Decreased by 3.194 billion yuan, Feihe's revenue experienced the largest decline in nearly five years

Ask AI · Why is Feihe’s revenue sharply declining while costs are hard to reduce in sync?

As the leading infant formula brand in China, Feihe is increasingly affected by the declining birth rate in the country.

China’s newborn birth rate has dropped from 8.52‰ in 2020 to 5.63‰ in 2025, with only about 7.9 million newborns in 2025, and the number of children aged 0-3 decreasing from about 41.9 million in 2020 to 26.5 million in 2025.

Feihe’s revenue decreased by 12.7% (the largest decline in nearly five years) from 20.749 billion yuan in 2024 to 18.113 billion yuan in 2025, mainly dragged down by its core business.

Feihe’s core business—infant formula milk powder revenue fell from 19.062 billion yuan in 2024 to 15.868 billion yuan in 2025**, a decline of 16.8%.**

Although revenue from other dairy products increased from 1.514 billion yuan in 2024 by 36.1% to 2.061 billion yuan in 2025, an increase of 547 million yuan; and revenue from nutritional supplements rose from 173 million yuan in 2024 to 181 million yuan in 2025, a 6% increase of 8 million yuan, they are still significantly overshadowed by the 3.194 billion yuan lost from the core business, with 555 million yuan hardly able to fill the gap.

With the decline in core business revenue, Feihe naturally has to cut costs.

Sales and distribution expenses decreased by 0.3% from 7.181 billion yuan in 2024 to 7.162 billion yuan in 2025—saving 19 million yuan on promotional expenses. Administrative expenses, which are the second-largest cost, increased from 1.681 billion yuan in 2024 to 1.683 billion yuan in 2025, an increase of 2 million yuan. Research and development expenses are negligible. Financial costs decreased by 28.8% from 44.6 million yuan in 2024 to 31.8 million yuan in 2025 (due to reduced interest-bearing borrowings), saving 12.8 million yuan. In total, this leads to a reduction of about 30 million yuan.

Revenue fell by 2.636 billion yuan, but costs were only reduced by 30 million yuan, so it’s no wonder that Feihe’s net profit dropped from 3.654 billion yuan in 2024 to 2.094 billion yuan in 2025, a decrease of a full 1.56 billion yuan.

Feihe’s gross margin has actually not decreased much, only declining from 66.3% in 2024 to 65.0% in 2025, a drop of 1.3%, but its net profit margin fell from 17.21% in 2024 to 11.54% in 2025, a decrease of 5.67%.

Why can’t Feihe reduce costs? Because its revenue relies mainly on offline sales.

Feihe sells its products through over 2,800 offline customers (covering more than 70,000 retail points) to retail stores, baby product store operators, supermarkets, and large supermarket chains, which contribute 73.3% of total revenue from dairy products.

With a significant decline in core business revenue, Feihe’s net cash flow from operating activities in 2025 was 2.214 billion yuan, down from 4.179 billion yuan in 2024, a decrease of 1.965 billion yuan, a year-on-year drop of 47.02%.

In addition to other dairy products (such as adult milk powder) and dietary nutritional products, Feihe acquired Vitamin World in 2018, which focuses on selling vitamins, minerals, herbs, etc., in the United States, with revenue of 183 million yuan in 2025, accounting for only 1.01% of total revenue, which is not substantial.

On March 27, 2026, Feihe’s share price was 3.68 HKD (with a total market capitalization of 32.412 billion HKD), while on March 28, 2025, it was 6.3 HKD/share, a year-on-year decline of 41.59%.