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Vinamilk forecasts downswing in profits for 2014

Update: April, 26/2014 - 08:34
Vinamilk's shareholders meeting takes place on April 25. — Photo
HA NOI (VNS)— Shareholders of dairy giant Vinamilk (VNM) approved the company's 2014 business plan yesterday.

According to the plan, total revenue is projected to increase 15 per cent over last year, reaching VND36.30 trillion (US$1.72 billion), but profits will fall 8 per cent to nearly VND6 trillion ($284.4 million).

Vinamilk's 2013 revenue reached nearly VND31.77 trillion ($1.5 billion), up 17 per cent, while profits climbed 12 per cent to over VND6.53 trillion ($309.7 million).

Vinamilk's chairwoman Mai Kieu Lien explained the company faced fierce competition while purchasing power was declining despite big advertisement and promotion campaigns.

"This year's plan is feasible. Although the profit target is lower than last year, the company's indicators are still better than our peers in the country and the region," Lien said at the shareholders' meeting yesterday, emphasising that Vinamilk was determined to keep its market share at all costs.

Currently, Vinamilk holds 90 per cent of the yogurt market, 75 per cent of the sweetened condensed milk market, nearly 50 per cent of fresh milk and 30 per cent of powdered milk.

As for competition with foreign milk, Lien said Vietnamese consumers still preferred imported powdered milk to local products, but in the last two years, Vinamilk had developed good products and even exported to other countries.

China is one of the company's target export markets. Vinamilk is working with the Ministry of Agriculture and Rural Development to negotiate a bilateral dairy agreement to export dairy products to China.

Lien said the published information that the price of raw milk fell sharply was incorrect. In reality, the price decreased for only four weeks and began to increase as of April 24.

The milk price should be raised 11 per cent to offset inflation but Vinamilk increased prices by just 6 per cent, Lien said. Raising prices of dairy products is currently under inspection by the management authority in Vietnam.

Vinamilk decided to raise the 2013 dividend from 34 to 48 per cent. The company paid 28 per cent of its dividend last year and the remaining 20 per cent, around VND1.668 trillion ($79 million), will be paid by the end of May.

This year, Vinamilk projects the rate of cash dividend will not exceed 50 per cent of its net profit and plans two payments, one in September 2014 and one in July 2015. The company will also issue bonus shares to shareholders at the ratio of 5:1 with a total offering of 166.79 million shares in the next two quarters. — VNS

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