Profits plunge but stock price rises instead. What's going on with Mengniu? | Krypton - Big Consumption

Author | Chen Sizhu

Editor | Xie Yunzi

"In 2024, Mengniu didn't sell well. It probably lost about 100,000 yuan throughout the year."

Zhang Cheng is an agent of Mengniu in a northern city. When asked about last year's business situation, he sighed to 36Kr like this. And in his perception, since entering 2025, the sales situation of Mengniu's liquid milk is still not ideal. "The sales are too slow, and the business is getting harder and harder to do."

To some extent, Zhang Cheng's problem also reflects the current dilemma faced by Mengniu Dairy. On March 26, Mengniu released its financial report. In 2024, its revenue was 88.675 billion yuan, a year - on - year decline of 10.1%; the net profit attributable to the parent company was only 105 million yuan, a year - on - year decline of 97.8%.

The picture is taken from Mengniu's financial report

However, although the profit has plummeted, the capital market remains optimistic about Mengniu. On the day after the release of the financial report, Mengniu's stock price once rose more than 8% during the session and closed up more than 5% on that day. In the following days, although Mengniu's overall stock price fluctuated, it still maintained an overall upward trend.

Some analysts believe that Mengniu's sharp decline in profit this time is mainly due to goodwill impairment. This has no impact on the actual business development and operation of Mengniu.

Mengniu's financial report shows that in the previous fiscal year, it made "impairment provisions" for its two major subsidiaries, Bellamy's and Modern Dairy, and the two items together affected the net profit by 4.33 billion yuan. However, an undeniable fact is that Mengniu's liquid milk business is also not optimistic due to the "prominent contradiction between supply and demand". In 2024, Mengniu's liquid milk business reached 73.066 billion yuan, a year - on - year decline of 10.97%.

The good news is that Mengniu is actively promoting the improvement of inventory, hoping to develop new product categories and broaden channels at the same time. On the other hand, a series of recent favorable policies on birth subsidies have also brought favorable space for dairy enterprises such as Mengniu.

With policy support, is there a new opportunity for Mengniu's milk powder business, which is regarded as its "weakness"? After completing the burden - reduction, when will Mengniu achieve the once - set "double - trillion" goal?

Clearing the "Historical Burden"

Mengniu's one - time provision of nearly 5 billion yuan for goodwill assets is to pay for its former "big - ticket" moves.

In 2016, Lu Minfang, the then CEO of Mengniu, proposed the "wolf - pack culture" and set the goal of achieving sales of over 100 billion yuan and a market value of over 100 billion yuan by 2020. Since then, Mengniu has entered an era of rapid expansion, successively acquiring brands such as Modern Dairy, Gaoke Dairy, Bellamy's, and Miaokelando.

Timeline of Mengniu's acquisitions of various enterprises, charted by 36Kr

However, the aggressive brand expansion strategy has not brought a real second growth curve to Mengniu. Instead, it has dragged down the company's revenue.

Take the acquisition of the infant milk powder brand Bellamy's as an example. Before this deal, in June 2019, Mengniu had just announced the sale of the "high - quality asset" Junlebao for 4 billion yuan. There has always been a voice in the industry saying that selling Junlebao was not Mengniu's original intention. But anyway, Junlebao's independence has not only made Mengniu's shortcoming in the milk powder business even more prominent but also means that Mengniu has cultivated a strong competitor for itself over the years.

Immediately afterwards, Mengniu announced the premium acquisition of Bellamy's for HK$7.86 billion in order to fill the gap left by Junlebao. However, the market has always been controversial about this acquisition, mainly because Bellamy's has never obtained the milk powder formula registration in China and can only enter the Chinese market through cross - border e - commerce.

Facts have also proved that this acquisition has buried a big pit for Mengniu's future development.

36Kr checked Bellamy's Tmall flagship store and found that there are only 4 types of milk powder on sale in the store, and the rest are various rice noodles and children's complementary food products. The financial report data also shows that Mengniu's acquisition has not saved Bellamy's revenue. In 2020, Bellamy's contributed 1.03 billion yuan in revenue to Mengniu, while in 2018 before being acquired, its revenue was about 1.6 billion yuan.

In 2021, Mengniu no longer separately disclosed Bellamy's revenue. Since then, Mengniu has started to make provisions for goodwill impairment for Bellamy's. The financial report data shows that in the previous year, the revenue of Mengniu's milk powder business was only 3.32 billion yuan, which is almost half of that five years ago.

Revenue table of Mengniu's various businesses in the past three years, charted by 36Kr

While the milk powder business has been in a slump, the situation of Modern Dairy is also not optimistic.

