Mengniu Still Waiting for Industry Reversal: Slight Decline in Profitability, Asset Clearing Continues

The long-term chill in the dairy industry still leaves a deep mark on Mengniu’s 2025 financials.

On March 6, Mengniu disclosed its 2025 performance forecast, with total revenue expected to decline by 7% to 8% year-over-year, which is consistent with the revised guidance given at the mid-year performance meeting.

However, when looking at key indicators like operating profit margin, the actual performance in 2025 shows some gap compared to management’s targets.

At the release of the half-year report in 2025, management held a relatively optimistic outlook for the second half of the year.

At that time, Mengniu expected that despite pressure on revenue, benefiting from lower raw milk prices and ongoing cost reduction and efficiency measures, the full-year operating profit margin could stay at 8.2%, the same as 2024.

But the latest forecast indicates that the operating profit margin in 2025 is expected to be between 7.9% and 8.1%, a slight decline year-over-year.

To cope with industry cyclical adjustments, Mengniu continues to intensify asset disposals.

According to the latest announcement, the company plans to recognize impairment provisions of about 2.2 to 2.4 billion yuan for idle production facilities and some doubtful recovered financial assets.

Compared to the approximately 4 billion yuan recognized in 2024 due to Bellamy goodwill and other factors, this impairment is narrower, so Mengniu has set its full-year net profit forecast between 1.4 billion and 1.6 billion yuan.

On the operational side, benefiting from stabilized raw milk prices and recovering demand, Mengniu’s liquid milk revenue saw sequential growth in the second half of 2025; categories like fresh milk, milk powder, and cheese all recorded double-digit growth throughout the year, highlighting diversification.

Additionally, Mengniu is actively developing the B2B tea and coffee supply chain through its “Milk Cube” division, aiming to build a new growth logic.

The industry has not yet reached a turning point. From channel feedback, the overall performance of dairy products during this year’s Spring Festival was tepid.

Wang Xuewei, partner at Siyuan Hengyue, said that both Yili and Mengniu experienced single-digit declines, with Mengniu’s decline slightly deeper. Besides the ongoing supply-demand imbalance, the diversification of holiday gift categories is also gradually replacing traditional dairy products.

However, signals of upstream supply clearance are strengthening.

Wang Xuewei told Xinfeng that in January, the price of loose milk had risen back to about 3 yuan per kilogram, roughly matching the contract milk price of 3.04 yuan, which has squeezed the cost advantage of small and medium-sized dairy companies; currently, there is basically no spray-dried powder phenomenon, indicating that supply and demand are gradually approaching balance.

In his view, based on current herd size and liquidation pace, capacity clearance could be completed by the first half of 2026. Coupled with the industry’s rational expansion, milk prices may enter a longer upward cycle.

“But before that, the market will still have fluctuations,” Wang Xuewei warned. “Poor data during the Spring Festival, and in February, loose milk prices fell back from around 3 yuan to below 2.7 yuan, reflecting that the industry is still in a weak state.”

Market opinions suggest that Mengniu’s current defensive stance—cutting investments, strictly controlling capital expenditure, and accelerating asset depreciation—is essentially preparing for a potential industry inflection point in the first half of 2026.

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