Vitasoy Announces "Encouraging" First Half 2009 Results, Returns to Profitability in North America Business
Press Release -- HONG KONG -- November 19, 2009 -- Vitasoy International Holdings Limited ("VIHL" or "the Company") and its subsidiaries (together referred to as the "Group") (SEHK Code:0345), a Hong Kong-based manufacturer, marketer and distributor of non-carbonated beverages and food, today announced a solid business growth of 9% in turnover for the six months ended 30th September 2009. The Company posted a turnover of HK$1,561 million during the period, compared with HK$1,437 million last year. Gross profit for the period was HK$775 million, 19% increase from HK$650 million for the same period last year. Owing to cost reductions in commodities and raw materials and more effective cost management, the gross profit margin stood at 50%, a 4 percentage points improvement from last year.PAID ADVERTISEMENT
Basic earnings per share were HK13.9 cents for the period. The Board of Directors has declared an interim dividend of HK3.2 cents per share (2008/2009 interim: HK2.8 cents per share).
Profit attributable to shareholders was HK$141 million, an increase of 46% over HK$97 million in the last interim period. This large increase reflects in part the one-off provision made in the previous period for leave entitlement of Hong Kong employees for the previous five-and-a-half years.
Hong Kong and Macau - Performed within Expectation
Although the Hong Kong operation's beverage business posted strong results, the Group's tuck shop business suffered from territory-wide school closures from May to July brought on by the swine flu pandemic. During the interim period, the operation reported total net sales of HK$737 million, representing a 2% increase over the last interim period. The revitalisation of core brands was the key focus and main driver for growth in this market.
"We launched a series of fun and energetic marketing campaigns including that for VITA Lemon Tea and VITASOY Soymilk, which were well-received and helped boost sales. These advertising campaigns were designed to rejuvenate our core VITASOY and VITA brands through emotional connection with the younger generation," said Mr Larry Eisentrager, Group Chief Executive Officer of VIHL.
New packaging and a revamp, along with TV commercials for VITA Pure Distilled Water, VITA Lemon Tea, SAN SUI Tofu and VITASOY Soymilk, have allowed the Group reinforce its leadership position in the territory. Export sales experienced a 10% growth over the same period last year. New products such as Low Sugar VITASOY have helped propel growth in the export sales market.
Mainland China - Sustained Robust Growth
Sales grew by an impressive 40% in Mainland China driven by effective brand building and marketing initiatives. "China continues to be our main engine for growth," said Mr Lo. "Building on our success in the Guangdong market, we are now expanding into the neighbouring provinces of Hunan, Fujian and Guangxi, where we are making market inroads through deeper and wider distribution channels. Food services, breakfast and key accounts are the new channel focus for the southern region, while our operations have been taken to wider markets that include Tier 2 and Tier 3 cities."
In the Eastern market, an aggressive strategic brand building program has been launched to strengthen the Group's market presence. The Group is moving ahead with detailed product development designed to address the specific taste profile of Chinese consumers. Several new products, including Black Bean Soymilk, were launched and well-received by the market. More products and marketing campaigns are expected to come out in the next half to increase sales and to expand market share.
Australia and New Zealand - Driving Category Growth
The operation in Australia and New Zealand posted double-digit sales growth. However, due to the steep depreciation of the Australian dollar during this period, net sales became dropping 1% in Hong Kong dollar terms to HK$158 million. "We are glad to see that the increase in our sales has driven the category growth in the Australian soy and ricemilk categories, of which VITASOY is the primary driver," said Mr Eisentrager. Expanded distribution through the Group's joint venture partner has also driven the channel growth.
North America - Turnaround to Positive Contribution
The North American operation experienced a modest decline of 6% in net sales because of a wholesale restructuring and exit from the mainstream soymilk business. "We have managed to come through with a small profit this period, after the losses we've suffered in the past few years, The improved bottom line was attributed to a major restructuring in the operation and more focus on our core products," said Mr Eisentrager. The business continues to be strong in the Asian markets.
"We shall intensify the focus on our core domestic NASOYA and AZUMAYA food businesses, the Asian tofu and our imported beverage business. Our marketing communication strategies have also been restructured to more effectively use of social media on the Web as an advertising tool to reach millions of our consumers. Meanwhile, we shall also improve our distribution avenues to reach our shifting Asian consumer base," said Mr Eisentrager.
Singapore - Growth in the Wake of Economic Recession The Singaporean operation experienced a top-line growth of 6% in local currency in the first six months of the fiscal year. "This growth was made possible by an expanded client base and the increase in the supermarket channels. In the coming months, we shall introduce more new products and strengthen our market position," said Mr Eisentrager.
Business Outlook
"These first-half results are encouraging but we will continue to be mindful of the economic development and its impact on consumer spending and behaviour. On the other hand, commodity prices present concerns to us and we will monitor the trends closely and adjust our purchasing strategy accordingly. On the business front, we will improve our reach to consumers and continue our investment in brand building and manufacturing capacity," said Mr Lo.
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.
Financial Highlights
Consolidated Consolidated
results results
for the six for the six
months months
ended ended
30th 30th
September September
(excluding (including
one-off One-off one-off
provision) provision provision)
2009 2008 2009 2008 2009 2008
HK$ HK$ % HK$ HK$ HK$ HK$ %
Results Mn Mn Change Mn Mn Mn Mn Change
Turnover 1,561 1,437 9 -- -- 1,561 1,437 9
Gross profit 775 659 18 -- (9) 775 650 19
EBITDA 259 222 16 -- (25) 259 197 31
Profit before
taxation 207 169 22 -- (25) 207 144 43
Profit after
taxation 165 136 21 -- (21) 165 115 44
Profit
attributable to
equity
shareholders
of the Company 141 118 20 -- (21) 141 97 46
Basic earnings per
Share (HK cents) 13.9 11.6 20 -- -- 13.9 9.5 46
Dividend
(HK cents) 3.2 2.8 14 -- -- 3.2 2.8 14
For more information, please contact:
Stella Lung
Public Relations Manager
Vitasoy International Holdings Limited
Tel: +852-2468-9644
Fax: +852-2465-1008
Email: publicrelations@vitasoy.com
Angela Hui
Senior Account Manager
Ketchum Hong Kong
Tel: +852-3141-8091
Fax: +852-2510-8199
Email: angela.hui@knprhk.com
Source: Vitasoy International Holdings Limited
CONTACT: Stella Lung, Public Relations Manager of Vitasoy International
Holdings Ltd., +852-2468-9644, or fax, +852-2465-1008,
publicrelations@vitasoy.com; Angela Hui, +852-3141-8091, fax, +852-2510-8199,
angela.hui@knprhk.com, of Ketchum Hong Kong for Vitasoy
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