THE Inner Mongolia Yili Industrial Group Co Ltd plans to spend 376.5 million yuan (US$48.9 million) on a project to process milk powder as it aims to keep its leadership in China's dairy industry and 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 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 yesterday.
The project will help Yili add another 1,200 tons of processed milk powder daily, part of a plan to boost its competitiveness in the milk powder segment as it faces challenges from Mengniu and Shanghai Bright Dairy & Food Co.
Yili said earlier it will invest 500 million yuan in the same zone to build Asia's biggest manufacturing plant for infant milk powder, with an annual output of 60,000 tons of formula milk powder.
Yili announced these investments after posting a 20 percent gain in its net profit to 109 million yuan in the first three months of this year, following a 17.45 percent growth to 345 million yuan for the whole of last year.However, the company also noticed that its gap with first runner up Mengniu is being narrowed in terms of sales and profit.
Sales of Yili climbed 34.2 percent to 16.34 billion yuan last year while Mengniu achieved a 50 percent jump in sales to 16.1 billion yuan.
But Mengniu, the Chinese partner of Groupe Danone SA, earned a higher profit of 727.4 million yuan against Yili's 345 million yuan last year."As the exclusive dairy sponsor for the 2008 Beijing Olympics, Yili is in an advantageous position to boost sales and lift its brand image," said Wang Dingmian, an official from Guangdong Dairy Association.
Shanghai-based Bright Dairy & Food Co's profit gained 41 million yuan in the first three months, an increase of 11 percent from a year earlier.
The demand for dairy products in the country is expected to rise 12.8 percent annually to reach 38 million tons by 2010.
Source:佚名