After two years in office, Mengniu Group President Gao Fei continues to "unload burdens"!

(Source: 21Style)

Written by: He Hongyuan

Has the turning point for Mengniu arrived?

From a revenue perspective, the company is still in a volatile period. On the evening of March 25, Mengniu disclosed its performance. In 2025, its revenue decreased by 7.25% year-on-year to 82.245 billion yuan, a decline of over 6.4 billion yuan.

Specifically, the revenue from liquid milk, which is Mengniu’s largest source of income, fell by 11.1% year-on-year to 64.94 billion yuan. Ice cream revenue grew by 4.2% year-on-year to 5.175 billion yuan, cheese business grew by 21.9% year-on-year to 4.32 billion yuan, and milk powder and other dairy products grew by 8.7% year-on-year to 6.647 billion yuan.

In terms of profit, Gao Fei, the president of Mengniu Group for two years, continues to “unload burdens.”

In 2025, Mengniu made impairment provisions for some idle production facilities that have been discontinued and have no plans for restart in the short term, as well as several financial and contractual assets with uncertain repayment capabilities (mainly involving accounts receivable from several customers and several entrusted loans), totaling approximately 2.3199 billion yuan in impairment provisions.

In 2024, Mengniu recorded goodwill and intangible asset impairment losses of 1.1547 billion yuan and 3.4901 billion yuan related to Bellamy respectively; as well as a reversal of previously recognized deferred tax assets and liabilities related to tax losses and temporary differences associated with Bellamy amounting to 663.4 million yuan (affecting income tax expenses), resulting in a total impact of 3.9814 billion yuan on the 2024 performance. In 2025, Mengniu did not make any further impairment provisions for goodwill and intangible assets.

Due to the various impairment impacts mentioned above, Mengniu’s net profit attributable to the parent company in 2025 was 1.545 billion yuan, compared to 105 million yuan in the same period last year.

In addition, Mengniu is comprehensively controlling costs. For example, at the end of 2025, Mengniu employed over 38,000 employees, down from over 41,000 at the end of 2024, a decrease of nearly 3,000 employees in a year. At the end of 2023, Mengniu had 46,064 employees, including about 2,556 from Miao Ke Lan Duo.

All of the above is laying the foundation for Mengniu to race towards a profit turning point.

On March 26, Mengniu Dairy closed at HKD 16.32 per share, an increase of 2.64%.

Revenue decline

Objectively, the decline in Mengniu’s revenue is influenced by industry-wide factors.

According to data from Euromonitor, the size of China’s liquid milk industry in 2024 was 344.2 billion yuan, corresponding to a CAGR of 7.2% from 2011 to 2021. Since then, the demand for liquid milk has faced phased pressure, with a CAGR of -4.2% from 2022 to 2024. Nielsen IQ data shows that in 2025, the overall growth rate of dairy products across all channels was -8.6%.

In such a market environment, dairy giants are under pressure. In the third quarter of 2025, Yili’s revenue fell by 1.70% year-on-year to 28.631 billion yuan.

However, Mengniu is not without growth.

For instance, its fresh milk revenue achieved double-digit growth, ranking first in market share among hypermarkets, O2O, JD, Tmall, and Pinduoduo, while continuously expanding opportunities in membership stores, snack wholesale, and leading tea and coffee markets.

However, according to reporters from the 21st Century Business Herald, Mengniu was relatively passive during negotiations with leading tea and coffee companies, resulting in a final product price that was not high.

In the milk powder market, Mengniu’s Bellamy high-end product line “Platinum Organic A2” is accelerating its expansion into markets in Vietnam and other Southeast Asian countries, with revenue growth exceeding 20%.

Additionally, Mengniu’s Misen launched a product line for energy/electrolytes/sports recovery, receiving nearly 100 million yuan in Series A financing. Special nutritional medical projects are expected to be commercialized within the year.

However, these various actions have not changed the trend of declining revenue for Mengniu.

