Vitasoy Maintains Market Share and Strengthens Position in FY2019/2020

HONG KONG,June 19,2020 --

Financial Highlights

12 months ended

31st March 2020

FY2019/20

HK$

Mn

FY2018/19

HK$

Mn

Change

Net of FX Impact

Revenue

7,233

7,526

-4%

-1%

Gross Profit

3,851

4,042

-5%

-2%

EBITDA

1,097

1,228

-11%

-8%

Profit before taxation

679

956

-29%

-26%

Profit Attributable to Equity Shareholders of the Company

536

696

-23%

-20%

Basic Earnings per Share (HK cents)

50.4

65.6

-23%

N/A

Final dividend per share (HK cents)

28.4

38

-25%

N/A

Vitasoy International Holdings Limited (SEHK Code:00345) today announced its annual results ended 31st March 2020.

FY2019/20 was a challenging year for all businesses with extraordinary local market events from droughts,bushfires,and social unrest to the global COVID-19 pandemic universally hitting all economies and industries. In response,Vitasoy focused intensely on operational efficiencies,health protection of its employees and integrity of its infrastructure to mitigate the immediate impact on operations.

In FY2019/20,on a constant currency basis,revenue and profit attributable to equity shareholders of the Company dropped by 1% and 20% respectively. In Hong Kong dollars (HKD),the Group's revenue dropped by 4% to HK$7,233 million,while profit attributable to equity shareholders dropped 23% to HK$536 million.Gross profit dropped by 5% to HK$3,851 million; while gross profit margin decreased slightly to 53% (FY2018/2019: 54%),mainly due to lower sales volume and higher depreciation cost in spite of favourable commodity prices,particularly in sugar and paper packaging.

The Board of Directors recommends a final dividend of HK28.4 cents per ordinary share (FY2018/2019: final dividend of HK38 cents per ordinary share). Together with the interim dividend of HK3.8 cents per ordinary share (FY2018/2019: an interim dividend of HK3.8 cents per ordinary share),the total dividend for FY2019/2020 will be HK32.2 cents per ordinary share (FY2018/2019 total dividend: HK41.8 cents per ordinary share).

During the recent financial year,Vitasoy successfully completed significant infrastructure projects in Mainland China and Hong Kong to support future growth plans. Mainland China,as the Group's biggest revenue contributor,achieved 1% growth in RMB terms despite COVID-19,while Hong Kong strengthened its market share in core categories. Despite the unfavourable market conditions,Australia and New Zealand continued to grow with revenue increasing by 3% in local currency terms thanks to the success of new product innovation. Vitasoy has also continued to expand its operations in South East Asia and made progress in both Singapore and the Philippines.

Vitasoy achieved significant progress in its Environmental,Social and Governance (ESG) goals for FY2019/2020. These include achieving a steady improvement in ESG ratings,such as joining the Top 30 most sustainable companies in the Hang Seng Corporate Sustainability Index as well as being the only company in Hong Kong to enter the Global 100 Sustainable Companies index of Corporate Knights. Vitasoy also established a Board-level ESG Committee to help steer and ensure sound execution of its Sustainability Framework.

Mr. Winston Yau-lai Lo,Executive Chairman of Vitasoy,said at a press conference today,"Throughout Vitasoy's 80-year history,we have remained resolute and stayed focused on our vision. Because of this,Vitasoy remains on pace to continue broadening its impact via the provision of tasty and nutritious plant-based foods and beverages during this current period of disruption and uncertainty."

Business Review

Mainland China -

Continued Leadership of Soy Category and Market Share Growth of Both Soy and Tea

Vitasoy China reported a 1% increase in revenue in local currency terms. Growth in market share for both VITASOY and VITA brands continued in core markets despite the current economic headwinds.

The outbreak of COVID-19 and the enforcement of related measures in the second half of FY2019/2020 have posed a short-term material impact to local manufacturing and commercial operations. This was particularly apparent in Wuhan,Hubei province,and significantly impacted the on-premise and on-the-go channels. Yet,there was strong growth on e-commerce channels and continued market share growth,which reflects the continued appeal and resilience of Vitasoy's brand franchises in Mainland China. Local operations have also progressed digital transformation initiatives and centralised shared services operations during the year for lower costs and higher accuracy.

