China Modern Dairy warns of wider loss despite revenue growth

China Modern Dairy Holdings Ltd. (HKEX:1117) has issued a profit warning, anticipating a net loss between RMB800 million and RMB1,000 million for the six months ending June 30, 2025, compared to a net loss of RMB207 million in the same period last year. While the company expects cash EBITDA to remain comparable to the 2024 figure of RMB1,515 million, this is overshadowed by significant losses incurred from revaluing dairy cows. Despite a decrease in sales cost per kilogram and a projected 10% increase in raw milk sales volume, the decline in raw milk selling prices and strategic culling of less productive cows have led to substantial revaluation losses ranging from RMB1,650 million to RMB1,850 million, compared to RMB500 million to RMB700 million in 2024. The company attributes the decreased price of raw milk to a supply increase in the domestic market. The company notes this revaluation is a non-cash item and won't impact cash flow. The company says that the supply and demand of the market will stabilize in the future.