VIETNAM: Vinamilk earnings slip despite improved sales
Vinamilk investing in top line
Vinamilk, Vietnam's largest dairy processor, saw a decrease in earnings during the first quarter despite higher sales.
In a regulatory filing, Vinamilk revealed sales rose to VND7.11trn (US$337.4m) in the first three months of the year. This represents a 3.6% increase on sales generated in the comparable period of last year, which totalled VND6.86trn.
However, operating earnings and net profits were both down in the period. Operating profit sank to VND1.67trn, down from VND1.84trn last year, due primarily to higher financial expenses. Net income fell to VND1.36trn compared to VND1.52trn in the year-ago period as higher income tax expense also weighed.
Last month, Vinamilk said its annual profits would fall in 2014. The company forecast net profit will fall 8.3% in 2014 to VND6.53bn, with pre-tax profits estimated to drop 6% to VND7.53bn.
A spokesperson for the company said that the group is willing to "sacrifice" margin for domestic market share, while also preparing to invest in international expansion.
"Due to the economic slowdown in Vietnam recently, the purchasing force of Vietnamese also decreases and hasn't improved since Q2/2013 despite all the effort and investment in marketing and sales of Vinamilk and other FMCG companies," the spokesperson said. "In order to overcome this situation, Vinamilk is willing to sacrifice its profit for market share, as well as preparing for Vinamilk's investment to other markets."
Vinamilk has indicated it aims to become one of the world's 50 largest dairy processors by sales by 2017. The group has recently made investments in Cambodia and, in December, Vinamilk announced it was looking to buy 70% of Driftwood Dairy, a business in the US. This year, Vinamilk has also revealed plans for a subsidiary in Poland.
just-food is currently in Ho Chi Minh City to visit Vinamilk and find out more about its growth plans, as well as gauge the outlook for the dairy sector in Vietnam. Check back for further coverage of the trip - and details of Vinamilk's investment strategy - in the coming weeks.
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