Vinamilk after-tax profit drops 6 quarters in a row

Vinamilk, Vietnam’s largest dairy company, recorded an after-tax profit of VND2,102 billion ($90 million) in the second quarter of 2022, down 26.5% year-on-year, as inflation impacted purchasing power and prices of input materials surged.

The company, listed on the Ho Chi Minh Stock Exchange (HoSE) as VNM, has seen profit decline for six quarters in a row.

Its net revenue hit VND14,930 billion ($639 million) in the period, down 5%.

In Vinamilk's financial statement, its management explained that high inflation led to a decrease in consumption, while prices of input materials rose.

In the domestic market, Vinamilk faces more competition as new companies have entered the dairy industry. Net revenue from exports decreased by nearly 12% year-on-year as overseas market consumption plunged due to inflation, while freight rates remain high.

Vinamilk in the second quarter opened 37 new Vietnamese Dairy Dream stores, bringing the total number of points of sale to 651. Two foreign branches Driftwood and Angkormilk recorded revenue growth of 40% and 20%, respectively.

Gross profit margin reached 40.7%, the first rebound in the last seven quarters, up 0.2% compared to Q1. For the domestic segment, gross profit margin upped 0.7% over Q1 as milk consumption in the summer quarter increased.

In the first half of the year, its consolidated revenue and after-tax profit reached VND28,808 billion ($1.23 billion) and VND4,386 billion ($187.8 million), almost flat and down 20% compared to the same period last year, respectively.

After six months, the dairy company has fullfilled 45% of the year's revenue plan and the year's profit target.

Securities companies are adopting a more optimistic assessment of Vinamilk in the long term. Top broker SSI Securities put its forecast on Vinamilk's net profit growth in 2023 at 11% as profit margin, driven by a downward correction in powdered milk prices, would improve.

On the Ho Chi Minh City Stock Exchange, the VNM shares price hit VND73,500 ($3.15) a piece at the closing session on August 1.