Vinamilk proudly hit its 47th year of development with the remarkable success. Reflecting on last year's performance, it is noteworthy that Vinamilk was able to maintain steady dividend payments and reasonable allocation of resources for sustainability commitments. Vinamilk’s brand value also climbed to USD 3 billion, up from USD 2.8 billion the previous year, cementing our spot as the No. 1 food brand in Vietnam and the 6th largest dairy brand in the world. These achievements are testament to Vinamilk's relentless efforts and commitment to offering the best values to shareholders and customers, fostering mutual growth with partners, and safeguarding the planet.

CARE TO CHANGE

In 2023, Vinamilk took a significant step forward by undergoing a bold rebranding initiative. This strategic move underscores the company's commitment to nurturing a culture of creativity and courage by way of challenging the status quo in response to the ever-evolving needs of consumers. To sustain the leading position in such a volatile market, the Company’s transformation goes beyond superficial changes. It encompasses fundamental restructuring through a series of strategic digital transformation projects currently being implemented across all operational aspects. By leveraging cutting-edge technologies, Vinamilk aims to gain deeper customer insights, boost supply chain optimization, sharpen competitive edges, and streamline operational costs.

COMMITMENT TO SUSTAINABILITY

Pioneering the sustainability journey for years, Vinamilk marked another significant milestone in 2023 with the launch of the action program “Pathways to Dairy Net Zero 2050”, coupled with a roadmap detailing 4 key pillars: Sustainable Agriculture, Green Production, Eco-friendly Logistics, and Sustainable Consumption. In addition, Vinamilk is the first dairy company in Vietnam to have a factory and farm-certified carbon neutrality according to the PAS 2060:2014 standard. This is thanks to the dual efforts in mitigating emissions in production and farming as well as maintaining green tree funds to absorb greenhouse gases over the years. Eventually, these achievements also serve as the first important building blocks in the pursuit of carbon neutrality by 2050.

DIVIDEND STABILITY

Vinamilk takes pride in maintaining its dividend payout policy with the significantly high ratios for shareholders. In 2023, the Company declared 3 interim dividends with a total value of VND 2,900 per share. At the 2024 Annual General Meeting of Shareholders, the Board of Directors is expected to propose a final dividend so that the total dividend for the full year is not lower than that of 2022. If approved, the dividend payout ratio to consolidated net profit after-tax attributed to the shareholders will likely continue to be over 90%, significantly higher than the minimum committed ratio of 50%.

Vinamilk's business performance in 2023 reflected contrasting colors. In particular, the consumption of fast-moving consumer goods saw a significant decline due to domestic and international macroeconomic challenges, slipping into negative growth in the second half of the year. On the other hand, the recovery of the global supply chain following the pandemic benefited us in controlling production costs effectively. Given such complexity, Vinamilk and our people has displayed immense resilience, leveraging all available resources and competitive strengths to strive for optimal execution of the business plan.

BUSINESS RESULTS IN 2023

Ended up 2023, Vinamilk recorded a total consolidated revenue of VND 60,479 billion, a YoY increase by VND 404 billion, completing 95% of annual plan. The consolidated net profit reached VND 9,019 billion, up by VND 472 billion YoY, surpassing the target by 5%, thanks to effective management of production and operational costs.

Domestic business

Amid the gloomy days of the Vietnamese dairy industry, the domestic business posted a consolidated net revenue and gross profit of VND 50,617 billion and VND 20,894 billion. The latter witnessed an increase of 1.6%. This was attributed to positive results in condensed milk, yogurt, and milk powder products.

A defining moment in 2023 was the launch of a new brand identity in July, which embodies Vinamilk's “be determined, be bold, and be authentic” spirit, while resonating with the youthful energy and aspirations of the Vietnamese consumers. This was followed by the introduction of new packaging for the liquid milk category in August. Simultaneously, large-scale marketing campaigns were rolled out to enhance brand recognition among consumers.

Vinamilk stores were another bright spot for growth, reflected via a 13% increase in revenue YoY. In December 2023, a store makeover was piloted in Vinamilk's headquarters, coupled with the change of name from “Giấc Mơ Sữa Việt” to “Vinamilk” for wider brand recognition. This is soon to be applied to the remaining 653 stores nationwide.

Vinamilk's online channel also saw a successful year with double-digit YoY sales growth, manifesting in over 4 million orders, 500,000 reaches, and 17,000 engagements on social media(1). This was owing to the successful implementation of the strategy to boost the Company's presence in e-commerce platforms, built upon its venture into this space in 2022.

