Investors, analysts, ladies and gentlemen, good morning. The twenty twenty-four interim results announcement of China Mengniu begins now. On behalf of China Mengniu, I would like to re-welcome you, all of you, to this event. Thank you very much for your long-term support and interest in the company. First of all, please pay attention to the disclaimer for today. Now, let me introduce to you our management team. They are Chief Executive Officer and Executive Director, Mr. Gao Fei. Chief Financial Officer, Mr. Zhang Ping. Vice President, Mr. Chen Yiyi. Vice President, Mr. Li Pengcheng. Company Secretary, Mr. Chris Kwok.
In today's event, Mr. Gao Fei will do a review of the twenty twenty-four first half financial performance and business review, and then there will be a session on outlook, and there will be then a Q&A. This event is going to be concluded at around 10:50 A.M. Mr. Gao, please.
Investors, analysts, media friends, good morning. Welcome for attending the 2024 interim results announcement of China Mengniu Dairy Company Limited. Now, let me go through our financial performance in the first half of 2024. In the first half, we achieved revenue of CNY 44.671 billion, down 12.6%. Given this macro environment, the overall consumption confidence and consumption desire was not as expected, and looking at inventory situation in the channels, it was not as in the past, so we had managed and controlled our sell-in rhythm, and we dealt with channel inventory so as to make sure that there won't be impact on sales arising from the terminal inventory. Now, there was oversupply of raw milk, and as a result, at the retail end, discount has been heavier.
And as a result, there was damage caused to price. From operation and management point of view, there is still big room to achieve improvements. In face of these short-term challenges, we actively adopted measures to improve efficiency and control expenses. So in terms of operating profit margin, there is an increase by 60-odd%, reaching 7%. Now, I know that investors are very concerned about operating profit margin. We are confident that we can maintain operating profit margin at an expansionary level. Now, for raw milk price decline and also other asset impairment in the first half, for JVs and affiliates, Shengmu and so on, they had achieved a
They had actually incurred a loss, so from CNY 110 million loss to CNY 170 million, so a change of 800,000. Besides, because of excess supply, as a result, there is CNY 350 million of inventory loss. In the first half, net profit attributable to owners of company down 19% at CNY 2.4 billion. If you look at categories, in the first half, various segments did not perform as expected. For the better segments or categories, for example, room temperature white milk and also Aice cream, well, consumption was weak, and at the same time, there was a conflict in relation to supply and demand and changes in the channels. We maintained a reasonable supply, and price has been reasonably stable.
For low temperature milk, it exceeded the market in growth. Profit margin is rising. For formula milk, because of privatization of Yashili, there has been some adjustments. So if you refer to revenue here, there is a decline, but profit, there is profit for this segment. When we face a problem in relation to supply and demand, and also consumption challenges, as said earlier, we put in measures to improve efficiency and controlled expenses. In terms of profit, there is increase in channel expenses. At the same time, with decline in revenue, overall speaking, selling and distribution expenses came down, but expense ratio went up. Administrative expense ratio, given the decline in revenue, the administrative expense ratio remained flat. And then operational efficiency, if you refer to all these indicators, they are at healthy level. You are concerned about inventory at the retail end.
In the first half, demand was weak. Our company maintained reasonable sell-in rhythm, and in terms of channel inventory flow, we increased some expenses in order to drive the movement of inventory so that we can maintain normal inventory level. In the first half, operating cash flow CNY 920 million, comparing with same period last year, down 44%, so that is because of fall in profits. Looking into operating cash flow in the second half, well there would be improvement, so on year-on-year basis, it would be stable, and then for capital expenditure, property, plant, and equipment, it was CNY 1.583 billion. Total CapEx for the year won't exceed CNY 3 billion. A lot of construction has been done already, so it will gradually come down.
In the past three years, it was a transformation stage. So for unnecessary CapEx, we would actually gradually reduce them. This is the twenty-fifth anniversary of the establishment of the company and twentieth anniversary of our listing. So, this is all owing to the support and interest from our investors. We need to thank support and trust of investors, so the board has authorized that in the coming twelve months, at maximum, we can do share buyback up to HKD 2 billion. For dividend payouts, it will continue to rise. We place shareholder return and interest at the most important place, and we will try our best to create the best investor return and value.
