The sector’s primary bellwethers, Yili Group and China Mengniu Dairy, both posted positive revenue growth for the interim period, though corporate profits diverged significantly. Yili achieved operational revenue of 64.33 billion yuan (up 4.1 percent year-over-year) with liquid milk sales rising 1.3 percent to 36.59 billion yuan, yet overall net profit contracted roughly 20 percent. Conversely, Mengniu posted revenue of 44.8 billion to 45.0 billion yuan (up 7.8 percent) and lifted its net profit by nearly 16 percent, outperforming market expectations and raising its full-year guidance to high single-digit growth.

The contrasting bottom-line trajectories highlight the outsized financial impact of external M&A assets and specialized subsidiaries. Yili’s interim earnings were weighed down by operational losses and goodwill impairments tied to infant nutrition subsidiary Ausnutria, which swung to a net loss of 726 million yuan. In contrast, Mengniu benefited from earlier asset write-downs on Bellamy’s and a operational turnaround at associate farming venture China Modern Dairy, alongside double-digit momentum in fresh milk (+30 percent), cheese (+30 percent via Milkground), and milk formula.

At the upstream farming level, market fundamentals are showing structural improvement as national herd consolidation and pasture optimization begin to rebalance raw milk supply. In July, average farmgate milk prices across major Chinese producing provinces turned positive year-over-year for the first time in nearly five years, signaling that prolonged supply gluts are easing and aggressive retail price-discounting wars are winding down heading into the second half of the year.