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Mengniu Still Going Strong
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Inner Mongolia Mengniu Dairy Industry (Group) Co Ltd yesterday reported continuing robust growth in revenue and profit of 50.1 percent and 59.21 percent in 2006, driven mainly by its innovative efforts and the explosive growth in China's dairy market.


According to the dairy major's 2006 annual financial report released yesterday, Mengniu generated 16.25 billion yuan in revenue, up from 10.8 billion yuan in 2005, and posted a record profit of 727 million yuan.


Mengniu's annual report comes on the heels of that of Bright Dairy & Food last month. Bright announced a growth of merely 3.1 percent in revenue, reaching 5.62 billion yuan, and a dip of 5.64 percent in profit, which was around 223 million yuan.


Although Inner Mongolia Yili Industrial Group Co Ltd, one of China's top three dairy producers along with Mengniu and Bright, won't release the report until late April, Mengniu's president, Yang Wenjun, said he believed his company will top the market in terms of growth.


The liquid milk segment continues to be Mengniu's revenue driver, accounting for 87.8 percent of its takings. Mengniu has been leading this market for the last four years.


"The result is within expectations," said an industry insider surnamed Yang who did not want to be named. "It is a reflection of the explosive growth of the Chinese dairy market."


An ACNielsen survey in December found the annual revenue of China's liquid dairy market grew more than 20 percent year-on-year.


Despite China's opening up of the market since entering the World Trade Organization, a few domestic players dominate the dairy market.


According to ACNielsen, the top three players in the liquid milk market account for 64.9 percent share, with Mengniu securing 33.3 percent compared with 28.6 percent in 2005.


Through research and development initiatives, Mengniu has managed to diversify its product mix to better meet the specific needs of different customer segments, fortifying its position as the top player in the industry, said the report.


Mengniu last year put in place a five-year plan starting from 2007, setting a goal of breaking into world top 20 by 2011. The company's shares in Hong Kong closed at HK$24.85 yesterday, rising by 3.76 percent - six times the price when it was listed.


(China Daily April 13, 2007)


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