However,the depreciation of RMB has affected business results when reporting in Hong Kong dollars. The revenue and profits of local operations in Mainland China have decreased by 3% and 27% respectively in HKD terms.

Mainland China is expected to restore its growth trajectory in coming fiscal year. The construction of the new Changping production plant in Dongguan,Guangdong province,has progressed and is expected to commence production in 2020 which will strengthen Vitasoy's capacity to support future growth in Mainland China.

On product side,Vitasoy China will focus on extending its market leadership in the soymilk category across key markets,complemented by the additional growth of the tea portfolio.

Hong Kong Operation-

Enhanced Leadership Position Despite Exceptional Challenges

The social unrest and continued COVID-19 ramifications have not only affected core product revenue,but also impacted the Vitaland school tuckshop business due to school closures in Hong Kong in November2019and during the pandemic. Overall revenue and profit in the local market declined 7% and 14% respectively versus the previous year.

Despite this,the market share of core brands VITASOY and VITA has grown as Vitasoy Hong Kong combined a strong focus on fundamentals for the classic brand products with on-trend successful innovation via the launch of new nutritional and no-sugar product variants.

To support future growth,Vitasoy has completed an infrastructure investment programme and installed new production lines. Apart from strengthening the infrastructure and cost efficiency,the local operation will stay focused on quality execution of the Classic portfolio and the launch of selective and relevant on-trend innovation.

Australia and New Zealand -

Sustained Plant-based Portfolio Growth Amid Market Challenges

Australia and New Zealand continued its growth with revenue increasing by 3% in local currency terms due to continued innovation in the plant-based milk space. During the year,revenue decreased 4% and profit dropped by 17% in HKD terms due to AUD depreciation.

The combination of extreme drought and bushfire disruptions reduced local soybean supply,increased material costs and also constrained production,which have inhibited Vitasoy's ability to supply customers.

Encouragingly,the new product innovation has propelled the business through all the challenges of last year and enabled the Group to capture new opportunities in the market which has displayed a growing appetite for plant-based products. Vitasoy expects continued growth in this market by building on its market leadership position,innovation and the strong consumer and retail interest in plant-based foods and beverages.

Singapore -

Maintained No. 1 Position in Tofu Plus Strong Export Growth

Vitasoy Singapore recorded an 8% increase in revenue in local currency terms and 6% in HKD terms. The operation maintained its leadership in the core tofu category,expanding its export and made further gains in imported beverage drinks.

Operating profit recorded a significant 482% increase in local currency terms over last year.This was due to a more profitable category and a channel mix combined with higher manufacturing efficiencies,upon a relatively low profit base of the previous fiscal year.The local operation will continue to grow and integrate the local tofu business with the expanding beverage portfolio to accelerate growth of the operation.

The Philippines -

Ready to Leap with Local Manufacturing

The Philippines joint venture with Universal Robina Corporation achieved a major milestone in establishing and starting local manufacturing. This achievement will support the team to enable lower costs,and higher flexibility and customisation to expand the local platforms in the exciting and fast-growing market.

Conclusion

Looking ahead,Mr. Lo said,"While the current conditions present near-term volatility,the sustainable plant-based food and beverage trend is clearly becoming more mainstream. We believe our proven competence and experience ideally positions Vitasoy to support a progressive return to growth as the COVID-19 impact subsides."

For more details,please refer to the following document:Announcement of Results for the Year ended 31st March 2020

https://www.vitasoy.com/wp-content/uploads/2015/01/ew00345-Results-Announcement-v19June-Eng-HKEx.pdfPhoto download: https://drive.google.com/drive/folders/1xLoZsztrZVrK1KHODP_Ivc0ERcl_EXUl

Vitasoy Group announces annual results for FY2019/20. (From left) Mr. Roberto GUIDETTI,Group Chief Executive Officer; Mr. Winston LO,Executive Chairman; and Mr. Chris LAU,Group Chief Financial Officer.About VitasoyVitasoy 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,Singapore and the Philippines. 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 Small Cap 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