Vitasoy Achieves Positive Results in a Tough Environment

Continued to Invest for Future Growth

HONG KONG, June 14, 2011 /PRNewswire-Asia/ --

Financial Highlights

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 a solid growth of 11% in net sales to HK$3,329 million for the year ended 31^st March 2011.

Gross profit improved by 10% to HK$1,651 million, while profit attributable to equity shareholders increased 9% to HK$284 million. The Group's gross profit margin maintained at 50%, through improved manufacturing efficiency and effective cost management amid the escalating commodity prices and increasing operating costs.

"We reported positive results and continued to grow our business.  During the year, we maintained our market leadership in major markets through product innovation to stimulate demand and effective marketing investment to reinforce our brand equity. We recorded strong volume growth in Mainland China and Australia/New Zealand. Our Hong Kong operation outperformed the local industry as a whole, while our North American business maintained its growth momentum. However, the Singaporean business was affected by the tough operating market. While driving business growth and development, we kept on investing and expanding our production capability to cater for the increasing demand for our products worldwide. The commencement of our capacity expansion programs in Hong Kong, Mainland China and Australia during the year has laid a strong foundation for our future growth," said Mr. Winston Yau-lai Lo, Executive Chairman of VIHL.

Basic earnings per share were HK27.9 cents for the year. The Board of Directors of VIHL proposed the payment of a final dividend of HK15.1 cents per ordinary share, which together with the interim dividend of HK3.2 cents per ordinary share made a total dividend of HK18.3 cents per ordinary share (FY2009/10: HK16.6 cents per ordinary share, excluding special dividend) for the year ended 31st March 2011. The increment is in line with the Group's growth in sales and profit. In view of the Group's investment in production capacity for future growth, the Board recommended maintaining the cash position and no special dividend will be declared for FY2010/2011 (FY2009/2010 special dividend: HK10.0 cents per ordinary share).

Hong Kong and Macau -- Steady performance under challenging environment, outperformed the local industry

The Hong Kong operation reported net sales of HK$1,530 million, representing a steady growth of 4%, which outperformed the local non-alcoholic beverage sector as a whole. During the year, the operation continued to gain market share by leveraging its strong brand equity and innovative marketing campaigns.  New products such as VITAPOP light-tasting fruit drinks in plastic bottles and VITASOY Organic Black Soya Drink were well-received and helped drive sales growth.

The export business showed remarkable results by reporting 11% growth in revenue with robust sales growth of 23% recorded in Macau. Vitaland Services Limited further enlarged its market share with an increase in the number of tuck shops.

"Amidst the challenges brought by higher inflationary pressure and commodity prices, we will focus on better productivity and utilization of assets. We will also leverage our innovation capability and diversify packaging formats to enhance our competitive edge for growth," said Mr. Larry Eisentrager, Group Chief Executive Officer of VIHL.

Mainland China -- Strong sales growth with enhanced brand awareness, but limited by capacity constraint

The Mainland China operation continued to implement the well-tested focused growth strategy and delivered strong results, in terms of sales and market share. The net sales increased by 17% to HK$854 million, despite capacity constraints in southern China.

During the year, the operation focused on enhancing the brand image and consumer education.  Vitasoy China revamped the pack design of the full range of products and capitalized on the right to use the popular "Pleasant Goat and Big Big Wolf" characters on 125ml products, which were well-received among children.

"The commission of our new plant in Nanhai, Guangdong, later this year will help alleviate capacity constraints and enable us to double our production capacity in southern China. We will also develop further in Guangdong and neighbouring provinces. Meanwhile, we will continue to promote our brand image and educate consumers about the importance of healthy diet," said Mr. Eisentrager.

Australia and New Zealand -- Strong sales and category growth with better operational efficiency and favourable foreign exchange impact

The VITASOY brand in the Australian / New Zealand market has been the category growth driver. The operation reported a robust growth of 28% in net sales to HK$445 million and an impressive increase of 60% in operating profit to HK$90 million. Discounting the positive currency impact of the Australian dollar, net sales grew by 16% while operating profit was up 45%.

"During the year, we reinforced our market lead, expanded distribution channels and launched projects to enhance operational efficiency. We have established a firm foothold in the out-of-home coffee market through our VITASOY Café for Barista Soymilk. In the coming year, we will promote our products in new usage category with proactive consumer communications. Commission of the plant expansion will double our production capacity this year and help us capture new business opportunities," commented Mr. Eisentrager.

North America -- Continued profitability momentum with focused business strategy

The North American operation focused on its core business under the NASOYA and AZUMAYA brands and the Asian imported beverages.  It showed positive growth in both top-line and bottom-line results. Net sales grew by 7% to HK$434 million while operating profit registered an increase of 52%. The growth momentum was also fuelled by sales growth in all core products, particularly shifting towards the premium NASOYA brand. New products NASOYA TofuPlus and Super Hummus successfully drove both category and brand sales.

"We will enhance our product offerings and packaging formats. Led by a strong marketing and sales team, we will further strengthen the brand association with consumers through social media activities.  Meanwhile, we will also focus on manufacturing efficiency to enhance productivity," added Mr. Eisentrager.

Singapore -- Solid performance but affected by tough operating environment

The net sales revenue of Unicurd, the Group's wholly-owned subsidiary in Singapore, grew by 5% to HK$66 million. However, excluding the positive currency impact of the Singapore Dollar, the top-line was down by 3%, due to the drop in sales in supermarkets and wholesale channels, which offset the business growth in restaurant, wet market channels and export business. The operating profit was further affected by the increase in operating cost and removal of government subsidy.  The operation will focus on the promotion in the food catering channels in driving sales growth.

Outlook

"The coming year heralds an important phase of development for the future of Vitasoy. We will ramp up our sales and marketing teams and programs to leverage the additional capacity from the plant expansions in Hong Kong, Mainland China and Australia. Despite the challenges brought by the commodity prices and market competition, we will strive to lead the growth in our categories and to develop brand equity through product and promotional innovation.  We will continue our investment in human capital.  We are committed to maximizing shareholder value and being our customers' and consumers' partner of choice," Mr. Lo concluded.

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 is a constituent stock of the Morgan Stanley Capital International ("MSCI") Hong Kong Small Cap Index, Hang Seng Composite Index, Heng Seng Composite SmallCap Index and Hang Seng Composite Industry Index -- Consumer Goods.

Vitasoy website: www.vitasoy.com

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