CHINA MENGNIU DAIRY COMPANY LIMITED (2319.HK) 2025 Interim Results Legal Disclaimer The presentation is prepared by China Mengniu Dairy Company Limited (the "Company") and is solely for the purpose of corporate communication and general reference only. The presentation is not intended as an offer to sell, or to solicit an offer to buy or to form any basis of investment decision for any class of securities of the Company in any jurisdiction. All such information should not be used or relied on without profes ...

Financial Performance - The company's revenue for 2024 was JPY 8,675,000,000, a decrease of 10.1% year-on-year, with a significant decline in sales volume and prices [4] - Gross profit margin improved from 37.2% in 2023 to 39.6% in 2024, an increase of 2.4 percentage points, while operating margin expanded by 190 basis points to 8.2%, marking the best operating profit in the company's history [6][7] - Attributable net profit was JPY 4,435,000,000, excluding the impact of goodwill impairment from Bellamy and Modern Dairy [8][15] Business Segment Performance - Revenue from white milk and ice cream faced challenges, but chilled products and yogurt segments showed positive growth trends [9] - Formula milk revenue declined, but excluding Bellamy's impairment, profitability was maintained [10] - The cheese business stabilized and improved profitability, achieving a market share of over 49.5% [11][34] Market Performance - Fresh milk faced intense competition but saw a 20% growth in the high-end brand "Shiny Metal," which became the market leader among premium brands [28] - The ice cream segment experienced destocking pressure, but inventory levels improved in early 2025 [30] - The infant milk formula market returned to a growth track, achieving double-digit growth for the company's brands [31] Company Strategy and Industry Competition - The company is implementing a "One Core, Two Wings" strategy, focusing on core businesses like room temperature chilled products and fresh milk while expanding into new markets and product categories [18][19] - Emphasis on innovation, product upgrades, and improving supply chain efficiency to navigate industry challenges [52][54] - The company aims to enhance its brand value and market presence through strategic collaborations and marketing campaigns [41][44] Management's Comments on Operating Environment and Future Outlook - The management highlighted the current dairy industry challenges, including supply-demand imbalances and weak consumer consumption [52][56] - The focus will be on enhancing nutritional offerings and addressing consumer health needs, particularly in lower-tier markets [60][66] - The company is optimistic about future growth opportunities, especially in the context of an expanding middle class and increasing demand for high-quality dairy products [69][70] Other Important Information - The company reported a significant increase in free cash flow due to lower capital expenditures, allowing for a dividend payout ratio of 45% in 2024 [15] - The company is committed to advancing its ESG initiatives, including green packaging and sustainability efforts [50][51] Q&A Session Summary Question: What are the company's strategies for future growth? - The company is focusing on its "One Core, Two Wings" strategy to strengthen core businesses and expand into new markets [18] Question: How is the company addressing the challenges in the dairy industry? - The management emphasized the need for refined management and innovation to improve efficiency and navigate current challenges [52][54] Question: What is the outlook for the infant milk formula segment? - The company is optimistic about the growth potential in the infant milk formula market, especially with the aging population and increased health awareness [32]