Hong Kong-based drink company Vitasoy International Holdings recorded a 2.5-fold increase in net profit despite a small revenue decline as a focus on product innovation paid off in successful launches of new banana and strawberry soy milks, plus a zero-sugar lemon tea.
The 84-year old Hong Kong company reported on Thursday that net profit grew 155 per cent year on year to HK$116.4 million (US$15 million) for the year ended March 31.
Revenue fell 2 per cent year on year to HK$6.2 billion. Mainland China contributed HK$3.4 billion of that, on par with the previous year despite an end to government Covid-19 subsidies that were in place in 2023. Hong Kong revenue rose 4 per cent, with the company citing convenience store sales and successful cooperation with secondary schools as factors.
“Secondary schools and convenience stores are normalising after the pandemic,” said CEO Roberto Guidetti. “We are confident about sales in the Hong Kong and China markets, and we think it’s possible to keep single-digit growth in Hong Kong through innovation.”
The company introduced three new products in Hong Kong and mainland China during the year: a low-sugar banana soy milk, a strawberry soy milk, and a zero-sugar lemon tea. All three have been well received, according to the company.
Vitasoy will place more emphasis on innovation to produce more products that build brand affinity while reducing costs, said Winston Lo, executive chairman.
Gross profit margin increased from 47.5 to 50 per cent in Hong Kong dollar terms, and operating profit rose 392 per cent, mainly thanks to higher selling prices and “increased efficiency in trade promotional spending”, which was partially offset by the impact of unfavourable foreign exchange movements and sales mix, the company said.
The company increased prices by single-digit percentages. It was among the last in its markets to do so and has no plans for further increases, Guidetti said.
Mainland China accounted for 54 per cent of the company’s total revenue, followed by Hong Kong at 36 per cent, with the rest coming from Australia, New Zealand and Singapore.
“Mainland China has much stronger demand for our soft-drink products than other markets,” Lo said. “We can see potential and profit growth in mainland China.”
The company proposed a final dividend of 6.3 HK cents per ordinary share, making the total dividend for the year 7.7 HK cents, after the interim dividend of 1.4 HK cents.
The dividend is based on the market situation, and the company raised it from 60 to 70 per cent of its profit to mark the 30th anniversary of its listing on the Hong Kong stock exchange, Lo said.
Vitasoy shares have lost more than 50 per cent in the last two years amid the challenging retail environment in Hong Kong and mainland China. While profits are increasing, the company does not yet know when they will return to pre-pandemic levels, Guidetti said.
Vitasoy lost 2 per cent to HK$6.45 on Thursday.