Dairy giant to remain cautious until herd immunity

By Quynh Trang   April 29, 2021 | 12:00 am PT
Dairy giant to remain cautious until herd immunity
An employee examines products at a Vinamilk factory in Binh Duong Province. Photo by VnExpress/Quynh Tran.
Vinamilk will sketch out a "sideways" profit plan because Vietnam's situation will brighten up only when herd immunity is achieved, says the dairy giant’s CEO Mai Kieu Lien.

The recent annual general meeting of Vietnam Dairy Products JSC (Vinamilk) set revenue and after-tax profit targets of VND62.16 trillion ($2.7 billion) and over VND11 trillion, respectively.

Explaining the "sideways" strategy, meaning targeting no significant growth in either revenue or profits, Lien said the situation still demanded caution.

In the first three months of 2021, Vinamilk's total revenue and post-tax profit were VND13.24 trillion and VND2.6 trillion respectively.

Lien said these figures were low because of lower demand for dairy products in the wake of the third Covid-19 outbreak that hit the country late January.

However, better performance in the remaining months will ensure that the year’s targets are met, she said.

At the Monday meeting, the company's leaders discussed Covid-19 as one of the most important variables affecting its business goals.

Other factors included a recent surge in powdered milk prices that has also put more pressure on the company’s profits. When shareholders asked if Vinamilk would need to increase its selling prices, Lien said this would "need to be carefully considered, especially in the context of the epidemic."

"No one wants low growth, but raw material prices have been unprecedentedly high. As purchasing power is still low, it is difficult to expect a high revenue growth.

"Only when Vietnam has herd immunity will we be certain and reassured about developing a brighter plan. Looking at India, Thailand, Cambodia, Laos, we can see that if herd immunity is not achieved, the calm will only be temporary."

While the domestic market did not perform as expected in the first quarter of the year, the export market still grew by 8 percent year-on-year, Lien said.

In the 2016-2021 five-year period, Vinamilk has been making investments to increase production capacity to meet demand until 2025. In the upcoming period, the company would focusing on M&As to grow further as also consider diversifying into other businesses, the meeting heard.

Vietnam's dairy industry last year earned revenues of VND135 trillion, an increase of more than 8 percent over 2019, thanks to rapid growth in the yogurt and fresh milk segments, according to market research company Euromonitor.

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