Solid Business Performance Recorded for Vitasoy during 1H 2010

    HONG KONG, Nov. 18 /PRNewswire-Asia/ --


    Financial Highlights


                                         Six months ended
                                          30th September
                                        2010            2009              %
                                      HK$ Mn          HK$ Mn          Change
                                  (unaudited)     (unaudited)
    Turnover                           1,710           1,561              10
    Gross profit                         849             775              10
    EBITDA                               292             259              13
    Profit before taxation               234             207              13
    Profit after taxation                185             165              12
    Profit attributable to
     equity shareholders
     of the Company                      156             141              10
    Basic earnings per Share
     (HK cents)                         15.3            13.9              10
    Dividend (HK cents)                  3.2             3.2              --

Vitasoy International Holdings Limited ("VIHL" or "the Company") (SEHK Code: 0345), a Hong Kong-based manufacturer, marketer and distributor of non- carbonated beverages and food, today announced a solid growth of 10% in net sales revenue to HK$1,710 million for the six months ended 30th September 2010. Gross profit and profit attributable to equity shareholders were HK$849 million and HK$156 million respectively, both increased by 10% from the same period last year. The Company's gross profit margin maintained at 50%, despite the impact brought by surging raw material and operating costs.

"In the first six months, we continued to solidify our leading market position and recorded positive sales growth in almost all our operations. Heavy cost pressures combined with an aggressive price cutting strategy used by our competitors across the globe created a very challenging operating environment. Notwithstanding these pressures, we maintained business growth momentum in Mainland China and Australia, while our Hong Kong business outperformed industry average. In North America, our focused business strategy has laid a good foundation for future growth, while the operation of our subsidiary Unicurd in Singapore was challenged by cost pressure. To ensure VIHL's sustainable development, we have embarked on investment plans to enhance our production capabilities and increase operational efficiencies," said Mr. Winston Yau-lai Lo, Executive Chairman of VIHL.

Basic earnings per share were HK15.3 cents for the period. The Board of Directors declared an interim dividend of HK3.2 cents per share (FY2009/2010 interim: HK3.2 cents per share).

Hong Kong and Macau -- Outperformed Industry Average

During the interim period, the Hong Kong market recorded steady year-on-year growth of 3% in net sales revenue to HK$759 million, amidst vigorous price war and intense market competition. Major products, including the VITA range of Ready-To-Drink Teas, SANSUI Fresh Soymilk and Tofu products, were the main growth drivers of sales.

In addition, there was favourable growth recorded in the export business. The sales revenue and the number of school tuck shops, which Vitaland Services Limited operates have both increased.

"We will continue our efforts in brand building to enhance our brand equity through innovative marketing and promotions. We are in the process of rejuvenating our production capability and expanding our plant's capacity, which will provide the impetus to support our business growth and product diversity," said Mr. Larry Eisentrager, Group Chief Executive Officer of VIHL.

Mainland China -- Continued Investment in Brand Building and Package Design

The "Core Business, Core Brand and Core City" strategy continued to drive growth momentum for Mainland China operations. The net sales revenue grew by 14% to HK$501 million.

"We have been focusing on our brand, product development and package innovation to drive sales and market share growth in Southern China within capacity constraints while to further expand our foothold in Eastern China. The package design of the full range of products was revamped and met with good consumer response. Our product image as 'healthy, green and low-carbon' and newly launched healthier versions of products have solidified our leadership position in soymilk market in Mainland China. We shall continue our business strategy and brand strengthening programs to gain growth and increase market share," said Mr. Lo.

The Company has kick-started construction plan for its third plant in Mainland China. The new plant, which is located in Nanhai, Guangdong Province, will commence operation in FY2011/2012. Upon its completion, the plant will enhance the production capacity in Southern China.

Australia and New Zealand -- Strong Growth in Business

Despite the deflationary tactics used by retailers and competitors to gain market share, the Australian operation was able to deliver strong and sustainable growth in the sales of both soymilk and rice milk products and outperformed other market players. Sales for the coffee channel also registered exceptionally robust growth. During the interim period, the net sales revenue surged by 32% to HK$210 million, which has also included the positive currency impact of the Australian dollars.

"Backed by our strong distribution channels and product development capability, we have been the market leader in milk alternative categories across Australia and New Zealand since the second quarter. We will continue to invest in category growth and enlarge our market share. The production capacity of the Wodonga plant will be doubled following the completion of the expansion plan in FY2011/2012, which will support our business expansion," commented Mr. Eisentrager.

North America -- Established good foundation for future growth

The North American operation maintained its growth momentum following the turnaround in business from the previous financial year. The operation recorded growth in its net sales revenue, market share and profitability. Its operating profit amounted to HK$6 million, representing an encouraging year- on-year growth of 270% from a low base of first half of FY2009/2010. Core products such as mainstream tofu, pasta and imported beverages all reported sales growth.

"We will continue to build a solid platform for profitable growth in our US operation, as well as reaching a more diverse spectrum of consumers via trade promotions and consumer marketing. We are well positioned to pursue for future growth," added Mr. Eisentrager.

Singapore -- Profitability Challenged by Cost Pressure

In the first six months of the year, Unicurd's profitability was challenged by strong cost pressure. Net sales revenue was HK$32 million, increased by 1%. The marginal increase was mainly attributable to the appreciation of Singaporean dollar, while Unicurd's sales in local currency dropped by 4%. The operation will focus on expanding its market share by introducing new products and innovative marketing. Improved profit is also expected through better price positioning and efficiencies.

Outlook

"In the face of challenging market conditions, we will invest for future growth in four key areas of brand equity, production capacity, product and package innovation and human resource development, as well as consolidate our long-standing position in each market. We will also adopt a prudent approach to managing costs in order to withstand rising raw material and operating costs and protect our profitability. Vitasoy is well poised to meet with the challenges coming ahead," Mr. Lo concluded.

About Vitasoy

Vitasoy International Holdings Limited is one of the leading manufacturers and distributors of non-carbonated drinks with a base in Hong Kong. Founded in 1940 and with production facilities in Hong Kong, Mainland China, Australia, the United States and Singapore, Vitasoy currently provides consumers in 40 markets worldwide with over 1,000 stock keeping units. Over the years, Vitasoy has successfully established a corporate image as "the Soy Expert". Vitasoy is a constituent stock of the Morgan Stanley Capital International ("MSCI") Hong Kong Small Cap Index, Hang Seng Composite Index, Heng Seng Composite SmallCap Index and Hang Seng Composite Industry Index -- Consumer Goods.

    Vitasoy website: www.vitasoy.com

    For more information, please contact:

     Stella Lung
     Public Relations Manager
     Vitasoy International Holdings Limited
     Tel:   +852-2468-9644
     Fax:   +852-2465-1008
     Email: [email protected]

     Angela Hui
     Account Director
     Ketchum Hong Kong
     Tel:    +852-3141- 8091
     Fax:    +852-2510-8199
     Email:  [email protected]

SOURCE Vitasoy International Holdings Limited