With the policy spring breeze combined with industry recovery, Mengniu will deliver a resilient performance by 2025. Gao Fei explains the breakthrough approach of "drinking milk, drinking good milk, drinking the right milk."

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On March 26, Mengniu Dairy (2319.HK) held its 2025 full-year earnings release at the Four Seasons Hotel in Hong Kong. Facing the dual challenges of macroeconomic environment and industry cycles, the company delivered a resilient operating performance, successfully navigating the cycle by adhering to long-termism and value creation.

Stable yet Improving Financial Performance, Continuous Shareholder Returns

The earnings report shows that in 2025, Mengniu Dairy achieved total sales of RMB 82.24 billion, roughly in line with expectations. Thanks to falling raw milk prices and ongoing lean operations, the company’s gross profit margin hit a record high of 39.9%, up 0.3 percentage points from 2024. The full-year operating profit was RMB 6.56 billion, with an operating margin remaining at a high level of 8%. After excluding related non-operating and asset impairment impacts, adjusted net profit attributable to the company’s owners was RMB 3.96 billion.

Strong operating cash flow is a solid foundation for Mengniu’s steady development. In 2025, the company’s operating cash flow reached RMB 8.75 billion, a record high; free cash flow also rose to RMB 6.3 billion, the best in history. Based on solid financial performance, Mengniu announced its shareholder return plan for 2025-2027, clearly stating that dividends will be steadily increased over the next three years, with a consistent buyback pace. In 2025, it plans to pay a dividend of RMB 0.520 per share, a steady increase from RMB 0.509 in 2024.

Mr. Gao Fei, President and Executive Director of Mengniu, stated at the release, “In the face of challenges, we chose to step out of the trap of low-price competition and focus on innovation to drive high-quality development. In the second half of the year, our business showed signs of stabilization and improvement month-over-month, a trend that continued into the first quarter of this year.”

Multiple Business Segments Flourish, Innovation Drives Structural Optimization

At the business level, Mengniu’s various segments demonstrated strong growth momentum:

• Room Temperature Business: Confronted with supply-demand conflicts and channel segmentation, the company broke through with product innovation to expand the market. The launch of the “Soft Milk” series of zero-lactose products addressed the needs of 660 million lactose-intolerant people, enlarging the consumer base. The TeLunSu brand, on its 20th anniversary, introduced the premium product “Shajin Set Hai,” deepening its value moat.

• Cold Chain Business: Outperforming the industry against the trend, it has maintained the No. 1 market share for 21 consecutive years. Guanyiliao, focusing on functional products, achieved exponential growth in the second half and continued to be the sales champion at Sam’s Club.

• Fresh Milk Business: Achieved double-digit growth, with “Daily Fresh Words” performing especially well. New products like zero-sugar double-protein milk effectively expanded the consumer base and rapidly penetrated Hong Kong and Macau markets.

• Infant Formula and Cheese: Infant formula brands Ruipuren and Yourui, as well as Bellamy’s, all grew over 20%. Cheese sales increased by more than 20%, and the synergy with MiaoKe Blue Ocean further strengthened the industry-leading position.

“One Body, Two Wings” Strategy Deepens, Creating New Growth Drivers

Building on the “Strong One Body” foundation, Mengniu’s “Two Wings” strategy has also made significant progress.

• Innovation Wing: The company continues to increase R&D investment in health fields, breaking through technical bottlenecks in deep-processing areas like lactoferrin and de-salted whey powder to meet international standards. The professional sports nutrition brand “MaiSheng” completed nearly RMB 100 million in Series A funding, with forward-looking layout gaining market validation.

• Internationalization Wing: Relying on expansion in Oceania and Southeast Asia, the company is growing and strengthening its overseas markets. Bellamy’s doubled sales in Vietnam and plans to expand into Indonesia and the Philippines; the Burra brand is enhancing product strength and collaborating with domestic business to develop global markets.

Looking Ahead: Policy Bonuses and Industry Recovery, Focusing on Core Nutritional Value

Looking to 2026, Mr. Gao pointed out that the dairy industry will benefit from both policy and market tailwinds. The release of the No. 1 Central Document and signals during the Two Sessions, such as “promoting dairy consumption” and “national milk supplementation,” inject strong confidence into the industry. Currently, China’s per capita milk consumption is only one-third of the global average, indicating huge market potential.

In response to diversified consumer demands and profound channel changes, Mengniu will focus on the core value of “high-quality protein” in milk, concentrating on three main tracks: basic nutrition, functional nutrition, and medical nutrition. The company revealed that a technology layout in high-protein functional nutrition is about to be launched, potentially leading market trends. Additionally, Mengniu plans to leverage the dual marketing opportunities of the 2026 Winter Olympics and World Cup to strengthen brand presence and sales conversion, achieving “brand and effect integration.”

Mr. Gao concluded, “Mengniu is steadily evolving from a traditional dairy manufacturer into a comprehensive provider of nutritional health solutions. We will create long-term, sustainable value for consumers, the industry chain, investors, and society through product value, innovation, management, and industry value.”