Vietnam dairy giant on global expansion path

By August 2, 2016 | 01:44 am PT

Vinamilk plans to earn half its revenue in foreign markets in the next five years.

Vinamilk, or Vietnam Dairy Product JSC, has set a target of building its overseas business so it accounts for half of its total revenue in the next five years.

The dairy firm, currently valued at nearly $8 billion, said that net revenue from overseas markets rose 14 percent to VND4.4 trillion ($197 million) in the first six months of 2016 from a year ago.

Vinamilk has unveiled plans to gain a strong foothold in Asia through mergers and acquisitions after 40 years of focusing on the domestic market.

The dairy firm has formed strategic partnerships with Topmost Enterprise in Thailand and Synchro World in Myanmar. Vinamilk has also launched a dairy plant in Cambodia via a joint venture with local company BPC Trading that produces fresh milk, yogurt and condensed milk for the Cambodian market.

Vinamilk spent $3 million to become the sole owner of the California-based Driftwood Dairy, which contributed 6.5 percent to the firm’s total revenue of $1.7 billion last year.

Vinamilk reported revenues in the first half of 2016 over $1 billion, and profits rose 33 percent to VND4.97 trillion ($222.6 million) from the same period last year.

Vinamilk said changes to strategic product lines and lower corporate income tax had spurred growth.

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Vinamilk products are displayed for sale at a Vinamilk shop in Hanoi. Photo by Reuters.

The Vietnamese government on July 20 scrapped a long standing foreign-ownership cap on Vinamilk in a move to boost foreign interest in the country’s stock market.

The State Securities Commission said in a statement that the decision now allows foreign investors to own a 100 percent stake in a company, up from 49 percent. The SCIC, the state's investment arm, holds a 45 percent stake worth $3.5 billion in Vinamilk, and has confirmed it will divest from the company without giving a specific time frame.