INNER Mongolia's Yili Industrial Group Co Ltd plans to allocate 376.5 million yuan (US$48.9 million) for processing milk powder as a way to maintain its leadership of China's dairy industry as it tries to stay ahead of its biggest rival, Mengniu Dairy Co Ltd.
Yili, the nation's largest dairy maker in terms of sales last year, said the investment will be spent on fixed assets, which located in an economic development zone in Hohhot, its home city in Inner Mongolia, the company said in a statement to the Shanghai Stock Exchange market today.
The project will help Yili to add another 1,200 tons of processed milk powder every day, part of Yili's plan to increase its competitiveness in milk powder segment after facing challenges from home rival Mengniu and Shanghai Bright Dairy & Food Co.
Yili said earlier it will invest 500 million yuan in the same zone to build up Asia's biggest manufacturing plant for infant milk powder which has an output of 60,000 tons of formula milk powder annually.
Yili's investment announcement comes after its net profit gained 20 percent to 109 million yuan for the first three month this year, following a 17.45 percent growth to 345 million yuan for last year.
The company has been caught by Mengniu in both terms of sales and profit. Sales of Yili was up 34.2 percent to 16.34 billion yuan for last year.
However, Mengniu's performance overshadowed Yili. Mengniu, the Chinese partner of Frence's Groupe Danone had sales of 16.1 billion yuan, a 50 percent jump, and profit reached a record high of 727.4 million yuan last year.
"As the exclusive dairy sponsor for 2008 Beijing Olympics, Yili will have an advantage to boost sales and lift brand image," according to Wang Dingmian, an official with the Guangdong Dairy Association.
Profit for Shanghai-based Bright Dairy & Food Co expanded by 11 percent to 41 million yuan after dropping 27.6 percent last year because of mounting expenditure on advertising cost and sluggish sales out of its home market.
Dairy makers in China are increasing capacity to meet a growing demand for dairy products based on the income growth of the population which is helping to boost sales.
Demand of dairy products is expected to rise at an annual rate of 12.8 percent to reach 38 million tons by 2010.
Source:佚名