Vitasoy prepares to scale up China business for post-pandemic rebound in non-carbonated drinks
- Profits in China and Hong Kong markets fell by 24 per cent and 14 per cent respectively in last financial year
- Company is preparing for sales to return to normal in the second half of this year
The company expects sales to return to normal in the second half, allowing it to catch up on lost volumes in the opening six months because of lockdown measures to stem the viral outbreak.
The group reported a 23 per cent slide in earnings to HK$536 million (US$69.2 million) in the year ended March 31, according to an exchange filing on Friday. Sales dropped 4 per cent to HK$7.2 billion.
China, which accounted for 62 per cent of its total sales, contributed 24 per cent lower profit because of lockdown measures to contain the viral outbreak. In Hong Kong, profit fell by 14 per cent as social unrest and the Covid-19 crisis disrupted its distribution channels and sales to closed schools.
“The most notable events are the Covid-19 pandemic, ongoing social unrest in Hong Kong, the prolonged drought in Australia and a continued strain on US-Sino relations,” Vitasoy said.
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China’s first-quarter GDP shrinks for the first time since 1976 as coronavirus cripples economy
China’s economy took a historic hit as a result of the viral measures and slower demand from overseas because of the trade tensions. The economy shrank 6.8 per cent in the first quarter from a year earlier, the first contraction since 1976 during the twilight of China’s Cultural Revolution.
Vitasoy fell 1. 7 per cent to HK$29.55 in Hong Kong on Friday, giving it a market value of HK$31.4 billion. The stock has risen 4.6 per cent this year, outpacing the 12.6 per cent slump in the Hang Seng Index.
To sustain demand in the mainland market, Vitasoy has digitised its operations, Chief Executive Roberto Guidetti said. The group’s online business in China contributed 10 per cent of its total revenues and this will continue to grow in the next couple of years, he added.
“We’ve seen disproportionate growth [of online business] even in areas where we do not have the basic infrastructures,” he said. “But online business does not satisfy all the needs because some proportions of our business requires physical presence.”
It aims to strengthen its infrastructure and efficiency and improve the quality of manufacturing and logistics operations to support a winning strategy in core categories.
