(Yicai Global) Aug. 29 -- China's largest dairy cattle breeder and raw milk supplier, China Modern Dairy Holdings Ltd. [HKG:1117] posted first-half losses of CNY670 million (USD100 million) after a sharp fall in the selling price of raw milk.

The firm pulled in CNY2.34 billion (USD350 million) in revenue over the period, up 5 percent from a year earlier, while net losses were 16 percent larger, the company said in its interim report on Aug. 28.

The rising revenue was mostly due to increased sales. Modern Farming Group Co., the firm's parent, sold CNY1.94 billion in raw milk in the first six months, up 23 percent from the same time a year earlier. The report pinned the large losses on a decline in the selling price of raw milk.

The price of raw milk fell 11 percent to CNY3.59 (USD0.54) a kilogram from the same period last year, hitting profits hard. As the price declined, Modern Dairy had to eliminate cows with lower milk yields in order to control production capacity, which lost CNY497 million.

In the first half, China's domestic raw milk supply and imports increased, but demand at major firms declined, leading to an oversupply and subsequent fall in price.

In breeding, increasing production, cutting costs and stopping losses will remain a core objective in the second half, management at Modern Dairy said. In the downstream sector, it will work with Inner Mongolia Mengniu Dairy Group Co. to open up to a broader market.