China Feihe, known for its claim of being "more suitable for Chinese babies' physique," is facing its most severe challenge since going public. On March 26, the company released financial results showing a simultaneous decline in both revenue and net profit attributable to shareholders. During the reporting period, the company achieved total revenue of 18.113 billion yuan, a year-on-year decrease of 12.7%, while net profit attributable to shareholders was 1.939 billion yuan, down 45.68% compared to the previous year. The company attributed the revenue drop primarily to intensified industry competition and reduced sales revenue from its infant formula milk powder products. In other words, the fundamental reason behind this disappointing performance may lie in the company's over-reliance on infant formula products, which are under significant pressure, coupled with the lack of substantial progress in its business diversification efforts.
From a segment perspective, the most alarming signal comes from the core business. As the pillar of Feihe's operations, infant formula milk powder products generated revenue of 15.868 billion yuan in 2025, representing a sharp decline of 16.8% year-on-year. The company's other dairy products business, including adult milk powder, liquid milk, rice cereal supplements, and other related products, collectively contributed 2.06 billion yuan in revenue. Although this segment's contribution to total revenue showed some growth, its gross profit margin was extremely low at just 1%, directly dragging down the company's overall profitability.
2025 marked the most significant revenue decline for Feihe since its listing on the Hong Kong stock market in 2019, with net profit attributable to shareholders nearly halving compared to the previous year. Throughout 2025, China Feihe achieved total operating revenue of 18.113 billion yuan, down 12.7% year-on-year, while net profit attributable to shareholders plummeted 45.68% to 1.939 billion yuan.
Examining the business segments reveals the most critical warning from the core operations. Feihe's long-standing heavy reliance on infant formula milk powder has exposed vulnerabilities during the industry's downturn. Although the company has expanded into other dairy products and nutritional supplements, these segments contribute minimally to overall revenue and profit. The other dairy products business, in particular, demonstrates low profitability that even undermines the company's overall earnings capacity.
The infant formula milk powder segment, serving as Feihe's backbone, generated revenue of 15.868 billion yuan in 2025, a substantial decrease of 16.8% year-on-year. The other dairy products business contributed 2.06 billion yuan in revenue. While showing some growth in revenue contribution, this segment's gross profit margin remained critically low at just 1%, further impairing the company's profitability. The nutritional supplements business generated revenue of 183 million yuan, accounting for merely 1% of total revenue.
From a profitability standpoint, Feihe's overall gross profit margin declined from 66.3% to 65.0%. A detailed segment analysis reveals underlying concerns: the much-anticipated "second growth curve" from other dairy products, including adult milk powder, achieved only a 1.0% gross margin, down 4.2 percentage points from the previous year, with gross profit plummeting 73.7%. The nutritional supplements segment also saw its gross margin decrease from 57.3% to 49.3%.
The deepest cause of Feihe's performance decline likely stems from the extremely high proportion of revenue contributed by infant formula milk powder products, which are facing pressure both in volume and price. Demand for infant milk powder remains sluggish while price increases face challenges. The sales volume of infant milk powder is primarily determined by newborn birth rates. According to data from the National Bureau of Statistics, China's birth rate declined continuously from 8.52‰ in 2020 to 5.63‰ in 2025. The number of newborns dropped from approximately 12 million in 2020 to about 7.92 million in 2025, representing a 17% year-on-year decrease in 2025. Concurrently, the population of children aged 0-3 years decreased from approximately 41.9 million in 2020 to about 26.5 million in 2025.
This structural shift indicates that the infant formula milk powder industry has completely transitioned from incremental competition to存量 competition, or even减量 competition, suggesting further intensification of market competition. The company's financial reports repeatedly mention the fact of declining birth rates. Therefore, considering factors such as the decrease in newborn numbers and fierce industry competition, demand for China Feihe's core business—infant milk powder—has declined.
Increased industry competition means that customer acquisition costs will continue to rise for Feihe, while competition for market share in the existing market will become more intense. In 2025, Feihe's sales and distribution expenses reached 7.162 billion yuan, remaining essentially flat compared to the previous year. However, the significant contraction in revenue scale caused the sales expense ratio to surge sharply from 34.6% to 39.5%.
At the end of 2019, the company's inventory stood at only 690 million yuan, but subsequently increased rapidly and has remained above 2 billion yuan in recent years. As of the end of 2025, the company's inventory increased by 16.33% compared to the end of the previous period, reaching 2.506 billion yuan, with its proportion of total assets rising correspondingly. The combination of declining revenue and increasing inventory may be the most direct indicator of weak channel sales momentum.