BRIGHT Dairy & Food Co.’s net profit rose 30.4 percent in 2013 on strong demand for dairy products that was offset by higher costs due to raw milk shortages in China that pushed up prices locally and internationally.

    Bright Dairy, China’s fourth-largest dairy company, made a net profit of 406 million yuan (US$65.36 million) last year, up from 311.3 million yuan profit in 2012, the Shanghai-based company said in a statement to the Shanghai Stock Exchange on Tuesday. The profit lagged an estimate of 459.5 billion yuan from eight analysts.

    Booming demand in China for dairy products such as milk and milk powder has become a big driver for the global dairy industry. Strong dairy demand has helped local rivals such as China Mengniu Dairy Co. increase annual net profit by 25 percent.

    But a shortfall in domestic production and the high cost of imports led to an 18.9 percent rise in Bright Dairy’s operating costs last year to 10.6 billion yuan.

    “We faced negative factors such as quickly rising prices both in China and abroad, a shortage of high quality milk supply and intensifying market competition,” Bright Dairy said.

    At the same time, China’s government is promoting consolidation in the sector to improve regulation and quality after a 2008 scandal, where dairy products contaminated with chemicals led to the deaths of at least six infants. The government’s stance should benefit larger dairies such as Bright Dairy and Mengniu.

    Bright Dairy, which held a 6.9 percent share of China’s dairy market in 2013 according to research firm Euromonitor, reported a fourth-quarter net profit of 98 million yuan, according to calculations. That was up around 10 percent from an 89 million yuan profit a year earlier. (SD-Agencies)