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Vitasoy Maintained a Sustainable Growth in 1H FY2016/2017

2016-11-29 17:24
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HONG KONG, Nov. 29, 2016 /PRNewswire/ -- Vitasoy International Holdings Limited ("Vitasoy" or the "Company") (SEHK Code: 00345) today reported its interim results for the six months ended 30th September 2016. The Vitasoy Group maintained above-market-average growth, though at a slower pace, repeating the high growth cycle of the same period last year. 

Due to the recent divestiture of the North American Mainstream and SAN SUI business (the "divestiture"), the Company has recorded a decrease of 3% in revenue to HK$3,013 million, while profit attributable to equity shareholders of the Company grew by 48% to HK$460 million.

Excluding the impact of the divestiture, Vitasoy reported a year-on-year increase of 3% in its revenue and 15% in profit attributable to equity shareholders of the Company.

Basic earnings per ordinary share increased 47% to HK43.8 cents for the interim period. The Board of Directors (the "Board") has declared an interim dividend of HK3.8 cents per ordinary share (FY2015/2016 interim dividend: HK3.8 cents per ordinary share). Vitasoy's gross profit increased 1%, with gross profit margin further improved to 53%.

Mr. Winston Yau-lai Lo, Executive Chairman of the Vitasoy Group, commented on the performance of the Company in the first six months of the financial year at the press conference today, "Despite the challenging market conditions of our core markets, Vitasoy has been determined to deliver sustainable growth through Execution, Expansion and Innovation. We have focused on enhancing our infrastructure with the new Wuhan plant and with an upgrade to advanced IT systems in Mainland China. We have also strived to improve operating costs through enhancing manufacturing efficiency and adopting careful cost management."

Mainland China has become the Company's biggest market, driven by dedicated execution of its "Go Deep Go Wide" strategy. The operation's revenue and operating profit both grew by 7% to HK$1,619 million and HK$282 million respectively and by 13% in local currency terms. The Company remained focused on enhancing the brand equity, supported by strong marketing and in-store execution. The profit growth was boosted by improved manufacturing efficiencies and optimal capacity utilisation. The new Wuhan plant also operated smoothly since its commencement.

The Hong Kong business experienced operational challenges in the first quarter due to machinery issues, which were resolved in the second quarter. The issues have caused the operation to miss opportunities for generating higher revenue during the important promotional period in the first quarter. Vitasoy Hong Kong reported a 3% increase in revenue (after re-clustering the North American business) but a drop of 3% in operating profit.

The Australia/New Zealand business continued its growth momentum with expanded market share in the Soya segment and consolidated its leadership position in Australia. It recorded 12% and 39% increases in revenue and operating profit respectively.

The Singapore operation focused on strengthening its leadership in Tofu business. However, the Imported Beverage business was affected by the change of distributorship, which brought negative impact on the overall revenue.

Driving innovation is one of the key drivers for Vitasoy's growth in different markets. During the first six months of FY2016/2017, Vitasoy has rolled out a number of new plant-based products, such as VITASOY Health+ Soya Milk and VITASOY Plant-based products in Mainland China, VITASOY Black Soya Milk and VITA Hong Kong Style Coffee Drink with Condensed Milk in Hong Kong, VITASOY Almond Milk and VITASOY Protein Plus Soya Milk in Australia and VITASOY Premium Organic Tofu in Singapore.

Regarding the market outlook, Mr. Lo said, "We remain confident about our business growth outlook for the remainder of the financial year. We will continue to work towards achieving sustainable growth through scaling up the business, growing market shares in core markets and categories as well as strengthening our capabilities and operational capacity. We are determined to stay focused on our core competence, strategy and growth model for delivering sustainable results and building a cohesive and integrated business."

About Vitasoy

Vitasoy International Holdings Limited is a leading manufacturer and distributor of plant-based food and beverages headquartered in Hong Kong. Since its establishment in 1940 by Dr Kwee-seong Lo, the Company has been promoting sustainable nutrition through provision of a variety of high-quality products with Nutrition, Taste and Sustainability as the guidelines for its portfolio offerings. The Vitasoy Group integrates social responsibility into its business and contributes to the communities that the Group serves. Currently, the Group has operations in Hong Kong, Mainland China, Australia and Singapore, and its products are available in approximately 40 markets worldwide. Vitasoy is listed on the main board of the Hong Kong Stock Exchange (0345.HK).

