China Mengniu Dairy Company Limited

China Mengniu said 2023 revenue increased 6.5%, gross profit expanded faster than revenue, and operating profit margin rose 40 basis points for the year. Management also said net cash inflow was 8.35 billion, CapEx is coming down, and the dividend payout ratio increased from 30% to 40%. On the business mix, liquid milk grew almost 5%, ice cream grew 6.6%, Bellamy’s grew more than 40%, and cheese was described as a major emerging growth driver. For 2024, management guided to mid-to-low single-digit revenue growth and 30-50 basis points of operating profit margin expansion; they also said impairment on bulk milk powder is likely to continue because of excess raw milk supply, though falling raw milk prices should offset some of that impact.

Lu Minfang framed the year as one of strategic transition, saying the company will keep growing its existing businesses while accelerating innovation and globalization. He emphasized a new 1-3-2 strategy centered on value creation, R&D, brand building, digitization, channel optimization, and new business acceleration. His tone was confident but realistic: he repeatedly said the industry is mature, competition is normal, and the company should focus on quality growth rather than chasing unrealistic 10% revenue growth.

Zhang Ping gave the clearest financial guidance on the call: 2024 revenue is expected to grow mid to low single digits, and operating profit margin should rise 30 to 50 basis points. He also said 2023 had a roughly 300 million impairment on bulk milk powder, and that impairment pressure should persist in 2024 because raw milk oversupply continues, although lower raw milk prices should help offset it year over year. Management also reiterated that margin expansion and cash flow improvement remain priorities.

Analysts pressed management on whether slower growth versus peers reflected weak category positioning or strategic issues, and whether more impairments might hit bulk milk powder and cheese assets. Management responded that the main constraint is industry-wide slowdown and oversupply in raw milk, while individual drag categories such as domestic ice cream and milk formula also weighed on growth. On cheese, Lu said the business is warming up again, To-B is growing well, and there is currently no major write-down pressure on Milkground; on acquisitions, he said the company should be more disciplined and less rushed, but does not see a need for more M&A now.