Chairman’s Message
Vinamilk’s brand value in 2022 increased by 18% year-on-year, placing it second among the Top 5 strongest global dairy brands and sixth among the Top 10 most valuable global dairy brands.
Vinamilk’s brand value in 2022 increased by 18% year-on-year, placing it second among the Top 5 strongest global dairy brands and sixth among the Top 10 most valuable global dairy brands.
Vinamilk’s brand value in 2022 increased by 18% year-on-year, placing it second among the Top 5 strongest global dairy brands and sixth among the Top 10 most valuable global dairy brands.
Vinamilk’s brand value in 2022 increased by 18% year-on-year, placing it second among the Top 5 strongest global dairy brands and sixth among the Top 10 most valuable global dairy brands.
Dear Shareholders,
On reflection, 2022 was yet another challenging year for us, as the geopolicical issue fueled raw material cost rises and complicated oil and gas price movements, affecting the import and export of raw materials and products, while soaring inflation and interest rates in the final months of the year created a volatile business environment. Despite this, with bravery, wisdom and experience, Vietnam Dairy Products Joint Stock Company (“Vinamilk”) has demonstrated the ability to overcome obstacles and adapt to changes though excellent use of available resources.
In parcicular, Vinamilk has overcome supply chain disruptions to ensure the execution of production plans and proactively implemented digital transformation and distribution channel optimization solutions to lay the groundwork for future growth. In addition to improving financial efficiency, Vinamilk has also focused on creating a sustainable future for the Company and the world with the goal of becoming carbon neutral by 2050. To achieve that goal, Vinamilk is investing in circular economy solutions, such as green energy and technology application, effective waste sources management and tree planting in Vietnam. Furthermore, the Company is committed to and has a roadmap for increasing transparency and publishing meaningful Environmental, Social and Governance (ESG) indicators in accordance with domestic and international standards. With the aforementioned efforts, Vinamilk’s brand value in 2022 increased by 18% from previous year, placing it second among the Top 5 strongest global dairy brands and sixth among the Top 10 most valuable global dairy brands.
In terms of dividends, Vinamilk is proud to maintain its commitment to distribute a significant portion of profits to shareholders. The dividend payment for 2022 is expected to be VND 3,850 per share, equivalent to nearly 40% of par value and more than 90% of profit distributed to the Parent Company’s shareholders, an outstanding payout ratio in recent years as well as in comparison to the overall market.
As we enter 2023, the second year of implementing the AGM Resolution for the term 2022-2026, we will continue to strive to achieve the Resolution’s growth goals, despite the fact that the first months of the year were still difficult due to the previous year’s influence. The specific goals include using and purchasing raw materials at reasonable prices, producing at designed capacity, providing high-quality products and launching new products to meet the demands of all customers, developing unique strategic business plans for different regions, promoting the use of digital technology to gain market share, building a reasonable salary scheme and carrying out succession planning for capable management personnel to meet the Company’s development needs.
On the auspicious occasion of the new year 2023, on behalf of Vinamilk’s Board of Directors, I would like to express my sincere thanks to the Board of Management and the entire staff for their efforts to overcome all the challenges and achieve the business plan of 2022. I would also like to thank our customers, partners, shareholders and stakeholders for always accompanying and cooperating with Vinamilk over the past year. Your trust and support are essential for Vinamilk to make bold transformations that will drive future growth.
CEO’s Message
Vinamilk is honored to be granted the First Class Independence Medal by the Party and Government, a rare noble prize for companies that have made remarkable contributions to the country’s growth.
Vinamilk is honored to be granted the First Class Independence Medal by the Party and Government, a rare noble prize for companies that have made remarkable contributions to the country’s growth.
Vinamilk is honored to be granted the First Class Independence Medal by the Party and Government, a rare noble prize for companies that have made remarkable contributions to the country’s growth.
Vinamilk is honored to be granted the First Class Independence Medal by the Party and Government, a rare noble prize for companies that have made remarkable contributions to the country’s growth.
Dear Shareholders,
Despite the prediction that 2022 would be the year of economic recovery in the post-Covid era, the situation remained complicated as multi-faceted crises related to geopolitical conflicts, epidemics, and climate change arose, increasing risks to global financial markets, energy security, and food security. These issues have led to multi-decade highs in inflation, causing governments to tighten monetary policy and lowering income and consumer demand.
In such context, the entire staff of Vinamilk has adapted and leveraged all resources and competitive advantages to achieve the Company’s business plan as best as we could. These efforts have been acknowledged by the rise of Vinamilk’s brand value to sixth place in the global dairy industry rankings and recognition as the most promising dairy brand, as well as the Government’s granting of the First Class Independence Medal by the Party and Government, a rare noble prize for companies that have made remarkable contributions to the country’s growth.
BUSINESS RESULTS IN 2022
By the end of 2022, Vinamilk had maintained a total consolidated revenue of more than VND 60 trillion, almost unchanged from the previous year, and had completed 94% of the annual plan. Efforts to stabilize sales and reduce operational expenses, however, were just partially offset the combination of rising raw material prices, high transportation costs, and exchange rate fluctuations. As a result, the consolidated profit before tax was VND 10,496 billion, completed 88% of the year’s target.
DOMESTIC BUSINESs
The domestic business contributed VND 50,704 billion in consolidated net revenue and VND 20,556 billion in gross profit. Despite various short-term challenges owing to the macro condition, Vinamilk strategically implemented sustainable distribution solutions from the second to the fourth quarter of 2022 to lay the groundwork for medium- and long-term development. Particularly, the Company has improved trade policies to balance benefits and avoid risks of cannibalization across distribution channels, while also reviewing points of sale to maintain inventories at a reasonable level and assure consistent service quality throughout the system.
