The company explicitly attributes this deepening loss to the persistent oversupply of raw milk within China, a condition that has kept market prices suppressed. Consequently, Modern Dairy has experienced a substantial drop in its average selling prices, directly impacting its revenue and profitability. This situation underscores the delicate balance between supply and demand, and its direct influence on dairy economics in major consuming nations.

Despite the widening net loss, Modern Dairy reports a degree of operational stability, with its cash EBITDA expected to remain steady at approximately 1.5 billion yuan, consistent with the previous year’s figures. This indicates that while the top-line revenue is under pressure, the company’s core operations are generating consistent cash flow, suggesting a degree of underlying resilience amidst challenging market conditions.

In response to the market headwinds, Modern Dairy has proactively implemented aggressive cost-saving strategies. The company anticipates a reduction in the cost of sales per kilogram of milk by more than 0.22 yuan compared to the previous year. Furthermore, they project a 10% year-on-year growth in raw milk sales volume, a critical factor expected to help mitigate the adverse effects of lower market prices. These measures reflect a focused effort on operational efficiency.