China’s prominent dairy company, Inner Mongolia Yili Industrial Group Co. Ltd. (600887.SH) announced Monday that its net profit decreased 6.67 percent year on year to 762 million yuan($119.79 million) in the first half of this year, as rising cost and falling investment income.

The dairy giant’s half year revenue increased 11.8 percent year on year, reaching 21.18 billion yuan ($3.33 billion), according to the semiannual report released Monday. Although Yili’s quarterly revenue hit a record-high in three years, its profit between January and June dropped to the lowest point since second quarter last year.

Excepting non-recurring profit and loss 217million yuan ($34.11 million), the actual operating profit decreased even sharply to 18.56 percent, reaching 524 million yuan. The rising cost and falling investment income caused the profit decline, according to the Beijing-based Caijing.com.

The revenue of milk powder and milk products, which have the highest profit margin, dropped most with 16.26 percent.

Local dairy producers lost trust with the public after several years of scandals, including the 2008 melamine crisis that killed 6 babies and sickened at least 300,000. Yili recalled a brand of infant formula in July, after government tests found traces of mercury.

Meanwhile, global food and dairy companies are making another round of big bets on China's fast growing dairy sector. They are lured by projections of 10 percent annual growth for the sector and by Chinese consumers' willingness to pay a premium for foreign brands as they remain wary of local brands' safety records.

For instance, Denmark’s dairy giant Arla Foods became a strategic investor in Mengniu Dairy Co. Ltd. (2319.HK), China’s largest milk producer by sales volume, after buying a 5.9 percent stake at a price of 1.7 billion Danish crowns ($289 million) recently.