Vitasoy Maintained Strong Business Momentum

Achieved Broad Based Growth Across All Operating Markets

HONG KONG, June 27, 2013 /PRNewswire/ -- Vitasoy International Holdings Limited ("VIHL" or "the Group") (SEHK Code: 0345), a Hong Kong-based manufacturer, marketer and distributor of non-carbonated beverages and food, today announced its audited annual results for the year ended 31st March 2013.

During the year, VIHL recorded a growth of 9% in net sales to HK$4,051 million. The growth were broad based across all operating markets in both volume and dollar value. Gross profit also grew in line with sales and reported an increase of 9% to HK$1,925 million, while profit attributable to equity shareholders increased by 8% to HK$303 million. Gross profit margin sustained at last year's level at 47.5% through product and price optimization and increased productivity and operational efficiency.

"The operating environment of FY2012/2013 in most of our markets was challenged by slow economic growth and rising costs in labour and production. In spite of headwinds, we adopted our growth strategy and were able to report consistent growth in our sales and net profit. This drive for organic growth has been in line with our long term business strategy. Last year also marked the completion of our 3-year investment phase in production capacity, which has paved way for pursuing sustainable growth in future," said Mr. Winston Yau-lai Lo, Executive Chairman of VIHL.

Basic earnings per ordinary share were HK29.6 cents for the period. The Board of Directors of VIHL proposed the payment of a final dividend of HK16.6 cents per ordinary share (FY2011/12: HK15.1 cents per ordinary share) for the year ended 31st March 2013. Together with the interim dividend of HK3.2 cents per ordinary share, the total dividend per ordinary share amounted to HK19.8 cents (FY2011/12:HK18.3 cents per ordinary share).

In view of the retirement of Mr. Larry Eisentrager, the incumbent VIHL Group Chief Executive Officer, Mr. Roberto Guidetti, who has an extensive exposure of food and FMCG sectors in both the global and Greater China markets, has been on board as designate VIHL Group Chief Executive Officer since 1st April, 2013.

Business Review

Hong Kong and Macau -- Growth in volume and value, driven by brand and packaging innovation

Amidst a challenging operating environment, the Hong Kong operation managed to grow its turnover by 7% to HK$1,797 million and continued to outperform the industry average. Most drinks segments such as ready-to-drink teas, soya and packaged water also showed healthy growth. During the year, Vitasoy Hong Kong's profit amounted to HK$320 million.

Mr. Larry Eisentrager, Vitasoy Group Chief Executive (Incumbent), said, "During the year, Vitasoy Hong Kong launched ten special festive pack design products, which demonstrated our capability in product and packaging innovation. We also rolled out six impactful advertising campaigns to strengthen the brand equity for VITASOY and VITA.

We have increased our investments in the market development of PET (Polyethylene terephthalate) packaging formats. Four new products in PET plastic bottles have been launched in the year with full listing in all retail channels."

Both the export and Macau businesses continued to report vibrant growth. The school tuck shop business operated by Vitaland, a subsidiary of VIHL, expanded its sales network and was able to deliver a steady profit contribution to the Group.

Mainland China -- Robust sales and profit growth with enhanced brand awareness and new plant running smoothly

In FY2012/2013, Vitasoy China reported double-digit growth in both top line and bottom line under a challenging and competitive operating environment. Its net sales and operating profit grew by 16% to HK$1,174 million and 37% to HK$122 million respectively.

Mr. Eisentrager said, "Our Mainland China operation has improved its sales mix and adopted a balanced pricing strategy, which helped counteract the rising costs and safeguard the gross margin.

The Foshan plant's excellent location helped lowered our transportation costs and allowed an improved customer services. Following a smooth run in the first full year of the operation, the increased production capacity from the new plant enabled us to further pursue our 'Go Deep Go wide' strategy by deepening penetration in existing cities and expanding territorial coverage in nearby cities and provinces. We continued the large-scale marketing campaign behind VITASOY brand to drive awareness and promote consumer education."

Australia and New Zealand - Completion of plant expansion provided a strong platform for future growth

Vitasoy Australia successfully completed the plant expansion project in the year under review. However, some operational difficulties took place in the transitional period. As a result, the operation's turnover increased 3% to HK$516 million, while the operation profit grew by 1% to HK$88 million, affected by shortage and partially by the adverse exchange rate.

