China: Milk giant wobbles - dairy industry feels shockwave

One of the world's largest dairies, the Chinese Mengniu, reports a drastic drop in profits. These are the consequences. The Chinese dairy giant Mengniu Dairy Company Ltd. is staggering significantly. The company, listed on the Hong Kong stock exchange, experienced a dramatic drop in profits in 2024. The shockwaves also reach Mengniu's international investments. One of the first casualties is the Western Australian traditional dairy, Brownes Dairy. Mengniu barely remains in the black The annual report of Mengniu Dairy for 2024 shows a profit of approximately 27 million euros, only with great difficulty. In the previous year, it was a proud 589 million euros. The revenue of the dairy giant, ranked 8th in the world's largest dairies according to Rabobank, shrank by more than 10 percent to approximately 10.7 billion euros. The causes for the poor numbers are weak domestic demand for dairy products, loss-making investments, and significant impairments. China Modern Dairy incurs high multimillion losses For 2024, the Mengniu subsidiary China Modern Dairy reported a net loss of approximately 177 million euros. China Modern Dairy is one of the largest dairy farms in the People's Republic and the world. The publicly traded company also held over 250,000 dairy cows plus 240,000 heifers and calves in 47 farms mainly in Northeast China by the end of 2024. Although the earnings before interest, taxes, depreciation, and amortization (EBITDA) were significantly positive at approximately 359 million euros, impairments and a goodwill write-off pushed the agricultural holding into the red. Impairment also at specialist for organic baby food The Australian Mengniu subsidiary Bellamy's, a milk processor specializing in organic baby food, is also expected to have ended 2024 with a loss. Mengniu expects an impairment on business or company values and intangible assets, which according to Mengniu's estimates could amount to up to 482 million euros. In October 2024, Jeffrey Minfang Lu, the Deputy Chairman and former CEO of Mengniu, resigned from his position. Credit line terminated, dairy up for sale The consequences of the poor numbers at China's dairy giant Mengniu are being felt as far as Australia. The traditional Western Australian dairy, Brownes Dairy, is up for sale. The background: Mengniu terminated a credit line of approximately 112 million euros for Brownes. The Chinese conglomerate is one of the owners and financiers of Brownes Dairy through the consortium Australia Zhiran.