Consumer demand falls short of expectations, Mengniu Dairy's revenue and net profit both decline by double digits year-on-year | Financial Report

On the evening of Wednesday, August 28th, Mengniu Dairy released its 2024 interim report. 1) Key Financial Data Revenue: Due to lower-than-expected demand and highlighted supply-demand contradictions, the revenue for the first half of the year was RMB 44.6705 billion, a year-on-year decrease of 12.6%. Net Profit: The net profit for the first half of the year was RMB 2.532 billion, a year-on-year decline of 17.2%. Earnings Per Share: The basic earnings per share for the first half of the year were RMB 0.623 per share, a year-on-year decrease of 18.56%. Operating Profit: Due to the decrease in revenue, the operating profit (gross profit minus operating expenses) was RMB 3.1193 billion, a year-on-year decrease of 4.8%; the operating profit margin increased by 0.6% to 7.0% year-on-year. Gross Profit Margin: With the decrease in revenue in the first half of the year, the gross profit of the group decreased to RMB 17.9847 billion. Due to the decrease in raw milk prices, the gross profit margin increased by 1.9% to 40.3% year-on-year. Operating Expenses: In the first half of the year, the company actively improved efficiency and reduced sales expenses by 8.8% to RMB 12.6805 billion, accounting for 28.4% of revenue. Among them, product and brand promotion and marketing expenses decreased by 12.1% to RMB 4.4994 billion, accounting for 10.1% of revenue. Due to cost control, management expenses decreased by 11.1% to RMB 1.941 billion, accounting for 4.3% of revenue. Other expenses including education surcharges, urban maintenance and construction taxes, and other taxes amounted to RMB 0.2439 billion, a year-on-year decrease of 7.8%. 2) Shareholder Returns The company plans to repurchase up to HKD 2 billion worth of shares in the next twelve months based on market conditions. On Wednesday, Mengniu Dairy's Hong Kong-listed shares fell by 2.59%, marking a cumulative decline of nearly 42.8% this year. Overnight, Mengniu's U.S.-listed shares initially rose by over 3.6% but later fell by over 2.3%. Consumer Demand Falls Short of Expectations, Mengniu's Business "Across the Board Decline" The company's products are mainly divided into five categories: (1) Liquid Milk Business, mainly producing and distributing UHT milk, milk beverages, yogurt, and fresh milk; (2) Ice Cream Business, mainly producing and distributing milk-containing ice cream; (3) Milk Powder Business, mainly producing and distributing milk powder; (4) Cheese Business, mainly producing and distributing cheese; (5) Other Businesses, mainly involving the production and distribution of raw materials for dairy products. Among them, the revenue from liquid milk was RMB 36.2615 billion, a year-on-year decrease of 12.9%, accounting for 81.2% of Mengniu's total revenue. Ice cream revenue was RMB 3.3714 billion, a year-on-year decrease of 21.75%, accounting for 7.5% of Mengniu's total revenue. Milk powder revenue was RMB 1.6353 billion, a year-on-year decrease of 13.6%, accounting for 3.7% of Mengniu's total revenue Cheese revenue was RMB 2.1143 billion, a year-on-year decrease of 6.28%, accounting for 4.7% of Mengniu's total revenue