And by doing share buyback and other measures, we hope that we can give investors more confidence and certainty. Then, looking back into the first half, global economy was volatile. Domestic economy did not see enough confidence. As a result, there was much impact on our industry. So in previous communications, I said that there were conflicts in relation to demand and supply, that there was not enough momentum for various segments. So all these factors mean that the dairy industry in China face all these fluctuations and volatility in the macro environment, and we are in a very passive position. But then for dairy products, in terms of the rigid demands, it has not changed.
So over the long run, dairy demand remains resilient, driven by increasing consumer awareness of nutrition and health, so the rising momentum is still big. If you talk about online-offline integration, new consumption scenarios To B channel and so on, all these will mean new driving forces for the dairy industry. Consumers are very diversified, and then they have diversified needs for nutrition. So in the past, we are talking about drinking milk, now they're talking about eating milk, so there's a change from basic nutrition to general health, from primary processing to value-added further processing. This is upgrading of the overall industrial structure, so we see good potential in the future dairy industry. After being established for 25 years, we have undergone different cycles and fluctuations, and I think all these different cycles and fluctuations will be short-term only.
I think top industries, top companies, will be able to ride out all the difficulties. We have to seize the opportunities to develop well and solve all the major problems in the industry. We should seize the opportunities to give full play to the big market and big consumption strengths, and we should transform the major driving force and develop new quality productive forces. We should move towards high-tech, high effectiveness, high efficiency, high productivity.
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In terms of the different business segment for UHT, because of the challenging declining raw milk prices and weaker than expected demand this year, so it really faces short-term challenges. But we believe that, so we really need to enhance our product capability, so we pay attention to the upgrading logic of dairy product. We believe that at the moment for first half of this year, Milk Deluxe has performed quite well, and you can see that this has been quite resilient and anti-cyclical. We are also dedicated to high-end product in addition for consumers to continue to pursue high-quality products, especially for Milk Deluxe dessert, organic pure milk.
We start from the dessert, and we are working hard on building Milk Deluxe and not anything that can be called Milk Deluxe. In addition, at the foundational and basic level, and we are also building products with high value for money to work better and further expand into the rural areas. For the whole year, in terms of UHT yogurt as well as the milk drinks, we need to focus on and further upgrading of our product. We have various product, for instance, a yellow peach and a white peach, and for first half of this year, they have grown by 20%. Again, further solidifying our lead in this area, we need to come back to the value of the product.
For instance, we are also launching our original flavor product of yogurt, and it has also become a very popular product. In RTM, we continue to accelerate our RTM channel transformation, and we have focused on the opportunities in the online channels. In addition, we continue to work on our offline channels and maintain the leading position to further expand in each channel, while working on our To C end products. This year, we're also focusing on To B business. We have already entered into formula products, et cetera, and for instance, working with Mixue Bingcheng and Luckin Coffee and all these different local Chinese brands. For chilled business, the H1 of this year, it suffered in the industry an industry-wide single-digit decline.
However, for Mengniu, we have been able to enjoy a further growth. For the past twenty years, we continue to maintain number one in the chilled business. In terms of the product value and from the feedback that we have received in terms of nutrition and good flavor and et cetera, and what we have seen is that with Mengniu as well as our upgraded product and yogurt, we can see that we continue to enjoy positive growth, despite the soft market and expanded leading market share. In July, we have also entered into the Hong Kong market, and I believe that Yoyi C, this product, will be able to find its good position in Hong Kong and find its footing in the Hong Kong market.
Yesterday, I can see that, the latest figure reflects a good performance of Yoyi C. We're very positive on chilled yogurt business development, and we'll continue to work on further expanding in this area and solidify our strength in chilled yogurt. In terms of fresh milk, first half of this year, we have been faced with quite a lot of challenges. However, we have been able to realize double-digit growth and new products that have been launched during the Olympics, and which is the dual protein product, and it has been very popular. And in the fresh milk business with the Shiny Meadow, and we continue to enjoy the leading position in the offline channel.
In addition, we can also see that, for Shiny Meadow, in about March this year, it has entered into the Hong Kong market. It continues to grow, and it shows a lot of brands' influence and equity and further capabilities in the market. In addition, for ice cream, it continues to face pressure from a high inventory level in the H1 of 2024. However, we focus on the strengthening of the brand leadership and continue to make breakthroughs in the product innovations. We focus on expanding market coverage and improve channel control efficiencies through digitalization. For overseas business, which is Aice, the first half of this year has enjoyed very strong growth, and we can also see that the overall profit margin has also increased quite a bit.
