China Modern Dairy (1117) H1 2024 earnings summary

Executive summary

• Unit yields and raw milk production reached record highs, with average annualized milk yield per cow at 13 tons and total milk production at 1.45 million tons.

• Revenue for 2024H1 was RMB 6,418 million, down 3.2% year-over-year, mainly due to a 17.8% drop in integrated dairy farming solutions revenue.

• Cash EBITDA rose 19.2% to RMB 1,515 million, reflecting strong cost control and operational efficiency.

• Net profit swung to a loss of RMB -207 million from a profit of RMB 218 million in 2023H1, with no interim dividend declared.

Financial highlights

• Raw milk sales revenue increased 1.3% year-over-year to RMB 5,112 million, with sales volume up 13.4% to 1.4 million tons.

• Gross profit margin for raw milk business improved by 2.0 ppt to 30.3%, and group gross profit margin rose to 26.1%.

• Integrated dairy farming solutions revenue fell 17.8% to RMB 1,307 million, but gross profit margin improved to 10.0%.

• Net cash from operating activities dropped 81.8% to RMB 398 million, mainly due to changes in supply chain finance payments.

• Free cash flow turned negative at RMB -1,093 million.

Outlook and guidance

• Focus remains on cost leadership, high-quality development, full value chain integration, and employee empowerment.

• Strategic shift from volume-driven to value-driven profitability, with emphasis on product value and cost optimization.

• Continued investment in digital innovation and sustainable, low-carbon practices.

• Industry-wide raw milk production growth is slowing, with domestic production expected to rise 1.3–3.2% in 2024.

• Imports of milk powder are forecast to decline by 22% in 2024 due to increased domestic supply and weak demand.