The Vinamilk store chain “Giac Mo Sua Viet”, with revenue growth of more than 20% thanks to nearly 40 newly opened stores, and the Key Account channel, with revenue growth of more than 10% given the recovery of the tourism and service industries, were the highlights of 2022.
Revenue from the e-commerce channel also increased by more than 30% year on year. Vinamilk’s distribution system has reached over 230,000 locations throughout Vietnam as of December 31, 2022, including nearly 650 Giac Mo Sua Viet stores.
In terms of products, a number of key product lines, such as Yogurt, Drinking Yogurt, and Condensed Milk, performed well. Despite smaller contribution to revenue, the Plant-based Milk category was growing strongly at a double-digit rate, with Super Nut, which was introduced in 2022, quickly becoming a prominent product.
Moc Chau Dairy Cow Breeding Joint Stock Company recorded net revenue of VND3,133 billion, an increase of 7.1% year on year, given 1) healthy development of traditional channels and 2) expansion of its own store system with more than 50% revenue growth and nearly 60 points of sale by the end of 2022.
INTERNATIONAL BUSINESS
In 2022, the international business generated a net revenue of VND 9,252 billion, with foreign subsidiaries accounting for VND 4,424 billion and export accounting for VND 4,828 billion, while gross profit hit VND 3,342 billion.
Foreign subsidiaries were the primary growth driver for Vinamilk’s international business in 2022. Driftwood’s revenue recorded a growth of over 30% as a result of distribution channel diversification to compensate for the key channel of schools which has yet to return to pre-Covid-19 levels. Driftwood also kept introducing several Vinamilk products into the US market. Meanwhile, Angkormilk’s revenue rose by more than 10% as a result of new product developments and expansive distribution.
Regarding direct export, Vinamilk has flexibly provided support solutions for current customers and enhanced trade promotion efforts, as seen by the acquisition of ten new customers in 2022. In addition to exporting Vinamilk branded goods, the Company seized processing opportunities at specialist trade fairs to expand its customer base and enter new markets, as well as offered innovative packaging and products for high-end markets such as the United States, Canada, Japan, Korea, Australia, and New Zealand.The Vinamilk-Del Monte joint venture continued to penetrate the Filipino market by expanding its product coverage and increasing brand awareness in the Philippines. The joint venture’s products, such as liquid milk, drinking yogurt, and milk tea, have high consumption frequency, are having high return ratio, indicating tremendous growth potential.
THE 5-YEAR STRATEGY IMPLEMENTATION
PREMIUM PRODUCTS AND CUSTOMER EXPERIENCE
Vinamilk has consistently observed consumer trends and launched innovative products to fulfill the needs of each target client segment. Enhancing the taste and packaging of existing products was another major emphasis in 2022. Over the year, the Company launched and renovated over 20 SKUs ranging from mid-end to high-end segment. We will aggressively apply new strategies in the future to improve customer experience by thoroughly gathering and controlling business data at both the distributor and point of sale levels.
Vinamilk is the first company in Asia to win the United States’ Purity Award for Optimal Gold infant powder, as well as the Clean Label Project’s certification for 100% Green Farm and Organic fresh milk. This is an unequivocal confirmation of Vinamilk’s world-class quality.
PROMOTING HIGH-TECHNOLOGY APPLICATION IN SUSTAINABLE AGRICULTURE
Vinamilk has executed renewable energy initiatives, including the installation and operation of rooftop solar power systems at farms and factories. In addition, the Company has adopted a new cost-effective packaging production lines for some products. In the meantime, farming system has been maintaining GlobalGAP and ISO 9001 certifications for farms and the Embryo Transfer Center.
SEEKING NEW BUSINESS OPPORTUNITIES
Apart from its core dairy business, Vinamilk is continuously pursuing new business opportunities via mergers and acquisitions, joint ventures, and venture capital. The successful partnership in the beef cattle project and the establishment of Japanese Vietnam Livestock Co., Ltd (JVL), a joint venture between Sojitz Corporation (Japan) and Vilico, a Vinamilk’s 68%-owned subsidiary, in which the latter holds 51% of share.
2023 OUTLOOK
Despite our confidence in plans to accelerate change and transition in 2023, the business environment remains challenging. With rising interconnectedness between nations in worldwide commerce, the effects of a recession in one country would also be felt intensely in others, unlike in the past. This might have an impact on both Vinamilk’s customers and partners.
Faced with these challenges, Vinamilk has started the new year with prudence and a desire to change, since only transformation can remove the shadow cast by previous accomplishments and enable Vinamilk to reach its full potential in the next age. Vinamilk’s short-term priority will be to increase market share and sales in a sustainable and profitable manner. As a result, Vinamilk will focus on reducing operational expenses in order to reinvest in expanding distribution channels and reinforcing brand strength. We will also prioritize new product quality and leverage customer data obtained via digital technologies to fine-tune our product portfolio to better meet consumer demands.
What doesn’t break us makes us stronger, I believe. Vinamilk has survived multiple economic downturns and has remained a market leader for 47 years by making the right decisions at the right time while adapting flexibly to market fluctuations. Vinamilk’s scale and business strategy, together with the mentality of “READY TO INNOVATE - READY TO CONQUER” embued in every Vinamilk employee, will help us to tackle the present challenges and overcome the current crisis, as many times before, to continue pursuing the objective of “STAND TALL VIETNAM - RISE IN THE WORLD”.
