Vitasoy Recorded a Strong Business Growth in 1H FY2015/2016

Driven by Acceleration in Core Categories and Core Markets

HONG KONG, Nov. 25, 2015 /PRNewswire/ --

Financial Highlights

6 months ended 30th September


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Vitasoy International Holdings Limited ("VIHL", "Vitasoy" or "the Group") (SEHK Code: 0345) today reports its interim results for the six months ended 30th September 2015. The Group recorded a strong business performance with an increase of 14% in net sales and a growth of 40% in its profit attributable to equity shareholders of the company.

In commenting about the business performance Mr. Winston Yau-lai Lo, Executive Chairman of VIHL, attributed it to the Group's "Accelerating Our Core" model which has been driving faster growth in its core categories and geographies, thus leading to the overall acceleration in both sales and profitability.

"The encouraging business growth was mainly due to a significant increase in net profit from the Group's Mainland China business, which benefited from the combined results of effective management of raw material costs and strong market demand for certain products during the peak summer season," said Mr. Lo.

"The consumption seasonality of beverages, better manufacturing efficiency and non-recurring favourable commodity prices have driven a step change in profitability in the interim period," added Mr. Lo.

Gross profit for the period increased 18% with gross profit margin further improved to 51%, thanks to enhanced manufacturing efficiency resulted from volume growth, and non-recurring favourable commodity prices.

Basic earnings per ordinary share increased 39% to HK29.7 cents for the interim period. The Board of Directors recommends an interim dividend of HK3.8 cents per ordinary share. (FY2014/2015 interim dividend: HK3.2 cents per ordinary share)

Business Review

Hong Kong, Macau and Exports --
Healthy business growth driven by innovations and strong marketing campaigns

Vitasoy Hong Kong reported a 4% growth in its net sales to HK$1,077 million, continuing to outperform industry average in volume growth. Operating profit increased by 11% to HK$194 million. Macau sales and tuck shop business reported solid year-on-year growth of 10% and 3% respectively.

Mr. Roberto Guidetti, Vitasoy Group Chief Executive Officer, said, "The key driver of Vitasoy Hong Kong business performance was our disciplined approach in execution to drive our core business, complemented by innovation. We continued to strengthen our leading position in both Soy and Tea categories with new packaging and new products. The new VITASOY in PET packaging and the VITA Hong Kong Style Milk Tea have delivered incremental growth in their first year. We will further develop our core propositions and drive operational efficiency to keep delivering profitable growth."

Mainland China --
Robust performance with the dedicated execution of the "Go Deep Go Wide" strategy

Vitasoy China reported a substantial growth in its volume and profit, driven by the dedicated execution of the "Go Deep Go Wide" strategy and supported by strong marketing and in-store campaigns. The net sales in the first six months grew 32% to HK$1,513 million, and operating profit increased 70% year-on-year to HK$263 million.

Mr. Guidetti said, "Vitasoy China continued to diligently execute its core brand programs in its core markets whilst expanding its sales distribution infrastructure, thus generating across-the-board strong sales increase in Southern, Eastern and Central China. The increased sales volume has driven higher capacity utilization and improved line efficiency, resulting in a lower fixed manufacturing cost per unit. With the non-recurring favourable raw material prices in the first half of the fiscal year, the China operation recorded an improvement in gross profit margin, which contributed to the operating profit performance."

Vitasoy has maintained its leadership position in the packaged soymilk market with the addition of the new premium VITALITY offerings. In the Tea category, VITA Lemon Tea was well received during the hot summer months. VITA Hong Kong Style Milk Tea has also been introduced in the market. The construction of the new plant in Wuhan, Mainland China, is on schedule and is expected to commence production in FY2016/2017.

Mr. Guidetti said, "We will continue our Go Deep Go Wide strategy and execute with excellence, deepen account penetration in the existing channels and gain territorial expansion into new areas."

Singapore --
Leadership position maintained in tofu segment with new premium tofu offerings

Unicurd, Vitasoy's wholly-owned subsidiary in Singapore, continued its growth momentum by reporting 23% increase in its net sales to HK$53 million. The overall business grew 35% in local currency and included the business of imported beverage which has started to be handled by the local management team in FY2015/2016. The operating profit increased 18% to HK$4.6 million.

The operation further strengthened its leadership in Tofu by adding to the UNICURD brand a new VITASOY Premium Organic Tofu, which also enhances the synergy with the imported VITASOY beverages.

The operation will continue to scale up the VITASOY brand equity and enhance operational efficiency to offset increasing cost challenges in the coming six months.

Australia and New Zealand --
Steady sales growth in local currency, but results were adversely impacted by weakened Australian dollar when reported in Hong Kong dollar terms.

The Vitasoy business in Australia and New Zealand recorded a steady net sales growth of 4% in local currency terms, driven by growth in core categories. The weakened Australian dollar has adversely impacted the results when reported in Hong Kong dollar terms. The net sales and operating profit dropped by 17% and 23% to HK$211 million and HK$36 million respectively.

During the interim period of FY2015/2016, Vitasoy Australia continued to drive core Soy platform via focus on Vitasoy Australian home-grown soy beans, and maintained its market leadership position in Soy, Rice, Oat and more recently Coconut segments.

VITASOY Coconut has been well received and became the number one brand in its category within the first year of launch. In addition, the re-launch of chilled business behind a whole new packaging added growth to the overall brand.

Mr. Guidetti expected the plant milk market would continue to grow, while competition would remain strong. Vitasoy Australia will drive its newly expanded offerings to sustain its leadership position in the plant milk segment.

North America --
Strong Mainstream Channel business, but manufacturing issues offset the extra sales revenue and caused a net loss.

Vitasoy USA recorded a net sales growth of 4% to HK$263 million, driven by the new ready-to-eat NASOYA Tofu Baked launch. However, the growth was affected by continuous manufacturing issues, which had severely impacted production volume and manufacturing efficiency and resulted in higher operating costs and overhead expenses. All these negatively affected the profitability and caused a net operating loss of HK$12 million in the first six months.

Vitasoy has started a strategic review of the business to structurally improve profitability and is assessing various potential strategic options for the future.

"We expect it would be a difficult year for Vitasoy USA and the loss in the first half of the fiscal year will lower the full year's profitability of the operation. Our local management team is focusing on resolving the manufacturing challenges in the coming months so as to translate the sales growth from new products into profitability," said Mr. Guidetti.

Looking forward

Mr. Lo concluded, "We are confident in our prospect for continuing the growth momentum, albeit at a slower rate than that of the first half of the fiscal year due to the business seasonality. We are committed to bringing superior product quality, good manufacturing practices, innovative product offerings and strong execution by our competent and dedicated Vitasoy teams. All these are instrumental to support our delivery of sustainable long-term value for our shareholders."

About Vitasoy

Vitasoy International Holdings Limited (0345.HK) 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, Vitasoy has been promoting sustainable nutrition through provision of a variety of high-quality products. With Nutrition, Taste and Sustainability as the guidelines of our portfolio offerings, we integrate our business into socially responsible activities and contribute to the communities that we serve. Currently, the Group's products are available in more than 40 markets worldwide and supplied by 8 manufacturing facilities in Hong Kong, Mainland China, Singapore, Australia and the United States. The Company is listed on the main board of the Hong Kong Stock Exchange.

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Source: Vitasoy International Holdings Limited
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