(Yicai) March 27 -- Mengniu Dairy’s shares sank after the Chinese dairy and ice cream  giant said net profit fell 9.3 percent last year, mainly because of lower earnings at its majority-owned unit and higher income tax expenses.

Mengniu [HKG: 2319] closed down 9.9 percent at HKD17.08 (USD2.18) a share in Hong Kong today. The stock has halved in value over the past 12 months.

Net profit was CNY4.8 billion (USD664.1 million) in the year ended Dec. 31, the Hohhot-based company’s annual report showed yesterday. Revenue rose 6.5 percent to CNY98.6 billion (USD13.6 billion).

Growth slowed in China’s dairy industry last year amid an excess supply of raw milk, and Mengniu stored the excess, resulting in asset impairment, Lu Minfang, who was promoted to vice chairman from president yesterday, said on the firm’s earnings conference call.

Another factor was greater competition, which led to higher sales costs, Lu noted.

Vice President Gao Fei will take over as the new president, Mengniu said. Lu was president for seven years and will remain as an executive director.

Gao, 47, joined Mengniu when it was set up in 1999 and was promoted to vice president and head of the firm’s core room temperature business group in 2016.

Lu instituted changes in Mengniu’s supply chain, talent system, and digital operations during his tenure as president, boosting the firm’s business significantly, Song Liang, a dairy industry analyst, told Yicai. 

Mengniu likely chose Gao as the new president because of his wealth of frontline experience, which will help the firm better respond to the increased market competition, he added.

Editors: Dou Shicong, Tom Litting