Since 2023, there has been a periodic surplus in the domestic raw milk market, and pasture enterprises are facing the same problem - the larger the scale, the less the profit. In 2024, Modern Dairy had a net loss of 1.417 billion yuan, a year - on - year decrease of 908.84%.

In the view of independent dairy analyst Song Liang, Mengniu needs to reduce the burden and correct mistakes. Solving the problems of Bellamy's and Modern Dairy at one time can also lay a good foundation for Mengniu's reform.

He also emphasized that there are not many product categories with goodwill risks in Mengniu, and it will still face the reality of the continuous contraction of the dairy market in the future.

To relieve the pressure, Gao Fei, the newly - appointed president, carried out reforms on Mengniu. While helping dealers to clear inventory, he also took measures to reduce costs and save money, such as laying off employees and cutting advertising expenses. However, according to Zhang Cheng's observation, these measures have not achieved results yet. "In actual business operations, there are still many cases of forced sales and cross - regional sales. Judging from the specific sales situation, only Telunsu is performing well."

Birth Subsidies, New Opportunities for Mengniu and Others?

It is certain that getting rid of the historical burden is conducive to the adjustment and optimization of Mengniu's various business lines. After the painful period of "weight - loss", if Mengniu wants to achieve the "double - trillion" goal, it still needs to find a second growth curve to support its performance.

Among them, the milk powder business is still highly expected.

Song Liang believes that although the population growth rate is declining, milk powder is still a business with relatively high gross profit in the dairy industry and is also the starting point for dairy enterprises to enter the family - oriented functional nutrition market.

Gao Fei also explained at the financial report meeting that after excluding the impact of Bellamy's impairment, Mengniu's milk powder business is still profitable.

During the Spring Festival in 2025, Mengniu established in - depth cooperation with "Ne Zha 2", and its co - branded products include Ruibuen, an infant formula milk powder under Mengniu. In 2022, Mengniu Ruibuen also obtained a patented affinity formula of "maternal MLCT + new OPO".

Meanwhile, Bellamy's is also accelerating the launch of new national standard products and launched two new products, "Organic Children's High - Calcium Growth Milk Powder" and "Norrell Infant Milk Powder", in August last year. At that time, Yan Zhiyuan, the vice - president of Mengniu, stated that "segmented growth and focused and in - depth operation" are the keys to winning in the milk powder industry, and Bellamy's still has a chance.

In the view of Lu Baoying, a senior analyst at Zhiyan Consulting, Mengniu has an advantage in industrial collaboration. It can reduce the risk of cost fluctuations of imported raw materials such as whey protein through large - scale procurement, thus ensuring the stability of milk powder production.

Of course, Lu Baoying also emphasized that in the highly competitive milk powder market, the brand concentration is also increasing, and enterprises such as Feihe, Yili, and A2 are all maintaining rapid growth. This also means that the growth space of Mengniu's milk powder business is being squeezed.

Song Liang said that compared with infant milk powder, Mengniu's adult milk powder performs well. "When the scale reaches a certain level, adult milk powder will definitely be an important revenue and profit support point for Mengniu's entire milk powder segment."

Actually, dairy enterprises including Mengniu may once again enjoy policy dividends.

Since March, many places including Hohhot, Changsha, Jinan, and Shenzhen have introduced detailed rules for child - rearing subsidies, with the annual subsidy amount exceeding 10,000 yuan. Under the favorable policies, dairy enterprises have followed up one after another. Among them, Mengniu provides 180,000 yuan in cash support for families with three children, Feihe invests 1.2 billion yuan to cover pregnant families, and Yili launches a combination of "1.6 billion yuan in subsidies + full - cycle services".

Guotai Haitong Securities believes that the recent introduction of detailed rules for birth subsidies in many places and the self - initiated birth subsidy plans of some dairy enterprises are expected to promote the recovery of the prosperity of categories such as milk powder and liquid milk and accelerate the narrowing of the supply - demand gap in the raw milk industry.

In the secondary market, on the day after Hohhot introduced the birth subsidy policy, the A - share dairy sector rose more than 10%, and the Hong Kong - stock dairy index rose more than 7%.

In addition, it is worth noting that since entering 2025, after years of falling milk prices and supply - demand imbalances, the entire industry has shown signs of improvement. In Song Liang's previous prediction, dairy enterprises including Mengniu will no longer need to spray a large amount of milk powder to consume milk sources, and the supply and demand of raw milk in 2025 are expected to tend to be balanced. For Mengniu, which is in the adjustment period, the improvement of the external environment and policies is also an opportunity that it urgently needs to seize to bounce back.

(Zhang Cheng in the article is a pseudonym)

Follow for more information