LI, Tao @ Hong Kong

Vitasoy International Holdings Ltd, the city’s biggest soy milk supplier, reported Tuesday a 20 percent growth in its net profit for 2009, thanks to the strong performance of its operations in the mainland, Australia and New Zealand.

The group said its net profit for the financial year ended March rose to HK$260 million from HK$217 million in the previous year as net sales revenue increased 7 percent to HK$3,012 million from the previous year.

However, the company saw lackluster performance in its home market during the period.

Net sales from the Hong Kong and Macao operation increased by only 1 percent after its school tuck shop business fell victim to the swine flu during May to July in 2009, when primary and secondary schools were shut down.

The local retail market did not see a major rebound in consumer spending. “In general, consumers are still very cautious in their household buying and are heavily driven by promotional activities,” the company said.

“We also noticed a shift in buying habits, from convenience stores (on-the-go) back to the conventional channels of supermarkets (in-home consumption),” a Vitasoy statement noted.

In contrast, through maximizing brands and distribution channels, the company’s mainland and Australia/New Zealand operations delivered strong year-on-year growth in net sales revenue, up 29 percent and 22 percent, respectively, from the previous year.

“Our strategic focus this year is to leverage on our brand equity and product innovation capability to accelerate business growth and fortify our market position,” said Executive Chairman Winston Lo Yau-lai in a statement.

Lo admitted the group is facing rising raw material prices and intensifying competition in these markets. The group’s products sell in over 40 markets around the world – including the USA (where its North American head offices are located), Canada, the mainland, Europe, Papua New Guinea, Australia, New Zealand, South East Asia, Guatemala, Trinidad and Venezuela.

Now a listed company (0345.HK) on the Stock Exchange of Hong Kong, Vitasoy has plants located in Hong Kong, the mainland, Australia and the US.

Lo said the instability brought by the uncertainties in the European economy and the consequential fluctuation in the related currencies are also posing some challenges to the company.

The company proposed to pay a final dividend of 13.4 Hong Kong cents. Together with the interim dividend and a special dividend, total dividends for the financial year will amount to 26.60 cents.

“Vitasoy is always generous in paying dividends, though its net profit hasn’t seen much growth over the years,” said Francis Lun Sheung-nim, general manager of Fullbright Securities.

“The group has been conservative in expanding its business on the mainland, otherwise its influence on the mainland would be totally different,” he told China Daily.

Lun said Vitasoy, founded in the 1940s, is a well-established brand that enjoys great popularity in Hong Kong and Guangdong province.

Lun added that, although the group has expanded its business to a wide variety of beverages beyond the soy drink products over the years, it has failed to move aggressively on the mainland to gain market share during the country’s thirty years of reform and opening up. Vitasoy is now left behind by many “newcomers”, such as Taiwanese food companies Uni-President, Master Kong and Want Want, in terms of business size and market share on the mainland.

Lun said the group also missed out opportunities to seize a bigger market share on the mainland when the melamine scandal haunted the whole milk industry in 2008.

China Daily

(HK Edition 06/09/2010 page3)

http://www.chinadaily.com.cn/hkedition/2010-06/09/content_9952005.htm