Iconic Hong Kong drinks maker Vitasoy sees profits fall 10 per cent in crisis-hit city
- The 79-year old company posted a 9.8 per cent drop in net profit in its home market, which has been ravaged by protests, but overall profit was up 3 per cent
- It is regarded as a quintessential Hong Kong brand, whose products are part of the city’s cultural fabric
Iconic Hong Kong drinks manufacturer Vitasoy International saw its profit in the crisis-hit city fall almost 10 per cent in the six months to the end of September.
The 79-year old company posted a 9.8 per cent drop in net profit to HK$174.7 million (US$22 million) in its home market, which has been ravaged by violent protests since early June.
Despite this, Vitasoy managed to report a 3 per cent rise in overall profits to HK$533 million (US$68.2 million), which includes China, by far its biggest market.
The fall in earnings in Hong Kong could have been greater had it not been for a rise in the number of people buying the drinks from shops to consume at home. Many restaurants and cafes have been forced out of business by the unprecedented social unrest.
“In the second quarter, from July to September, we have done better than in the first quarter,” chief executive Roberto Guidett said on Thursday at a press conference after the results were announced.
“A number of shoppers are coming to buy our products more often because of more home consumption.”
About a quarter of Vitasoy’s revenue is generated in Hong Kong and Macau. It is regarded as a quintessential Hong Kong brand, whose products are part of the city’s cultural fabric.
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Guidetti did not directly blame the political turmoil in Hong Kong for the fall in profits.
“We’re having economic recession in Hong Kong. This is not the first time it happens in our lives,” he said.
“So we are looking at channels where we do business, such as supermarkets.
Vitasoy relies heavily on the Chinese market, where 70 per cent of its revenue is generated. Operational profits from China reached HK$611.8 million, 8.3 per cent higher than the same period last year. Vitasoy will keep expanding its presence in China by advertising and using e-commerce platforms, said Guidetti.
The board of directors declared an interim dividend of 3.8 HK cents (0.05 US cents) per share.
The company’s shares dropped more than 7 per cent to close at HK$30 (US$3.84) after the interim results were released. That is 36.4 per cent lower than the record high of HK$47.15 on June 13.
