mainland. At least six children died of kidney stones and tens of thousands were fell ill. Wu Jingshui, executive director and chief financial officer, said the performance last year had exceeded the level prior to the scandal. The company posted revenue of 21.32 billion yuan and a net profit of 935.79 million yuan in 2007. A report by Nomura International (Hong Kong) said Mengniu's net profit in 2009 was still 10 per cent below market expectations. In addition, investment sentiment on Mengniu was likely to be affected in the short term following Niu's reassignment. Niu quit as chief executive and took the post as board chairman in August last year. According to an announcement released by the stock exchange yesterday, he has been redesignated from executive director to non-executive director effective June 9 so as to 'focus more on the company's strategic management and planning' instead of daily operations. Shares of Mengniu dropped 8.8 per cent to HK$23.80 yesterday morning before closing at HK$24.25, down 7.09 per cent. The company said capital expenditure this year would be 1.3 billion yuan to 1.6 billion yuan, mainly to expand the production capacity and set up ranches and farms. Separately, the company's chief executive Yang Wenjun, who claimed to be a master's degree holder in business administration from Barrington University in the United States, has been facing challenges over the authenticity of his degree. It has been reported that the university was never recognised by the US Department of Education. Lu Jianjun, chief administrative officer, said Yang took all the classes required by the MBA scheme and passed all the examinations. 'Even if the university is proved to be a bogus one, we think Mr Yang should be considered as a victim,' Lu said. Mengniu declared a final dividend of 14.13 fen per share.