Vitasoy website: www.vitasoy.com

Summary

Financial Highlights

Six months ended 30th September

2015/16

HK$ Mn

2016/17

HK$ Mn

Change

Revenue

3,117

3,013

- 3%

Revenue (Net of divestiture impact)

2,893

2,967

3%

Gross profit

1,598

1,611

1%

EBITDA (Earnings before interest income, finance costs,
     income tax, depreciation and amortisation)

529

765

45%

Profit before taxation

422

648

54%

Profit attributable to equity shareholders of the Company

310

460

48%

Profit attributable to equity shareholders of the Company
     (Net of divestiture impact)

310

355

15%

Basic earnings per ordinary share (HK cents)

29.7

43.8

47%

Interim dividend per share (HK cents)

3.8

3.8

/

Business Review

Mainland China --

Delivering sustainable growth, benefiting from the 'Go Deep Go Wide' strategy

During the first six months, Vitasoy China continued to deliver double-digit growth in sales and profit when reported in local currency. The business continued to drive its brands in the areas where the Company competes, and extended sales network to new markets and channels. The half year's revenue improved by 7% to HK$1,619 million. The operating profit also showed 7% increase to HK$282 million.

The operation continued to drive awareness and explored the high-nutrition tier with VITASOY Health+ Soya Milk, which is enriched with nutrients including protein. Vitasoy is also engaged in enhancing its knowledge of the relevant market segments through small-scale introduction of the new VITASOY Plant-based products.

The newly built Wuhan plant has supported the growth in sales and profit in the Central and Eastern regions. The upgrade of IT system to Systems Application Programming (SAP) in Wuhan and Foshan plants have helped to better plan Vitasoy's resources in Mainland China.

Under the 'Go Deep Go Wide' strategy, the operation will stay focused on building equity and execution fundamentals, and in particular building manufacturing and commercial infrastructure. Vitasoy China is also strengthening its capabilities in management, marketing and distribution to pave the way for sustainable and long-term growth.

Hong Kong, Macau and Exports --

Below target performance, also impacted by manufacturing issues

Vitasoy Hong Kong reported an increase of 3% in sales, after re-clustering the post-divested North American business under the Hong Kong operation. The sales recorded a decline of 3% excluding the impact of the divestiture. Due to machinery issues which happened in the first quarter of the fiscal year, the operation has missed the opportunities to generate increased revenue during the important promotional period. The issues were fully resolved in the second quarter. The operating profit dropped by 3% to HK$189 million (net of impact from the divestiture).

The key driver for the growth was innovation. The Hong Kong operation launched VITASOY Black Soya Milk and VITA Hong Kong Style Coffee Drink with Condensed Milk with integrated marketing campaigns. CALCI-PLUS Soya Hi-Calcium Drink was rebranded under the flagship VITASOY brand in a total product packaging revamp, supported by TV advertising to highlight its nutritional values.

After the divestiture, the North American Imported Beverage business, which comprises the sale of products exported from Hong Kong, has been reported under the Hong Kong operation. The Hong Kong Export business achieved good progress with steady growth in volume and value year-on-year.

Vitasoy Hong Kong will continue to execute with discipline on core brands while driving innovation in the market. The operation will also expand distribution network and continue to enhance operational efficiency.

Australia and New Zealand --

Consolidating solid market leadership position with accelerating growth in sales and profit

The operation continued to report good growth with strong increases in both top and bottom lines. The net sales and profit grew by 12% and 39% to HK$237 million and HK$50 million respectively.

Vitasoy consolidated its position as the market leader in the plant milk segment in Australia, driven by strong core businesses and the success of recently introduced VITASOY Almond Milk. The new product has commanded solid market share and helped VITASOY to extend the number one market share in both Australia and New Zealand.

The operation has also launched a completely new product as part of its Organic range -- the new VITASOY Protein Plus Soya Milk, which contains higher protein and is unsweetened, making it a choice compatible with a healthy breakfast.

It is expected that the growth momentum will be maintained in the second half of the fiscal year. As plant milks continue to gain in popularity, the operation will leverage its market leading position in the segment to drive sustainable business performance.

Singapore --

Expanding Tofu leadership position yet performance affected by Imported Beverage business during transition period of distributor

Unicurd, Vitasoy's wholly-owned subsidiary in Singapore, reported an 11% drop in its revenue to HK$47 million as the overall business was affected by decreased sales in the Imported Beverage business during the period of distributorship transition. The operating profit increased by 9% to HK$5 million.

Driven by strong execution in key accounts and vibrant export sales, the local operation continued to grow its Tofu business and developed the VITASOY and the UNICURD brands while maintaining market leadership in the Tofu segment. The operation has appointed a new distributor with a goal of enhancing performance of the Imported Beverage business. During the transition period of distributors, it had lowered the shipments of imported beverages, which affected the overall business performance.

Vitasoy Singapore is looking to achieve steady growth despite slow economic conditions foreseen for the remainder of the financial year. With the new distributorship, the operation will be in a stronger position to drive the combined Tofu and Beverage business to a new level.

Source: Vitasoy International Holdings Limited
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