In the first half of 2025, MENGNIU DAIRY (02319) steadfastly advanced the implementation of its "One Core, Two Wings" strategy, accelerating channel optimization and new business development while strengthening refined operations and quality enhancement. The company delivered a resilient half-year operational performance amid challenging market conditions.

Financial results showed that despite continued oversupply of raw milk and demand recovery falling short of expectations, with supply-demand imbalances persisting in the dairy industry, Mengniu achieved revenue of RMB 41.567 billion. On the profit side, key profitability indicators including gross margin and operating profit improved significantly. Gross margin increased by 1.4 percentage points year-over-year to 41.7%; operating profit reached RMB 3.538 billion, up 13.4% year-over-year; and operating profit margin rose 1.5 percentage points year-over-year to 8.5%. These performance metrics demonstrate Mengniu's effectiveness in cost control, product mix optimization, and operational management.

Notably, benefiting from further declines in raw milk prices that reduced procurement cash outflows and improved working capital management, Mengniu's net cash inflow from operating activities surged 46.2% year-over-year to RMB 2.806 billion in the first half. This strong operating cash flow provides solid financial support for the company's sustainable development, enabling more confident strategic positioning and business expansion amid complex and volatile market conditions.

**"One Core, Two Wings" Strategy Shows Results, Establishing Foundation for High-Quality Growth**

Mengniu's resilient first-half performance is closely tied to the comprehensive advancement of its "One Core, Two Wings" strategy. The company continues to strengthen its six core dairy business segments as the foundation, driving diversified category development. Simultaneously, it accelerates key technological breakthroughs and commercialization in the nutrition and health sector, while international business revenue achieved rapid growth with expanded overseas market coverage, injecting new development momentum.

Specifically, addressing diverse market demands for basic nutrition, high quality, and precision nutrition, Mengniu launched over 100 new products in the first half of 2025, covering chilled yogurt, fresh milk, milk powder, cheese, ice cream, and other categories. This drove category structure upgrades toward higher value-added directions and enabled differentiated growth in segmented markets.

The liquid milk business, serving as the company's revenue pillar, generated RMB 32.192 billion in revenue, accounting for 77.4% of total revenue. Through product mix optimization, the liquid milk business achieved dual improvements in quality and efficiency. The ambient temperature business focused on "drinking milk" and "drinking the right milk" needs, optimizing basic white milk category structure while steadily increasing market share and accelerating channel-customized product development to match different distribution requirements. Meanwhile, it expanded into precision nutrition segments, launching refreshed Mengniu functional milk and introducing high-calcium milk, prebiotic milk, and vitamin milk to cover diverse demographic needs.

The Telunsu brand continued deepening its premium positioning, with the 200ml Master Limited Edition achieving rapid sales breakthroughs. The organic series upgraded to desert milk sources with traceability marketing, further consolidating premium market advantages. The chilled business continued leading amid industry recovery, with yogurt sales outperforming the category and maintaining the #1 market share for 21 consecutive years.

Fresh milk business achieved double-digit growth, significantly outpacing industry growth rates with notable market share gains. The premium brand Mei Ri Xian Yu continued its momentum, with 4.0 and A2 series sales steadily increasing. Lactose-free dual-protein milk and HMO children's care nutrition milk expanded the consumer base, while sub-brand Xiao Xian Yu targeted young consumers and expanded into whole milk PET and flavored milk segments.

**Nutrition & Health Breakthrough and International Expansion Open Growth Space**

As one of the "Two Wings," Mengniu continues increasing R&D investment in nutrition and health, promoting deep dairy processing and achieving the transition from "basic nutrition" to "professional nutrition." The professional dairy segment independently developed China's first domestic whipping cream "Mengniu Multi-Effect Whipping Cream," which won the highest star rating at the 2025 International Taste Awards, breaking import dependency and becoming a core ingredient for leading tea, coffee, and baking brands with significantly improved market penetration.

The sports nutrition brand Maxwin maintains its positioning as "China's Professional Sports Nutrition Leader," establishing a professional product matrix covering pre-, during, and post-exercise nutrition needs. In the first half of 2025, it launched tart cherry liquid and sugar-free electrolyte powder, expanding into daily vitality nutrition demographics.

Hong Mo Biology, as Mengniu's precision nutrition core platform, received approval for independently developed LNnT (Lacto-N-neotetraose), becoming the only domestic company with dual certification for HMO (Human Milk Oligosaccharides) 2'-FL and LNnT, breaking overseas technological monopolies.

International business serves as another growth engine of the "Two Wings," achieving rapid revenue growth in the first half of 2025 with simultaneous expansion in overseas market breadth and depth. In ice cream overseas business, the Aice brand deepened Southeast Asian channel deployment through its "Freezer Investment Program," cumulatively deploying nearly 600,000 freezers in Indonesian rural areas, covering approximately 400,000 retail terminals. Currently, Aice holds a 34% market share in Indonesia, ranking first, second in the Philippines, and breakthrough to second place in Vietnam's market share.

In overseas milk powder business, Bellamy's Organic accelerated international expansion beyond consolidating the Australian domestic market. The first half saw product line upgrades with Classic Blue Can series and Organic Blue Shield series launching in Vietnam and other Southeast Asian markets.

**Industry Recovery Period Expected to Highlight Leading Advantages**

Looking ahead to the second half of 2025, as national consumption stimulus policies take effect and consumer confidence recovers, combined with stabilizing raw milk prices, supply-demand contradictions in the dairy industry will continue improving, with the industry expected to enter a bottoming-out recovery channel.

As an industry leader, Mengniu will continue following the guidance of "drinking milk," "drinking good milk," and "drinking the right milk," deepening its "One Core, Two Wings" strategy. In "One Core" businesses, it will further optimize liquid milk product structure and accelerate growth in high value-added categories like milk powder and cheese. In "Two Wings" businesses, it will continue breakthrough core technologies in nutrition and health while expanding international market share.

Additionally, Mengniu will continue strengthening refined operations, improving channel efficiency and supply chain resilience through digital transformation, optimizing cost control capabilities, and driving further improvements in operating profit margins. The company plans to continue share repurchases over the next 12 months at levels no lower than those executed in the previous 12 months, both demonstrating board confidence in long-term development and returning value to shareholders through improved earnings per share.

In conclusion, amid industry structural upgrades and leading player concentration trends, Mengniu is well-positioned to further expand market share during the industry recovery period through its comprehensive category positioning, technological R&D advantages, and global vision, leading Chinese dairy into a new development stage characterized by "high technology, high efficiency, and high quality."