China Shengmu Organic Milk warns of loss for 2024

China Shengmu Organic Milk (HKEX:1432) has issued a profit warning, anticipating a loss attributable to owners of the parent company ranging from RMB60 million to RMB80 million for the year ended December 31, 2024. This contrasts with a profit of RMB86.1 million in the corresponding period of 2023. The group expects a cash EBITDA in the range of RMB930 million to RMB980 million for the reporting period, representing a decrease of approximately RMB11 million to RMB61 million, compared with 2023. The expected loss is attributed to a decline in gross profit due to decreased sales volume and revenue, and an increased loss arising from changes in the fair value of biological assets. Specifically, the imbalance between supply and demand in the domestic raw milk market and proactive retirement of inefficient cows contributed to the downturn. The company notes that the average annualized milk yield per milkable cow exceeded 12 tonnes for the first time.