Right now, for ice, it is ranked number one in the Indonesian ice cream market and the second in the Philippines market. We can see that this is a Chinese brand success story in Southeast Asia, and ice has been able to ride the wave of the Olympics and enjoy further popularity in Southeast Asia. We also believe that going into Vietnam and Thailand, they will further expand in these markets. For formula business, the revenue is down, and this is mainly because of the privatization of Yashili. We have streamlined certain products and focused on specific brands. On the profit side, we have been able to turn a loss into profit. In addition, at the beginning of the year, we have a set target of reducing the loss, so we can see that through our combing through, our business is now recovering.
And going forward for Bellamy's Organic and Reeborne, these are the two brands that we will be focusing on. In addition, we are also going to focus on Yourui and to create a functional product that strengthen bones, joints, and muscles for the adult milk formula business. So finally, it's on cheese. So cheese product is a very key stage of our transformation and upgrading. So we are using the cheese industry to help us to digest the raw milk industry and its development. So this is a very important force for the diversification of our products.
So Mengniu today, in the cheese sector, we have already become the absolute leader, and we also believe that while building the blueprint, we are simply at the beginning, going forward, in order to become even stronger, for instance, including butter, et cetera, and to really create a closed loop with the to B and to C products, to further expand our customer base and to build our business of two milk and one cheese business. So I now spend some of the rest of the time to talk to you about ESG achievement. So green is a very important underlying color, and sustainable development is a very important strategy for Mengniu. So we will be adhering to the green sustainable development strategy, and the ESG will be fully implemented in all the aspects of the execution of our business.
So that, under the leadership of the management, the company will go on to an even more sustainable and green future. For the first half of this year, we are focusing on two parts. One is zero deforestation, another one is green packaging. Those are the two we focus on. For Chinese dairy industry, and we are the first one to have come up with the zero deforestation by 2030. In January, this year, we have officially joined RSPO, became its member. We have also launched RSPO's procurement. In May, under Mengniu, and we have completed Mengniu's development in this regard and to finish our green procurement. In addition, we also focus on green packaging and set a goal for green packaging by 2025 and 2035.
We strive to achieve all the packaging would become recyclable, could be further to become biodegradable. We have also launched our one plus N sustainability reporting disclosure system. We have launched the 2023 annual ESG report, first TCFD report, first TNFD report in China dairy industry, as well as the first green packaging value report. We'll continue to disclose our information. In addition, in terms of these topics that investors pay attention to, that we will continue to disclose so that everyone can see the measures that we have taken in the green aspects. It can be said that this past summer, Paris Olympics has drawn the attention around the world.
As an Olympic partner for Mengniu, not only from the Olympics on the pitch, but also as sports in general, and Mengniu as the partner of Olympic. From the early preparation stage and to the lead up to the Olympics, as well as the Chinese athletic teams leaving for Paris and throughout the whole process. For Mengniu, we have been able to spread the word of striving for the personal best, as well as for the personal health of the whole public. I believe that you all have seen a video that was shot by Director Zhang Yimou, and this was a very high quality video.
It has received very good feedback, and very importantly, that, it has, brought us, to the high position as an Olympic partner and spreading the culture of Olympic, as well as striving for personal best. So we say that when we work on, marketing, and, the essence of marketing is to deliver a clear message. So this time, through this, message delivery of striving for personal best, and this has resonated very well with the consumers. We're also able to connect with the consumers. In the meantime, we have, the globally Olympic top message, and, on the ground level, we are able to connect with the, the citizens, and, we have the hundred city marathon campaign, to echo the spirit of the Olympic Games. Through the participation of the public, we are able to enable more participation.
During this period, we have also been working with the offline consumers, and this is the vision and aspiration of all our consumers, and they all want to achieve their personal best. For the consumers, not only that, we are the provider of dairy products, we're also the creator of a healthy lifestyle. In this general background of the market, we need to adhere to a brand long-term, and so that we will continue to grow. In the following years, we have Milan 2026, French Alps 2030 and Brisbane 2032, all these Winter and Summer Olympics. I believe that you'll all be able to see the shining moments of Mengniu. Through all these layouts, Mengniu will continue to build an international brand.