Comprehensive cost reduction

Under pressure for growth, Mengniu has focused on controlling costs as one of its priorities.

Gao Fei referred to this action as “lean operation” during the earnings conference. Various adjustments have had an impact. In 2025, Mengniu’s gross profit margin increased by 0.3 percentage points year-on-year to 39.9%, mainly driven by the continuous decline in raw milk prices, which brought cost benefits. However, it should be noted that in the second half of that year, Mengniu’s gross profit margin declined by 0.88 percentage points, which may have been influenced by the proactive price reduction of Telunsu.

Gao Fei mentioned during the earnings conference that Mengniu’s overall sales volume declined by 4%, and the overall price dropped by about 3%, with the decline in sales volume having a slightly more noticeable impact on revenue.

In addition, in 2025, Mengniu’s sales and distribution expenses decreased by 6.4% to 21.6122 billion yuan. Among them, Mengniu’s product and brand promotion and marketing expenses increased by 4.2% year-on-year to 7.4105 billion yuan.

Due to quality improvement and efficiency measures taken during the year, Mengniu’s administrative expenses decreased by 1.9% to 4.1495 billion yuan; other expenses, including education surcharges, urban maintenance and construction tax, and other taxes amounted to 482.3 million yuan, a year-on-year decrease of 5.8%; Mengniu’s total business operating expenses (including sales and distribution expenses, administrative expenses, education surcharges, urban maintenance and construction tax, and other taxes) decreased by 5.7% year-on-year to 26.244 billion yuan.

However, even if Mengniu continues to strengthen the optimization of marketing expenses and control fixed costs, its economies of scale are still weakened with the decline in revenue. The result is that Mengniu’s operating profit (gross profit minus business operating expenses) in 2025 decreased by 9.5% year-on-year to 6.5644 billion yuan.

The aforementioned reduction of nearly 3,000 employees is part of Mengniu’s “lean operation.” As a result, Mengniu’s total employee costs decreased by 397 million yuan.

It should also be noted that in 2025, Mengniu’s capital expenditure decreased by 30.4% year-on-year to 2.4945 billion yuan. Of this, capital expenditure for new construction and renovation of production equipment and related investments amounted to 2.4527 billion yuan, and equity investments amounted to 41.8 million yuan.

Where to go?

Regarding the future, Gao Fei appears optimistic.

He disclosed at the earnings conference that in the first quarter of this year, Mengniu’s overall operating situation is positive, and it is expected to achieve high single-digit growth. Specifically, liquid milk is expected to grow at a high single-digit rate, fresh milk, milk powder, and cheese are expected to achieve high double-digit growth, while ice cream maintains single-digit growth.

Shen Xinwen, Mengniu’s new chief financial officer who took office in September 2025, also mentioned that for the entire year of 2026, Mengniu’s goal is to achieve single-digit growth in revenue while also expanding operating profit. “We have always emphasized the need to generate profitable revenue and cash flow profit,” he said.

Looking at the mid- to long-term, Gao Fei stated that Mengniu’s goal is to focus on revenue growth while improving operating profit margins.

To address the impact of past reliance on ambient white milk on revenue and profit, Mengniu will optimize its business structure through the “one body with two wings” strategy. Specifically, this means continuing to advance its core dairy business while expanding into nutrition and health and international markets.

In terms of innovative business, in the future, Mengniu will focus on the core pain points in the fields of “the elderly and the young”, as well as sports populations, increasing investment in medical nutrition, special medical foods, and sports nutrition.

In terms of internationalization, Mengniu has resources such as Aisue Ice Cream, Bellamy milk powder, and Burra Foods, and has accumulated a certain foundation in the Southeast Asian and Australian markets.

According to Mengniu Vice President Chen Yi, Mengniu’s internationalization has gone through the initial phase from 0 to 1, the exploratory phase from 1 to 10, and in the future aims to achieve a scale explosion from 10 to 100. “Although overseas revenue accounts for less than 10% of Mengniu’s total revenue, its annual growth rate is higher than the group’s average growth,” he stated.