Vinamilk targets 5.5% revenue growth in 2023

Vietnam’s largest dairy manufacturer Vinamilk is targeting VND63.38 trillion ($2.7 billion) in consolidated revenue for 2023, a year-on-year increase of 5.5%, said CEO Mai Kieu Lien.

At a virtual annual general meeting of shareholders on Tuesday, Lien said the company’s after-tax profit was estimated to reach VND8.62 trillion ($367 million) this year, flat compared to the previous year.

“To realize these goals, Vinamilk will expand in international markets, invest in factories and farms, and deploy investment projects at home and abroad,” she said.

During the meeting, shareholders approved a plan to pay cash dividends of at least 50% of consolidated post-tax profit, with 15% to be paid on October 5, 2023. They also authorized the board of directors to decide on the dividend in advance and the date for the second payment in 2023.

Vinamilk, listed on the Ho Chi Minh Stock Exchange as VNM, posted net revenue of VND59.96 trillion ($2.56 billion) in 2022, down 1.58% year-on-year, and after-tax profit of VND8.58 trillion ($365.8 million), down 19.3%.

The Vietnam Dairy Dream stores were a bright spot for the corporation in 2022, with revenue growth of 20%, Lien said, adding that this year the company will increase investment in this distribution channel to promote both online and offline sales.

Among the firm’s foreign branches, Driftwood in the U.S. recorded revenue growth of over 30%, and Angkormilk in Cambodia over 10%. Along with completing the Lao-Jargo dairy farm complex in Laos, it invested about $42 million to expand factories and farms in Cambodia. Last year, Vinamilk’s export turnover hit $100 million, which is expected to double in 2023.

Explaining the reason for the 2022 profit decrease compared to the VND10.63 trillion ($452.83 million) posted in 2021, the CEO said that for the first time in 47 years, Vinamilk had encountered a 30-50% increase in the cost of raw materials, not to mention objective reasons such as global conflicts, increasing transportation costs, and declining demand.

“Milk is an essential product, so we have only raised prices by 3% to ensure the interests of users and share their difficulties amid high inflation. This increase was not enough to compensate for the price difference, causing the company’s profits to drop," she analyzed.

In 2023, Vinamilk will implement new plans on production, sales, the domestic market, exports, research and development, and human resources.

"We believe this strategy will achieve positive results and a brighter future is awaiting us from the second quarter when the prices of raw materials become relatively stable," said Lien.

However, she noted that it will take Vinamilk about a year to obtain profits as high as pre-pandemic levels.

Last year, the company opened nearly 40 new Vinamilk stores in a move to ensure sustainable distribution solutions. As of end-2022, Vinamilk’s distribution network had more than 230,000 points nationwide, including nearly 650 Vinamilk stores.

In early April, Vinamilk and Japanese company Sojitz broke ground on a $500-million cattle complex to supply beef in northern Vietnam. The project, a 49-51 joint venture between Sojitz and Vinamilk subsidiary Vilico, will cover almost 76 hectares in Tam Dao district, Vinh Phuc province, bordering Hanoi.

On the stock market, VNM's share price hit VND71,000 ($3.02) at Wednesday's close.