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Numerous dairy firms enjoy profit growth in Q3

A number of dairy companies reported positive earning results in the third quarter of this year after restructuring their businesses.

Việt Nam’s largest dairy producer Vinamilk expected that revenue and profit would increase 9 per cent and 16 per cent, respectively, to reach VNĐ15.5 trillion (US$668.7 million) and VNĐ3.1 trillion.

In the first nine months, Vinamilk estimated revenue and profit would total VNĐ45.3 trillion and VNĐ9 trillion, both up 7 per cent.

As the company targets to earn VNĐ10.7 trillion in 2020, it has fulfilled 84 per cent of the target after nine months.

BIDV Securities Company even forecast that Vinamilk would achieve VNĐ11.3 trillion this year, up 6.8 per cent. The estimated result is based on advertising cost cuts and financial revenue increases.

Mộc Châu Dairy Cattle Breeding Joint Stock Company (Mộc Châu Milk) reported revenue of VNĐ775 billion in the third quarter this year, up 14 per cent year-on-year.

Gross profit margin reached 34.6 per cent, a sharp rise compared to those of 18-19 per cent in previous years but still less than Vinamilk’s gross profit margin of over 45 per cent.

The company achieved VNĐ102 billion in post-tax profit in Q3, up 113 per cent year-on-year. It attributed the hike in profit to its effective cost management, proper supporting policies to distributors and customers.

In the first nine months, Mộc Châu’s revuenue reached VNĐ2.1 trillion, up 10 per cent. Post-tax profit rose 69 per cent to touch VNĐ209 billion, surpassing 33 per cent of the yearly target.

The company spent a large amount of VNĐ370 billion in advertising activities, doubling that of the first nine months in 2019.

The International Dairy Products Joint Stock Co (IDP), one of Việt Nam’s home-grown dairy product firms, reported gross profit margin reaching 41.7 per cent in the third quarter, approximately that of Vinamilk although the company has a smaller scale compared to the dairy giant.

IDP’s post-tax profit in Q3 reached VNĐ159 billion, 4.2 times higher than the last year and that of the first nine months was VNĐ309 billion, 3.3 times higher than 2019.

As IDP suffered continuous losses in the 2016-2018 period, it still reported a total loss of VNĐ270 billion in the first nine months. Net revenue totaled nearly VNĐ2.8 trillion in the period.

The company has recently approved Blue Point to buy 90 per cent of the stakes without a public bid. Blue Point was established in 2015 and specialises in consumer goods manufacturing. The group previously expressed an ambition to set foot in the dairy and pharmaceutical sector to become one of Việt Nam’s largest consumer-retail groups.

IDP has also released information that Howard Holding PTE managed by VinaCapital sold a 28 per cent stake in IDP to decrease its ownership to 26 per cent. At present, this investment fund and relevant parties are holding 37 per cent stake.

Previously, in December 2014, VinaCapital Vietnam Opportunity Fund and Japan’s Daiwa PI Partners invested approximately $45 million to take a 70 per cent stake in IDP.

Established in 2004, IDP has the main trademark of Ba Vì for its milk products, which includes fresh milk and yoghurt. It also has other products such as z’Dozi and Purina fresh milk.

Hanoimilk JSC (HNM) reported profit of VNĐ847 million in Q3, 3.8 times higher than the previous year. Net revenue soared 90 per cent to reach VNĐ58 billion. Gross profit margin was 26.8 per cent.

In nine months, net revenue rose 23 per cent to VNĐ150 billion. But the company suffered a loss of VNĐ28 billion in the period.

Established in 2001, Hanoimilk used to be a major player in the dairy industry in Việt Nam, thriving the most in 2006-07 period thanks to the IZZI milk brand. However, the melamine incident in 2008 and ineffective out-of-industry investments caused the business to suffer heavy losses, and were further outstripped by big rivals. The company has returned to be profitable in the last two years.

Experts from SSI Research stated that the domestic dairy products were less affected by COVID-19 than fast-moving consumer goods (FMCG) products.

However, milk demand of low-income consumers could still be affected and average selling prices will not increase in 2021, said SSI Research.

Although domestic brands are dominating the market, SSI Research forecasts competition from foreign brands will become stiffer as the EVFTA will remove tariffs on European dairy products in the coming years. — VNS

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