Vitasoy International (0345) H2 2016 earnings summary

Executive summary

• FY15/16 revenue rose 10% in HKD, gross profit 13% and profit attributable to shareholders 43%; excluding deferred tax asset recognition and U.S. divestiture costs, attributable profit grew 24%.

• Core categories and geographies accelerated growth, while management shifted its priority from gradual acceleration to sustainable growth paced to market conditions and organizational capability.

Financial highlights

• Revenue increased 10% in HKD to HKD 5.5bn; constant-currency growth was 13%, with currency depreciation in the RMB, Australian dollar and Singapore dollar weighing on reported results.

• Gross profit rose 13% to HKD 2.8bn; gross margin increased 1 percentage point to 51%, supported by volume, mix, manufacturing efficiency and favorable commodity prices.

• EBITDA increased 12% to HKD 812m, or 14% excluding U.S. divestiture transaction costs; PBT rose 14% to HKD 599m, or 17% to HKD 615m excluding the divested business.

• Profit attributable to shareholders rose 43% to HKD 531m; excluding deferred tax asset recognition and U.S. divestiture costs, it increased 24% to HKD 460m.

• Basic EPS increased 42% to HKD 0.509, or 23% excluding deferred tax asset recognition and U.S. divestiture transaction costs.

Outlook and guidance

• Priority shifts to sustainable growth, aligning expansion with market conditions and organizational capability; growth drivers remain execution, geographic and channel expansion, and innovation.

• Mainland China plans to build VITASOY Classic brand equity, expand reach and promote VITASOY HEALTH PLUS; Hong Kong launched new VITASOY Classic Black, CALCI-PLUS rebranding and a VITASOY GO variant.

• Australia plans to grow its newly launched almond milk and chilled proposition; investment in team capacity and capability is a focus over the next 12–24 months.

• Management expected gearing to rise in coming months as bank loans funded capacity investment; raw-material trends were expected to become less favorable over the following 12–18 months.