Hua Xia Shi Bao·2025-08-28 14:50Core Viewpoint - The dairy industry is experiencing a prolonged downturn, with leading companies like Mengniu reporting declining revenues and profits due to a combination of oversupply and weak demand in the liquid milk segment [2][3][5]. Group 1: Financial Performance - Mengniu's revenue for the first half of 2025 was 41.57 billion yuan, a decrease of 6.9% year-on-year, with liquid milk sales dropping over 10% [3][4]. - The net profit attributable to shareholders decreased by 16.4% to 2.0455 billion yuan, influenced by losses from joint venture Modern Dairy and the absence of previous year's gains from subsidiary sales [4][5]. - The average price of fresh milk in major producing provinces fell to 3.02 yuan per kilogram, down 5.6% year-on-year, reflecting a nearly 30% decline since the peak in September 2021 [5][6]. Group 2: Market Dynamics - The dairy industry is facing a supply-demand imbalance, exacerbated by a prolonged down cycle in raw milk prices, which have dropped nearly 30% since their peak in 2021 [2][5]. - The current market conditions are characterized by a significant decline in sales volume and prices, particularly in the liquid milk segment, which remains under pressure [3][4]. Group 3: Strategic Adjustments - Mengniu is diversifying its product offerings to mitigate the impact of declining liquid milk sales, with ice cream and cheese segments showing growth [7][8]. - The ice cream business generated 3.8785 billion yuan in revenue, up 15% year-on-year, while cheese revenue increased by 12.3% to 2.3739 billion yuan [7][8]. - The company is focusing on innovation and product development to address the challenges posed by the current market environment, with plans to enhance its presence in high-value segments [9]. Group 4: Future Outlook - Analysts predict that the supply-demand relationship in the raw milk market may begin to stabilize by the end of 2025 or early 2026, although current production levels remain high [6]. - Mengniu's management acknowledges the need for time to achieve a full recovery and emphasizes the importance of developing new products to alleviate supply-demand conflicts [5][9].