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Vitasoy Reported Steady Business Growth in FY2016/2017

2017-06-23 17:47
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In line with its Sustainable Growth Strategy

HONG KONG, June 23, 2017 /PRNewswire/ -- Vitasoy International Holdings Limited ("Vitasoy" or "the company") (SEHK Code: 00345) today reported its audited annual results for the year ended 31st Mach 2017 (FY2016/2017). Vitasoy has delivered a steady business growth in line with its Sustainable Growth strategy amidst a challenging operating environment.

Due to the divestiture of the North American Mainstream and SAN SUI business ("the North American divestiture"), Vitasoy recorded a decrease of 3% in revenue to HK$5,406 million, while profit attributable to equity shareholders of the company grew by 16% to HK$618 million. Vitasoy's gross profit increased 2%, with gross profit margin improved by two percentage points to 53%.

Excluding the impact of the North American divestiture, Vitasoy reported a year-on-year increase of 6% in its revenue and 2% in profit attributable to equity shareholders of the Company.

Basic earnings per ordinary share increased 16% to HK58.9 cents for the full year. The Board of Directors recommends a final dividend of HK27.1 cents per ordinary share (FY2015/2016 final dividend: HK26.5 cents per ordinary share) and a special dividend of HK4.2 cents per ordinary share (FY2015/2016 special dividend: Nil). Together with the interim dividend of HK3.8 cents per ordinary share, the total dividend for FY2016/2017 will become HK35.1cents per ordinary share (FY2015/2016 total dividend: HK30.3 cents per ordinary share), representing an increase of 16%.

Commenting on the full year performance of the company at the press conference today, Mr. Winston Yau-lai Lo, Executive Chairman of Vitasoy, said, "The business performance of the full year reflects the execution of a steady 'Sustainable Growth' strategy, which has weathered volatile conditions in our core markets, as well as rising competitive pressure to deliver measurable gains. By divesting the North American tofu business and forming a joint venture with Universal Robina Corporation ('URC') in the Philippines, we have reconfigured our business to be more geographically focused on the high potential Asian region and on our core category expertise."

Vitasoy registered a strong growth in the Mainland China and Australia/New Zealand businesses. Mainland China has become the largest market for Vitasoy. Driven by the "Go Deep Go Wide" strategy, the operation delivered another year of strong double digit growth in revenue by 11% to HK$2,666 million and operating profit by 13% to HK$317 million.  During the year, the Mainland China business remained focused on enhancing brand equity, supported by strong marketing and in-store execution. The Wuhan plant has been operating smoothly, enabling the company to better serve the communities in Central China. As our Enterprise Resources Planning (ERP) platform has been implemented smoothly, it would help to enhance Vitasoy's operational efficiency across different functions.

The Hong Kong business remained flat in sales and recorded a slight decline in operating profit. After re-clustering the post-divestiture North American business under it, the operation reported a 5% growth in revenue to HK$2,168 million and operating profit remained flat at HK$381 million. Focusing on growing its main VITASOY franchise, the Hong Kong operation augmented its presence through increased distribution channels and new innovative products.

The Australia/New Zealand business delivered respectable results with revenue up 12% to HK$472 million and operating profit grew by 4% to HK$87 million. With a solid core business and a disciplined, well-tailored commercial strategy, the operation has improved in-store execution, promotion strategy, distribution and the product range to enhance its market leadership in Australia.

The Singapore tofu business maintained a steady increase in sales, driven by vibrant export sales. Overall performance was affected by lower sales in the Singapore business's Imported Beverage business, as Vitasoy deliberately reduced inventories ahead of the transition to a new distributor. The revenue growth of the Singapore business slowed by 5% to HK$100.4 million while operating profit grew 5% with stringent cost management.

In FY2016/2017, the company continued its innovation and built brand equities. During the year, Vitasoy has rolled out a number of new plant-based products including VITASOY Black Soya Milk, VITA No Sugar Jasmine Tea and VITA No Sugar Green Tea in Hong Kong, HEALTH PLUS, a soya milk range fortified with calcium in Mainland China, and PROTEIN PLUS, an organic soya milk product in Australia.

During the year, Vitasoy has formed a new joint venture with URC in the Philippines to sell soya milk drinks. This joint venture will help Vitasoy explore the potential of plant-based, sustainable beverages in the Philippines.

Regarding the market outlook, Mr. Lo said, "We will continue to focus on implementation and execution of our Sustainable Growth strategy. We are committed to investing in the long-term development of the business, expanding our operations and generating solid returns for our investors. Although current and foreseeable market conditions remain challenging, Vitasoy is well positioned to deliver disciplined growth and sustainable success."

About Vitasoy

Vitasoy International Holdings Limited is a leading manufacturer and distributor of plant-based food and beverages. Established in 1940 by Dr Kwee-seong Lo in Hong Kong, 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 integrates social responsibility into its business and contributes to the communities that the company serves. Currently, Vitasoy has manufacturing operations in Hong Kong, 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).

