BRIEF: Modern Dairy’s loss widens on saturated China market

China Modern Dairy Holdings Ltd. (1117.HK) announced on Sunday it expects to record a net loss of between 800 million yuan ($111 million) and 1 billion yuan for the first half of this year — significantly wider than its 207 million yuan loss a year earlier. Its cash EBITDA will remain steady at around 1.5 billion yuan, it said, in line with the figure from the previous year.

The company said that oversupply in China’s raw milk market has persisted this year, with prices staying at low levels, leading to a significant drop in its average selling prices. It added the company has implemented various cost-saving strategies to bring down its operating costs. The cost of sales per kilogram of milk is expected to fall by more than 0.22 yuan compared to the previous year.

At the same time, the company expects its raw milk sales volume to grow approximately 10% year-on-year, helping to offset the impact of lower prices. Modern Dairy emphasized that its cost-reduction and efficiency-boosting measures are yielding results. With dairy demand gradually rebounding, raw milk prices are expected to stabilize and recover, improving the company’s profitability.

Modern Dairy’s stock opened lower on Monday, and closed at HK$1.04 by the midday break, down 0.95%.

By Lee Shih Ta

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