Mengniu aims to make more high-end products

China Mengniu Dairy aims to increase the proportion of high-end products to offset rising costs and maintain its profit margin.

Wu Jingshui, the chief financial officer of the country's No1 dairy products maker by sales volume, said the price of the most vital raw material for the industry - milk - increased by 15 to 20 per cent last year. However, he believed the price would remain stable this year as the 'possibility for further price rises is small'.

The company's gross profit margin last year was 25.7 per cent, down 1 percentage point from 2009.

Mengniu adjusted sales pricing for its high-end products and yogurt in October last year but Wu said the impact of that price review on annual revenue was less than 2 per cent.

He said the firm this year would try to maintain its gross profit margin but would consider increasing prices if the margin fell short of the target.

'We will closely follow the market behaviour of both the raw material and our products and decide if prices should be adjusted.' He said Beijing had not issued any order this year barring dairy enterprises from raising prices, which it did temporarily last year to check runaway inflation.

Wu said the ratio of products with high added value accounted for about 22 per cent in the company's products line, and Mengniu aimed to increase it by 1 to 2 per cent every year in the following years.