Vietnam’s top dairy producer Vinamilk targets modest growth as weak dairy demand persists

Vinamilk (HoSE: VNM) set cautious growth targets for 2026, as it navigates weak consumer demand and rising input costs despite a strong start to the year.

At its annual shareholders’ meeting on Wednesday, the company approved a plan for consolidated revenue of VND66.45 trillion ($2.52 billion) and net profit of VND9.83 trillion ($373.41 million), up 4.3% and 4.4% respectively from 2025.

The results came after the firm has largely completed a 2022-2026 transformation strategy. It has redesigned more than 300 SKUs (stock keeping units) across 15 categories, repositioned its retail network to nearly 800 stores with a target of 1,000 outlets in 2026, and overhauled its traditional distribution system.

The company also continues to expand its dairy herd to over 130,000 cows, supplying around 410,000 tons of fresh milk annually.

Despite these efforts, the dairy sector remains under pressure, CEO Mai Kieu Lien said. The industry demand contracted by about 3.7% from a year earlier in the first quarter, even as broader fast-moving consumer goods (FMCG) showed signs of recovery with a 4.3% rise.

“Unless there are significant positive shifts, demand recovery will remain limited amid ongoing geopolitical uncertainties,” she told shareholders. Still, Vinamilk expects that if it sustains current growth momentum, it could help lift the overall dairy market by 1.5% to 2% in 2026, she noted.

The company reported strong first-quarter results, with revenue rising 24.7% year-on-year to VND16.18 trillion ($614.67 million) and net profit jumping nearly 55% to VND2.46 trillion ($93.39 million).

Vinamilk described 2025 as a “stress test” year, as it faced declining demand, rising input costs, and intensified competition while undergoing internal restructuring. Despite these pressures, the company posted record revenue of VND63.72 trillion ($2.42 billion), up 3.1%, while net profit remained broadly flat.

The company plans to maintain a high dividend payout, with a minimum cash dividend of 50% of net profit for 2026. For 2025, shareholders approved a total cash dividend of 43.5%, equivalent to VND4,350 ($0.17) per share. The remaining 18.5% will be paid within six months following the meeting, subject to board approval.

Vinamilk said it continues to see long-term growth opportunities, supported by demographic trends including an aging population and rising health awareness, which are driving demand for adult nutrition and functional dairy products.

The company expects stronger growth in segments such as plant-based milk, adult milk powder, probiotic yogurt, and high-protein products over the next three to five years, while traditional categories such as liquid milk and infant formula are likely to grow more slowly.

Rising input costs remain a key risk. Vinamilk said prices for milk powder, energy, and packaging materials are trending upward. In the near term, the company plans to keep selling prices stable to support demand, with any adjustments likely to be gradual and limited to 2-3%.

Geopolitical tensions, particularly in the Middle East, have also disrupted export logistics, increasing shipping times and costs. The region remains an important market, contributing about 7.7% of Vinamilk’s revenue and maintaining double-digit growth in 2025 and Q1/2026. Meanwhile, it saw a 20% growth from the Chinese market, supported by products tailored to local consumer preferences.

To mitigate risks, the company is diversifying supply sources and export markets while continuing to optimize its product portfolio and distribution network.

VNM shares closed at VND61,800 ($2.35) each on Wednesday.