Vinamilk revenue up 14% in 2015 on strong overseas business

HO CHI MINH CITY -- Vietnam Dairy Products, better known as Vinamilk, had sales of 40 trillion dong ($1.7 billion) in the year through December, up 14% on the year. Net profit attributable to shareholders of the parent company expanded 28% to 7.77 trillion dong, the company reported last week.

Vinamilk products in production chain

Vinamilk's overseas sales rose 39% to 7.96 trillion dong last year, contributing 20% to its total revenue. Its earnings per share rose 28% to 5,837 dong.

With the speeding up its international expansion through acquisitions and investments in local dairy plants, Vinamilk’s purchasing is growing up, including the purchase of a 22.8% stake in the Miraka plant in New Zealand, a 70% stake in Driftwood, a U.S producer, and a 51% stake in the Angkor plant in Cambodia.

The company planed and opened a branch in Russia at the beginning of 2016 after setting up a subsidiary in Poland in 2014 to tap European market. It pushes ahead with its move into Russia and the former Soviet Union after Vietnam signed a free trade pact with Eurasian Economic Union last year.

Vinamilk's sales expenses also rose significantly last year, reaching 6.2 trillion dong, up 70% year on the year. Its advertising costs rose 82% to 1.7 trillion dong in 2015, while commissions to customers rocketed 168% to 2.3 trillion dong, the company's latest financial report says.

The higher spending was driven by a desire to hold onto market share in Vietnam's $4 billion dairy market. Even though Vinamilk is hitting the dairy market with its products’ sales, it is facing competition from new entrants, including Nutifood, IDP, and Anova Milk. Moreover, battling longtime rivals are Dutch Lady, Abbott, Mead Johnson, Nestle and TH True Milk who are very strong competitors.

Vinamilk holds 53% of the domestic market for liquid milk, 84% for yogurt and 80% for condensed milk. The company has 100 sales offices, and does business with 212,000 small retailers and 650 supermarkets across the country.

Thuy Huynh

Source: Nikkei