Vitasoy website: www.vitasoy.com

Summary

Financial Highlights

Full year ending 31stMarch

2015/16

2016/17

Change

HK$ Mn

HK$ Mn





Revenue 

5,552

5,406

-3%

Revenue (Net of North American divestiture impact)

5,072

5,360

6%

Gross profit

2,826

2,873

2%

EBITDA (Earnings before interest income, finance costs, 

812

1,083

33%

     income tax, depreciation and amortisation)

Profit before taxation

603

848

41%

Profit attributable to equity shareholders of the Company

531

618

16%

Profit attributable to equity shareholders of the Company 

504

516

2%

     (Net of divestiture impact)

Basic earnings per ordinary share (HK cents)

50.9

58.9

16%

Interim dividend per share (HK cents)

3.8

3.8

--

Final dividend per share (HK cents)

26.5

27.1

2%

Special dividend per share (HK cents)

--

4.2

--

Total dividend per share (HK cents)

30.3

35.1

16%

 

Business Review

Mainland China --
"Go Deep Go Wide" strategy yields sales and profit growth

Vitasoy China reported strong top-line and bottom line growth in both reported and local currencies. Continuing to execute the "Go Deep Go Wide" strategy, Vitasoy China accelerated growth in the Central and Eastern regions, backed by strong support from the Wuhan plant.

The operation's revenue increased 11% to HK$2,666 million, while the operating profit grew by 13% to HK$317 million. The non-recurring favourable commodity costs have also improved gross profit margin.

Strong brand building and innovative marketing efforts helped sustain Vitasoy's leadership in the soya milk segment in Guangdong province. Vitasoy China continued to strengthen its organisational capacity and capabilities, especially in marketing. Enterprise Business Planning (ERP) was implemented at all Vitasoy facilities across Mainland China during the year.

In the coming year, Vitasoy China will continue to leverage its "Go Deep Go Wide" strategy and build strong brand equity. Following the implementation of ERP, the company will benefit from enhanced management information and operational efficiency. As the plant in Wuhan is operating smoothly, Vitasoy will grow capacity utilisation to support additional business growth.

Hong Kong, Macau and Exports --
Stable position in a challenging retail economy

Vitasoy Hong Kong reported an increase of 5% in revenue to HK$2,168 million and maintained its operating profit at HK$381 million, after re-clustering the post-divested North American business under the Hong Kong operation. The Hong Kong business maintained its leadership position.

In FY2016/2017, the Hong Kong operation continued to leverage product innovation, introducing VITASOY Black Soya milk and expanding the VITA portfolio with the addition of No Sugar Jasmine Tea and No Sugar Green Tea. It also rebranded CALCI-PLUS High Calcium soya milk under the flagship VITASOY brand in a total product packaging revamp, supported by TV advertising to highlight its nutritional value.

Hong Kong's Export business achieved good progress and profitability, building on initiatives to improve the export distributor's performance.

Vitasoy Hong Kong will continue to define its core categories progress via renewed efforts in brand equity building, product and marketing innovation as well as improving commercial execution.

Australia and New Zealand --
Strong performance and market leadership

The Australia and New Zealand operation recorded strong sales growth in FY2016/2017.  Net sales and profit grew by 12% and 4% to HK$472 million and HK$87 million respectively.

Vitasoy Australia launched an organic soya milk product called PROTEIN PLUS, which complements the existing VITASOY Creamy Original soya milk and CALCI-PLUS products. The launch was supported with TV advertising, in-store sampling and social media campaign. The new products have received enthusiastic market response.

It is expected that Vitasoy Australia would continue a solid growth in its competitive position. As the category expands beyond soy-based drinks, Vitasoy Australia's complete portfolio is well positioned to continue strengthening its market leadership.

Singapore --
Maintained leadership in tofu while enhancing beverage capabilities

Vitasoy Singapore reported a 5% drop in revenue to HK$100.4 million as the business deliberately reduced inventory levels in preparation for the transition to a new beverage distributor. The operating profit grew 5% to HK$11.5 million with stringent cost management.

During the year, the Singapore tofu business grew in sales and maintained clear market leadership through dedicated focus on in-store excellence and leveraging the VITASOY brand equity in communication, resulting in a market leadership position, and enabling synergies with the VITASOY beverage business.

Following the transition to a new imported beverage distributor, the company expects to see a return to growth in this business segment, coupled with strong growth behind VITASOY Tofu offering.

Philippines

Vitasoy remains confident that the new joint venture can expand Vitasoy's plant based portfolio with an established local partner, providing a strong and wide platform to expand Vitasoy's business portfolio in the Philippines. The company looks forward to bringing Vitasoy's high-quality plant based nutrition to the health-conscious consumers in the Philippines.

Source: Vitasoy International Holdings Limited

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