Vinamilk profits grow by 65% in second quarter

HCM City-listed dairy producer Vinamilk estimates it will earn an after-tax profit of VND931.07 billion (US$47.7 million) in the second quarter of this year, representing an increase of 65 per cent over the corresponding period in 2009.

In the first six months, the company earned an after-tax profit of VND1.75 trillion ($92.01 million), up 67.1 per cent over the same period a year ago and representing more than half of its 2010 target.

The company’s turnover is estimated to be VND3.98 trillion ($209.5 million) in the second half of this year. In the first six months of 2010, its turnover was VND7.24 trillion, an increase of 52.6 per cent over the same period in 2009.

The company’s chairman, Mai Kieu Lien, said that high domestic demand on dairy products contributed to the company’s well-performed results in the first half.

“Turnover from dairy products’ consumption grew over 60 per cent,” she said, noting that dairy consumption in the domestic market now was 14kg per person per year, in comparison to 6.5kg in 2000 and 9kg in 2005.

She estimated that consumption would grow much higher than its current level which was modest, compared to neighbouring markets such as Thailand, where it is twice that of Viet Nam.

Le Thuy Ngoc Khanh, a securities analyst at Tan Viet Securities, said Vinamilk performed well, thanks to its wise strategy to focus on the domestic market, while it developed an improved distribution system, with 200 distributors and 135,000 retail outlets nationwide.

However, the company was facing challenges such as a shortage of raw materials (the company imports 70 per cent from abroad) and stiff competition from overseas dairy producers, Khanh said.

Lien said the company bought back Lam Son Milk Company and invested in F&N Viet Nam Food Company Ltd in an effort to boost its raw-material supply.

Meanwhile, the company would continue focusing on research and development to increase domestic demand, while developing its marketing and distribution systems, Lien said.

The company has targeted a turnover of VND14.5 trillion ($743.6 million) and an after-tax profit of VND2.7 trillion ($138.5 million) this year, leading to a dividend cash payment of 30 per cent.

Vinamilk’s shares, (VNM), yesterday closed unchanged at VND92,000 a piece. — VNS

Tags: vietnam stock, Vietnam stock market, Vinamilk