Vinamilk records double digit growth in Q2 despite pandemic

Consolidated net revenue in the second quarter reached VND15.5 trillion ($674 million), up 9.5 percent against the previous quarter and up 6.1 percent year-on-year, according to the HCMC Stock Exchange-listed company’s (VNM) financial statement.

Domestic business activities recorded Q2 net revenue of VND13.36 trillion ($580 million), a 10.5 percent rise against Q1 and up 7.6 percent year-on-year, accounting for 86 percent of the consolidated net revenue. This figure includes revenues from subsidiaries GTNfoods and MocChau Milk.

Q2 net revenue of the parent company was VND13.62 trillion ($592 million), up 13.6 percent against Q1.

Export activities during this period still recorded positive results despite the Covid-19 pandemic as the firm actively sought fresh opportunities, reflected by its exports to the Middle East under a $20 million contract, exports of condensed milk to China; and exports of soy-based nut drink and milk tea to South Korea.

These efforts contributed VND1.37 trillion ($59.5 million) to the total net export revenue, an increase of 26.8 percent against Q1 and an increase of 7.1 percent year-on-year, accounting for 9 percent of the consolidated net revenue.

In June, Vinamilk became the first dairy firm in Vietnam to be licensed to export milk to countries of the Eurasian Economic Union (EAEU).

Vinamilk's business activities in the second quarter and the first half of 2020 recorded good growth year-on-year.

Its foreign branches recorded net revenues of VND761 billion ($33 million), accounting for 5 percent of the consolidated net revenue. This figure was affected by business activities of the wholly-owned subsidiary Driftwood in the U.S., which were hit by the closure of schools in California - the main customer group - over Covid-19.

However, revenues of Cambodian subsidiary Angkor Milk recorded a growth of over 20 percent thanks to high demand for dairy products in this market.

Consolidated gross profit margin in Q2 reached 46.1 percent, a decrease of 61 basis points compared to Q1, because of the higher costs of imported raw materials.

Consolidated management and selling expenses incurred reached VND3.76 trillion ($163 million), equivalent to 24.2 percent of net revenue. The ratio decreased as Vinamilk adjusted expenses appropriately to ensure operational efficiency amid the Covid-19 crisis.

Vinamilk's positive export activities are a driving force of the company’s growth in the first six months of 2020.

Consolidated profit after tax for Q2 reached VND3.085 trillion ($134 million), a 6.2 percent rise year-on-year. Consolidated net profit margin reached 19.9 percent, equal to that of the period last year. Earnings per share reached VND1,586 (7 US cents), up 5.7 percent year-on-year.

In the first half of the year, net revenues of VND29.65 trillion ($1.29 billion), up 6.7 percent year-on-year, meeting 50 percent of the whole-year target. Of this, domestic business revenue was VND25.46 trillion and direct exports were worth VND2.45 trillion, respective year-on-year increases of 7.7 percent and 7.3 percent.

Subsidiaries perform well

Vinamilk subsidiaries, meanwhile, earned net revenues of VND1.37 trillion. In particular, MocChau Milk's net revenue in the first half of 2020 increased by 8 percent year-on-year.

The subsidiaries recorded consolidated profit after tax of VND5.86 trillion ($253 million) for H1, an increase of 2.8 percent year-on-year and 55 percent of the year's plan.

Earnings per share reached VND3,013 (13 US cents), a 2 percent year-on-year increase.

For GTNfoods, consolidated profit after tax reached VND88.4 billion ($3.82 million), a strong growth of 112 percent year-on-year.

A Vinamilk representative said the main drivers of this growth were more effective sales campaigns; a 72 percent increase in financial revenues year-on-year; and reduced corporate income tax rate under incentive policies for MocChau Milk.

In H1 of 2020, despite many challenges posed by the Covid-19 pandemic, Vinamilk continued to launch and re-launch nearly 10 products, including bottled coffee brand Hi!Café, young rice yogurt and Dielac Grow Plus with Bird’s nest powdered milk.

Both domestic and export activities of Vinamilk in the first half of 2020 had positive results.

With consistent innovative and creative efforts, Vinamilk has become the most chosen dairy brand in Vietnam for eight consecutive years, according to the 2013-2020 Kantar Brand Footprint report covering four main cities and rural areas in Vietnam.

Also in Q2 of 2020, Vinamilk was voted one of the 50 best listed companies by Forbes Vietnam, which made it nominee for the eighth consecutive year. The company also made it to the top 50 effective Vietnamese businesses for the ninth time in a study done by Nhip Cau Dau Tu, a leading local business magazine.

Alongside its business activities, Vinamilk has continued to implement programs for the community, including the "Vuon cao Vietnam" Milk Fund to supply milk to children in Hanoi, Hue and Quang Nam. The "Sua Hoc Duong" program was actively implemented in Quang Nam, Quang Ngai, Tra Vinh and Ha Giang provinces after students returned to school.

In April, Vinamilk's Driftwood dairy factory in the US donated nearly 23,000 liters of milk to the Food Bank in Los Angeles (LA Food Bank) to support Los Angeles residents facing difficulties because of the long-lasting effects of the Covid-19 pandemic.