Industry News
Vinamilk to explore further investments abroad in 2015

HCM CITY (Biz Hub) –Viet Nam Dairy Joint Stock Co. (Vinamilk) will continue to explore markets abroad and boost M&A activities after buying a 70 per cent stake in the U.S.-based Driftwood dairy factory

This was revealed by Mai Kieu Lien, chairman of the management board at Vinamilk Co., during the April 27 annual general meeting of shareholders for 2015.

Accordingly, Vinamilk revealed to shareholders, its plan to spend VND4 trillion (US$187.79 million) for M&A activities, investment cooperation to expand markets and developing material sources for production during this year.

Vinamilk is currently negotiating with two partners to buy a dairy factory in Europe. However, the deal is yet to materialise so Vinamilk has not submitted it before shareholders for approval, according to Lien.

Currently, Vinamilk has invested capital in four companies, including buying a 70 per cent stake in the U.S. dairy firm, a 51 per cent stake in Cambodia's Angkor Dairy Products, a 19.3 per cent stake in New Zealand's Miraka Limited and a 15 per cent stake in Viet Nam's Asia Sai Gon Food Ingredients JS Co.

Lien said, "Vinamilk will explore multiple ways to grow, including M&A deals in foreign markets and exports. However, whatever the company does, the important thing is maintaining market share and capturing greater market share from rivals."

The company also plans on spending a lot of money on advertising and sales promotion this year, owing to new competitors that are entering the market and intend to invest a lot of money to boost market share. If Vinamilk does not invest in advertising and sale promotions, it will be unable to compete with them.

In addition, the costs for advertising and marketing must correspond with the market share that the company holds. For instance, Vinamilk's yogurt products occupy 84 per cent of market share, and the cost for advertising will be at the same rate.

Lien added the expenses for advertising and marketing were still dependent on the market situation at a certain point in time.

Fruitful results

Le Anh Minh, a member of the management board at Vinamilk Co. said that although the company had failed to meet its revenue target to the fullest, there were still promising business signs ahead.

For instance, revenue and profit from the U.S.-based Driftwood had already fulfilled 123 per cent of the revenue target for the year.

Besides, the company's farm in Nghe An had become the first cow milk husbandry farm in Southeast Asia and the third in Asia to meet the Global G.A.P Standard. Currently, Vinamilk has strengthened investment in the cow milk farm project, which has 11,000 cows.

Although the business plan in 2014 did not meet expectations, Lien was optimistic about the business plan this year, as the company is targeting a revenue of VND38.424 trillion, aiming for a 9.9 per cent growth over last year, and an after tax profit of VND6.83 trillion, which would reflect an increase of 12.6 per cent and cash dividends of minimum 50 per cent of after tax profit.

The target is achievable, considering that during the first quarter of this year, sales at Vinamilk jumped by 13 per cent and exports increased by 70 per cent.

At the meeting, shareholders also approved a plan to issue 200 million shares to increase capital.

Source: VNS

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