During the year, Vitasoy expanded its cooperation with Lion, a local joint venture of Vitasoy, to include New Zealand.

According to Mr. Eisentrager, Vitasoy Australia improved its product offerings in the areas of Cafe for Baristas and Oatmilk ranges. The launch of VITAGO has been affected by head-wind created by the added competition in the liquid breakfast segment.

North America - Sales growth driven by higher value items; profitability affected by manufacturing difficulties

Vitasoy USA recorded a 6% increase in turnover to HK$482 million, with higher value items being the main driver. However, the continuous manufacturing difficulties compounded by severe cold weather conditions had interrupted the supply during the peak season. The cost of rectifying measures impacted operating profit and the operation reported a break-even in its bottom line. By year end, the manufacturing capability of the plant has been significantly improved with full market supply resumed.

Mr. Eisentrager said, "On the product front, recent launches of NASOYA Black Soybean Tofu Plus into both mainstream and Asian channels along with Pasta Zero low calorie noodles helped drive both category and brand sales." New product launches were supplemented by cost-effective internet and social media campaigns.

Singapore - Strong sales and profit growth driven by improved sales mix and effective channel strategy

Unicurd, the Group's wholly-owned subsidiary in Singapore, reported a 9% and 39% increase in sales and profit respectively, led by enhancement in sales mix, channel promotions and cost control. The market share in the tofu category has been enlarged with its leadership position maintained. The operation also recorded promising growth in various channels, such as key accounts, restaurants and export.

Outlook

Mr. Roberto Guidetti, Vitasoy Group Chief Executive Officer (Designate) expected that the concern over the economy and inflation would continue to affect the consumption and purchasing sentiment in Hong Kong. Vitasoy will continue to grow market share via developing its most complete portfolio of brands, packages, across different channels, consumer clusters and geographical areas.

"For Mainland China, we expect the year ahead will remain challenging with intense competition. We will continue to our 'Go Deep and Go Wide' business strategy to drive increased per capita consumption. Our focus will be on growing the VITASOY brand equity and sustain profit margin through cautious pricing strategy and driving productivity in our processes. The primary focus is Southern China, while in Eastern China, we will continue working towards a critical mass through building our strength there," continued Mr. Guidetti.

For Australia and New Zealand, with innovative portfolio offering, the superior distribution infrastructure of joint venture with Lion and the successful completion of the Wodonga plant expansion, VIHL has an advantageous position to grow business and keep expanding category relevance and growth. The Group will continue to invest in consumer understanding and reflect that into relevant programs delivered via both traditional media and innovative social digital programs.

Mr. Guidetti said, "In North America, we will continue to drive product innovation, strengthen our manufacturing efficiency and capacity to counteract the rising costs in raw materials and transportation, and tailored consumer marketing. We expect a much normalized production to provide the basis for an improvement of our profit position in the coming year.

Our focus in Singapore will be on innovation, consumer trial activities to convert local high category consumption into brands, with relentless focus on executing with quality and consistency. Meanwhile, we will continue our efforts in improving the overall plant efficiency and managing manufacturing cost to drive profitable growth. "

Conclusion

Mr. Winston Lo, Executive Chairman of VIHL, concluded, "We had a solid business performance in FY2012/2013. Although the coming year is expected to be challenging, Vitasoy's existing market positions, on-trend portfolio relevance, branding, innovation, execution skills and manufacturing competence put us into a solid position to successfully keep meeting these challenges.

Our focus is to leverage on our brand equity and product innovation capability and invest in distribution gains and strategic channel promotion, in order to drive profitable growth and category expansion, as well as growing our market leadership position. We will further enhance our operational efficiency and effectiveness to protect margin and maintain a healthy financial position. This will enable us to both capitalize future growth opportunities and create sustainable shareholder value."

About Vitasoy

Vitasoy International Holdings Limited is one of the leading manufacturers and distributors of non-carbonated drinks with a base in Hong Kong. Founded in 1940 and with production facilities in Hong Kong, Mainland China, Australia, the United States and Singapore, Vitasoy currently provides consumers in 40 markets worldwide with over 1,000 stock keeping units. Over the years, Vitasoy has successfully established a corporate image as "the Soy Expert." Vitasoy website: www.vitasoy.com