(Yicai) April 30 -- China's milk industry should start to improve in the second half, after last year’s slowdown in sales due to oversupply, the chairman of Chinese dairy giant Yili Industrial Group said today.

Supply has been outstripping demand due to the increase in dairy cow farming in the upstream of the dairy sector, which flooded the market with fresh milk while demand has remained tepid, Pan Gang said at the earnings call, following the release of the Hohhot-based company’s latest financial report yesterday.

Yili’s revenue from raw milk climbed 0.7 percent in 2023 from the year before to CNY85.5 billion (USD11.8 billion), the report said. While rival Mengniu Dairy's raw milk sales jumped 4.9 percent to CNY82 billion and that of Bright Dairy advanced 2.8 percent to CNY15.6 billion.

All are far below the double-digit growth during the pandemic and these firms rely heavily on their income from fresh milk.

In the second half, the oversupply of raw milk will ease which will bring prices and inventories back to healthy levels, Pan said. Market competition this year will not be too stiff.

Yili logged a 10.4 percent jump in net profit last year from the year before to CNY10.2 billion (USD1.4 billion), while revenue climbed 2.4 percent to CNY126.1 billion (USD17.4 billion), according to the report. The company has set a goal of widening its profit margin to at least 9 percent by 2025, it added.

Yili’s share price [SHA:600887] closed up 1.1 percent at CNY28.61 (USD4) today.

Editor: Kim Taylor