August 30, 2018 / 1:00 AM / a year ago

Dairy firm China Mengniu says H1 profit rises nearly 40 pct

HONG KONG, Aug 30 (Reuters) - China Mengniu Dairy Co Ltd late on Wednesday said its first-half net profit jumped 38.6 percent, boosted by reduced costs and stronger sales due to higher-quality products.

China’s top milk products manufacturer said in a statement that net profit for January to June came in at 1.56 billion yuan ($229 million), compared with a profit of 1.13 billion yuan at the same time last year. Revenue rose 17 percent to 34.47 billion yuan.

“As the industry goes deeper into supply-side structural reform, its focus has also changed from seeking to grow in scale to achieving steady growth in per capita consumption and quality upgrades,” said Chief Executive Officer Jeffrey Lu.

Gross profit margin increased 3.6 percentage points from a year ago to 39.2 percent amid relatively low prices for raw milk and an improving product mix.

“Mengniu will continue to explore overseas upstream resources and refine its global milk source supply chain,” Lu said in the statement.

Mengniu is stepping up development and sales of premium products and is working with major shareholders and partners like Danone Group and Arla Foods to bring more dairy goods to China. It said on Wednesday that it would work with China Modern Dairy to explore expansion in fresh milk and yogurt markets.

Mengniu said it would team up with Alibaba to increase the global reach of Chinese dairy products. It also plans to develop business in Malaysia and the Philippines in the second-half of 2018.

Shares of Mengniu have gained 1.1 percent so far this year, outpacing a 5-percent fall in the benchmark Hang Seng Index . ($1 = 6.8190 Chinese yuan renminbi) (Reporting by Donny Kwok; Editing by xxx)

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