Vitasoy Delivered a Solid Performance in 1H FY2019/2020 and Continued to Invest in Building Infrastructure
HONG KONG,Nov. 21,2019 --
Financial Highlights
Six months ended 30th September
1HFY2019/20
HK$Mn
1HFY2018/19
HK$ Mn
Change
Net of FX
Impact
Revenue
4,684
4,448
+5%
+9%
Gross Profit
2,556
2,408
+6%
+10%
EBITDA
909
831
+9%
+13%
Profit before taxation
713
703
+1%
+5%
Profit Attributable to Equity
Shareholders of the Company
533
518
+3%
+7%
Basic Earnings per Share (HK cents)
50.2
48.9
+3%
+7%
Interim dividend per share (HK cents)
3.8
3.8
--
N/A
Vitasoy International Holdings Limited (SEHK Code:00345) today announced its interim results ended 30th September 2019.
In the first six months of the Fiscal Year 2019/2020,the Company achieved year-on-year growth of 5% in revenue and 3% in profit attributable to equity shareholders,to HK$4,684 million and HK$533 million respectively. Net of currency impact,revenue increased 9%,and profit attributable to shareholders increased 7%. Gross profit increased by 6% to HK$2,556 million,reflecting higher sales volumes. Enhanced manufacturing efficiency and favourable trends in certain commodity prices contributed to a modest improvement in Vitasoy's gross profit margin by 1 percentage point,reaching 55%.
Basic earnings per ordinary share were HK50.2 cents,an increase of 3% compared to the same period last year.The Board of Directors recommends an interim dividend of HK3.8 cents per ordinary share (1H FY2018/2019: interim dividend of HK3.8 cents per ordinary share).
Mr. Winston Yau-lai Lo,Executive Chairman of Vitasoy,said at a press conference today,"Despite more challenging economic conditions and intensified competition,Vitasoy has continued to deliver profitable growth albeit at a more moderate rate than the year before. We continue to focus on building strong foundations in our core markets and capabilities.
Mainland China grew 14% in RMB,on top of the remarkable 30% growth in the previous interim period. Hong Kong revenue was flat as influenced by slower than expected execution of part of our innovation program,whilst profit was affected by the final phase of our infrastructure investment program. In Australia,this year's extreme drought conditions significantly reduced the local supply of soybeans,and affected the material costs,production and product supply to customers. Singapore continued to grow revenue whilst investing in scaling up. Our joint venture in the Philippines,has progressed its plans to start local manufacturing in 2020."
Business Review
Mainland China-
Continued revenue growth,whilst investing and building for the future
Vitasoy China reported 8% increase in both revenue and profit from operations,reaching HK$3,244 million and HK$612 million respectively. The continued depreciation of the RMB has affected business results when reporting in Hong Kong dollars. Net of currency impact,revenue increased 14%,and profit from operations increased 13%. The operations continued to invest in brand building,organisational capability and manufacturing infrastructure during this period.
Despite fierce market competition,the local business reported a broad-based growth across all categories and regions for the two core brands - VITASOY and VITA. New products such as VITASOY No Sugar Soymilk and VITA No Sugar Teas were introduced for consumers that favour a more health-conscious lifestyle.
In order to support market expansion and improve in-store execution,the local business has initiated improvements to enhance route-to-market. E-commerce was instrumental to further outreaching into regions,in addition to the existing physical distribution infrastructure.
The construction of the new production plant in Dongguan,Guangdong is on track and the production is expected to commence in 2020,ahead of plan. Leveraging strong brand equity and an improved distribution model,the local business will focus on improving execution,expanding product distribution,and accelerating the growth in the second half of the year.
Hong Kong Operation-
Focusing on our core,renewing portfolio and infrastructure
In Hong Kong,revenue was unchanged,mainly due to the slower than expected execution of our innovation programme. Profit from the operations decreased as a result of its continued investment programme in reconfiguring the manufacturing and logistics infrastructure. These improvements will be completed in the current fiscal year and will enhance future efficiency and sustain longer term growth. The profit from the operations was HK$175 million,dropped by 10%,compared to the same period in the previous year.
Riding on the healthier consumption trend,Vitasoy Hong Kong has introduced more No Sugar product offerings in the VITASOY and VITA tea portfolios and increased the promotion of VITASOY Calci-Plus.
The Hong Kong business will continue to focus on growing core equites,refreshing its product portfolio and continuing its two-year investment programme to lay a solid foundation for long-term growth.
Australia and New Zealand-
Extreme drought affected local supply and margins
The Company's Australian and New Zealand business grew mildly by 1% in revenue in local currency,and focused on sustaining its leadership position in the local plant milk market category. Traditionally,we have sourced local Australian soybeans for production. However,unusual severe drought this year has greatly reduced local crops,affected raw material prices and caused disruptions in our supply.
The depreciation of Australian dollars has also negatively impacted on the financial results when they are reported in Hong Kong dollars. The revenue and profit from operation was HK$248 million and HK$35 million respectively,representing a drop of 6% and 23% in the first six months of FY2019/2020.
Whilst soybean supply shortage will likely continue to impact our business in the second half of the fiscal year before restoring stability during 2020,we are continuing to implement measures to mitigate supply risk and to leverage product innovation to restore growth in the medium and long term.
Singapore-
Sustained leadership in local tofu market,continued to scale up beverage business
Vitasoy Singapore recorded a 2% increase in revenue when reported in Hong Kong dollars. The business has sustained its market leadership in the tofu business and continued to scale up the imported beverage business. The profit from operation was affected by investment in branding,in-store activities and strengthening of management resourcing. The Company is focused on expanding the operation by growing the local and export markets for the tofu business,supported by an improved portfolio of imported beverages.
The Philippines-
Local JV continued to drive brand awareness and promote market trials
The joint venture with Universal Robina Corporation focused on driving brand awareness,promoting market trials of Vitasoy products,and using imported products from Hong Kong to build its local presence. The Company is planning to embark on local production in 2020,while improving the efficiency and cost structure of its product offering in this market,which shows clear potential for the long term.
Conclusion
Looking ahead,Mr. Lo said,"Over the next six months,we expect to sustain growth and continue our investment in advertising and organisational capability.We are confident in our long-term growth prospect and continue to drive our portfolio."
About Vitasoy
Vitasoy International Holdings Limited is a leading manufacturer and distributor of plant-based food and beverages. Established in 1940 by the late Dr. Kwee-seong Lo in Hong Kong China,the Company strives to promote sustainable nutrition through provision of a variety of high-quality products with Nutrition,Taste and Sustainability as the guidelines for its portfolio offerings. Vitasoy cares about the social responsibility and contributes to the communities that the company serves. Currently,Vitasoy has manufacturing operations in Hong Kong China,Mainland China,Australia and Singapore. Its products are available in about 40 markets worldwide.
Vitasoy is listed on the main board of the Hong Kong Stock Exchange (00345.HK) and included as a constituent of MSCI Hong Kong Index,Hang Seng Stock Connect Hong Kong Index and Hang Seng Stock Connect Hong Kong Big Bay Area Index and Hang Seng Corporate Sustainability Benchmark Index,among others.
Vitasoy website: www.vitasoy.com