Starting from twenty twenty-five, Mengniu will be opening our top chapter and bring the healthy lifestyle and health concept to the world. So now, I spent some time on the future outlook to talk about the business operation and some of our thoughts in these areas. So since taking up the position as CEO here, the investors often will ask me about the strategy of Mengniu, and whether this will change. I continue to deliver the message with all the investors. So far, for Mengniu, we are in a correct strategic direction, so that's not going to change, and there's no need for this to change. And while adhering to this, we are also adhering to the current strategies, the profile, and this profile is here to stay for the management team.
In terms of our research, as well as the recognition by the board, and we can see that for all our customers, this is a best way forward, and really it reflects the fighting spirit of Mengniu, and we dare to dream, we dare to think, and we dare to take actions. I have been working in Mengniu for a long time, and I have a great emotional attachment to the company, and today we have all these great business from UHT to chilled and to fresh milk, et cetera, so all of these main business, how we are able to further develop and continue to innovate and to continue to catch up with others, this is very important. In the meantime, we can also see that. In our internal meeting, we have also talked about this.
First, how do we further strengthen our core business? For the innovative business, we need to continue to further expand and to establish a very good inventory. So you can also see that in terms of the new business, we have seen breakthroughs in certain areas, for instance, in the sports drinks, and we have M-Action, and this has grown by 300% for Mengniu so far. HMO, this is our first. We are the first in China, and this month, we have just been approved by the China Food and Drug Administration. Going forward, we will be using more professional resources and to further improve for the development in this regard.
And so for all of these strategies that we have talked about and can continue to flourish in the meantime in this globalization, I said, today, in Southeast Asia, they have enjoyed great success for the Chinese food industry. It is in this industry as a leading example, and we believe that we'll continue to expand to the global market and become a leader in this area, and in working in this environment to do well is very difficult to achieve, and we ask all the Mengniu's work need to come back to the essence of our core business, and we need to think about it from a consumer's perspective, to really put the consumers number one, client number one, and this is what we are thinking.
And with thinking of the consumer as well as the product, even if the external market has changed, we still believe that for the whole industry, including the shareholders, we need to create value. Second, for the customer-oriented, in a very difficult environment, we need to work even harder to strive to meet the demand of the customers. And thirdly, the Mengniu's business heads, I often tell them that we need to come back to profit-making, and we need to make sure, on one hand, we have a stable running of the business, improving efficiency, as well as effective growth. And I believe that this is also something that all the investors pay attention to.
Number four, which is for the full value chain approach and building this approach to realize a high level of product whole process and management. And for this whole process, we do believe that there's a lot of room to grow. And number five is long-term approach. Coming back to the whole environment as well as the ecosystem, and we really need to make sure that there is a long-term approach and development. And finally, which is on the bottom line, and we need to adhere to our integrity and discipline. So coming back to today, while maintaining our business strategy faced with this new environment, we also need to think about the following directions. So these directions as follows. Since taking up the post of the CEO, and these are the work priorities that I'd like to focus on.
Number one, which is to alleviate the industry demand and supply imbalances. The demand and the supply imbalance at the moment is quite an obvious issue, so we are working hard on optimizing the situation and to further alleviate the contradiction between supply and demand, and to build a better future for the China dairy industry so this is quite a major challenge that is faced by the industry and through a series of measures that we have taken, and we're now already in a healthy state and in addition, internally, and we need to improve quality and efficiency, and to work hard on improving efficiency through digitization, to make sure that we are able to carry out fine management. In terms of the lack of supply, we really need to focus on product innovation.
In the past, we have a seven-to-one theory, which is that for our core business, we invest 70% of the resources, so this is the one area that we need to focus on and 20% of resources plus 10% planning for innovative products. Going forward, we will be looking at the structural upgrade of the whole product offering in the industry. In terms of the organizational structure and we will be building a lean and efficient organizational structure to push forward for the development of Mengniu from the value creation and to the development of the business. In the meantime, in terms of CapEx and we continue to control the CapEx and continue to enhance free cash flow and to further improve our dividend payout capabilities to enhance the shareholders' return.
Finally, I would also like to thank all the shareholders who have been with us throughout, and we have a long-term view, and we will be working with our partners to continue to face up to the challenges and grasp the opportunities, and to continue to revitalize the consumer market, to embrace this new chapter of the market, to realize the growth in this new cycle, and we believe that we'll be able to achieve all these points. Thank you very much.