Vietnam’s dairy firm Lof expects steep decline in 2025 net profit

Lof International Dairy Products JSC anticipates a sharp decline in net profit for 2025, likely due to the substantial operating costs associated with a new plant in southern Vietnam.

The firm targets VND360-440 billion ($14.14-17.28 million) in net profit this year, down 50-59% year-on-year, according to its business plan. If it fails to meet the goal, that will be the lowest profit since 2020.

Lof (UpCoM: IDP) aims for VND8.4-8.8 trillion ($329.8-$345.5 million) in 2025, up 10-14% from 2024.

In addition to its two operational factories in Ba Vi district (Hanoi) and Cu Chi district (Ho Chi Minh City), which have a combined annual capacity of 300,000 products, the company is accelerating the development of a new facility in Binh Duong province. This plant is set to produce dairy products, non-alcoholic beverages, mineral water, and more.

Lof has increased the total investment of the project by 2.4 times to VND6.5 trillion ($255.25 million) and revised up its total capacity to 685,000 tons from 300,000 tons.

Phase 1 will include an annual output of 250,000 tons of dairy products and 50,000 tons of beverage products, with operations expected to begin in Q1/2025. Phase 2 will add 286,000 tons of dairy products, 98,500 tons of beverage products, and 500 tons of other food items, with operations scheduled for Q2/2027.

Once the Binh Duong dairy plant becomes operational, the company is set to face large operating costs while business performance may not yet generate sufficient returns to offset expenses. This could explain why IDP’s management has set a target for revenue growth despite a sharp decline in projected profits.

In 2024, Lof earned nearly VND7.66 trillion ($300.73 million) in revenue, up 15% year-on-year, and VND875 billion ($34.36 million) in net profit, down 5.3%.