Growing Amidst the Headwinds
In the first quarter of 2024, the dairy industry continued to decline as per AC Nielsen, marking a 2.8% decrease year-over-year. This downward trend was also observed in other FMCG segments. Data from the General Statistics Office of Vietnam revealed a similar pattern, with total retail sales and consumer service revenue growing by only 8.2% in Q1 2024, significantly lower than the average annual growth rate of 11.5% during the pre-COVID period (2015-2019).
These figures indicate that consumer sentiment and income are being impacted by global economic fluctuations and severe climate change. Despite these industry and macro challenges, Vinamilk maintained positive business performance, with Q1 2024 revenue reaching VND 14,112 billion, a 1.4% growth year-over-year.
Regionally, domestic net revenue amounted to VND 11,497 billion, on par with the previous year, while international markets contributed VND 2,615 billion, reflecting an impressive 7.7% growth. Net export revenue reached VND 1,297 billion, sustaining the high levels seen in Q4 2023 and representing a 5.9% increase compared to the same period last year. Traditional export markets continued to be major contributors to the robust performance. Additionally, Vinamilk remains focused on expanding into promising export markets such as Africa and South America.
Vinamilk has added various new products to its export portfolio to meet the demands of new markets like Australia and New Zealand.
Net revenue from international subsidiaries reached VND 1,319 billion in Q1 2024, a 9.6% increase year-over-year. Amidst inflationary pressures, Angkormilk and Driftwood both recorded positive revenue growth, fueled by enhanced brand recognition and improved value proposition for consumers.
Double-Digit Profit Growth in Q2
Consolidated gross profit margin reached 41.9% in Q1 2024, recovering 311 basis points and 123 basis points year-over-year and over 2023, respectively, due to revenue growth and favorable input costs. Sales and administrative expenses in Q1 2024 accounted for 24.7% of net revenue, slightly higher than the 24.5% reported in 2023. This increase ensured adequate funding for increased business development activities while preserving the improved gross profit margin.
Overall, net profit after tax in the first three months of the year was VND 2,207 billion, reflecting a 15.8% increase year-over-year. This result marked the second consecutive quarter of double-digit growth driven by improved gross profit margin and effective cost management. The consolidated net profit margin in Q1 2024 stood at 15.6%, expanding 195 basis points year-over-year and 71 basis points over the full year 2023. Correspondingly, earnings per share (EPS) reached VND 944, an 18.5% increase compared to the same period last year.
Despite the strong start to the year, Vinamilk remains cautious in its plan, as approved by the 2024 Annual General Meeting of Shareholders. The company has set a target of VND 63,163 billion for total revenue, a 4.4% increase over 2023, and VND 9,376 billion for net profit after tax, a 4% increase. To date, the company has achieved 22.4% and 23.5% of its revenue and net profit targets, respectively.
As of March 31, 2024, the consolidated net cash balance remained high, supported by strong profitability and robust operating cash flow, ensuring financial health. Furthermore, the debt-to-total-assets ratio stood at 13.2%, minimizing leverage pressure and allowing efficient allocation of financial resources for reinvestment in business operations and value creation for the parent company shareholders.
During Q1 2024, Vinamilk also announced its third interim dividend payment for 2023, with a dividend per share of VND 900, and a payment date of April 26, 2024.
ESG Highlights
The British Standards Institution (BSI) has certified the Vietnam Beverage Plant, part of Vinamilk’s factory system, as carbon neutral in accordance with the international standard PAS 2060:2014. This brings the total number of Vinamilk entities with this certification to three, including two factories and one farm. This achievement is the result of the company’s dual efforts to continuously implement emission reduction projects in dairy farming and to maintain and expand its green funds to absorb and contribute to reducing the “carbon footprint” on the journey towards the Net Zero 2050 goal.
Vinamilk now has 3 entities certified as carbon neutral according to international standards
In Q1 2024, Vinamilk received the High-Quality Vietnamese Product Award for the 28th consecutive year. Vinamilk is one of a few companies to have consistently held this title for 28 years, since the program’s inception in 1996. This year’s vote demonstrated that consumers highly value not only the quality of products and brands but also their contributions to sustainability. Mrs. Vu Kim Hanh, Chairwoman of the High-Quality Vietnamese Product Business Association, commented, “In the journey of sustainable development, Vinamilk’s leading role is crucial in inspiring and encouraging other businesses to embark on responsible business practices.”
Recently, Vinamilk released its 2023 Annual Report, providing detailed information on its business performance at **[HERE](link)**. The company has also published its 2023 Sustainability Report, which includes information on environmental metrics, social activities, and corporate governance, at **[HERE](link)**.