Vinamilk has deployed a digital program at the outlets, which provides partners sales support while establishing direct customer engagement. At the same time, it gave the Company's deeper insights into the target customer profile, thereby facilitating product and service adjustments. The program has covered 1,165 stores across 63 provinces and cities, distributing over 373 thousand gifts. Additionally, Vinamilk Rewards program was also launched in Q4 2023. By joining this program, consumers are able to accumulate points through direct purchases from Vinamilk, which are then redeemed for various attractive gifts.

Regarding Moc Chau Dairy Cattle Breeding Joint Stock Company (Moc Chau Milk), it recored a net revenue of VND 3,135 billion in 2023, maintaining year-over-year stability, and a net profit of VND 374 billion, up 8.0% from the previous year. Besides, positive developments were also observed at Vietnam Livestock Corporation (Vilico). In particular, the construction of its key project, the beef farm and processing complex in collaboration with Sojitz (Japan) in Vinh Phuc province, commenced in early 2023 with a total investment of VND 3,000 billion. Given the current progress, which remains on schedule, the complex is anticipated to start operation by the end of 2024.

International business

The International business's net revenue reached VND 9,752 billion, up 5.4% YoY. In which, Overseas subsidiaries and Exports contributed VND 5,039 billion and VND 4,713 billion, rising to 6.5% and 4.4% YoY respectively. Its gross profit, therefore, accounted for VND 3,651 billion, an impressive 9.3% increase YoY.

The overseas subsidiaries remain the growth engine of Vinamilk's international business in 2023. In the United States, Driftwood maintained revenue growth and recorded a seven-fold YoY increase in profit. Meanwhile, AngkorMilk ramped up marketing activation programs at schools, markets, and supermarkets, while collaborating with partners to survey milk consumption trends to reach Cambodian consumers in a more systematic and effective way. As a result, Angkormilk recorded impressive growth in revenue and profit in 2023, with an increase of 6% and 27% respectively, compared to the previous year.

For Export, Vinamilk successfully secured numerous high-value contracts for infant formula in the Middle Eastern market. The revenue from condensed milk, fresh milk, and yogurt products also experienced positive growth as Vinamilk has become a popular name in the Asian region. China, Vinamilk's emerging market, also witnessed encouraging signals, reflected via signed cooperative agreements with two leading companies specialized in import and distribution, an additional effort to penetrate this billion-population market. The first batch of Vinamilk's durian-flavored yogurt hit the shelves in China in early December. Prior to that, Vinamilk's flagship product, Ông Thọ sweetened condensed milk, officially made its debut in a major retail chain.

Keeping a close eye on consumption trends, Vinamilk has launched products tailored to the needs of each target segment. Therefore, the introduction of packaging, in line with a new brand identity, for the liquid milk category was the central theme over the past year. This packaging transformation is expected to be adopted for the remaining categories in 2024. Throughout 2023, over 10 products, ranging from mid-end to high-end segments, were launched and innovated. In addition, Vinamilk is developing solutions to enhance supply chain capabilities in the pursuit of optimal operations and seamless customer experience.

A crystal-clear testament to Vinamilk's endeavors in product and customer experience enhancement is our continued participation and attainment of many international awards, built upon a successful year of 2022. This includes the Clean Label Project and Purity Award (50 products), Monde Selection (4 products), and Superior Taste Award (8 products). Notably, Vinamilk Green Farm's UHT fresh milk has just won 2 additional awards from Monde Selection and Superior Taste Award, making it the first milk brand of Vinamilk to achieve all three prestigious accolades—Clean Label Project, Superior Taste Award, and Monde Selection.

Elevated adoption of advanced technologies into sustainable agriculture

Amid the current complex scenario of climate change, Vinamilk has taken a proactive approach to researching, testing, and piloting new climate-resilient farming methods. In particular, priority is given to the application of new technologies in production (such as drone inspection and automatic center pivot systems), as well as the identification of appropriate cultivation methods (via the use of seeders, row seeders, etc.) for each raw material region. The goal is to replace traditional cultivation methods, leading to increased production efficiency, labor savings, and minimized environmental impact. The Company is proud that 100% of farms maintained GlobalG.A.P and ISO 9001-2015 certifications and 02 Organic Farms were recertified with EU Organic Certification.

Exploration of new business opportunities

In addition to the core dairy business, we have actively looked out for business opportunities in new markets through mergers and acquisitions, joint ventures, or venture capital. This is exemplified by the success of the joint venture in the beef project, resulting in the establishment of the Japan Vietnam Livestock Co., Ltd. with Sojitz Corporation (Japan). We are now seeking suitable land funds to upscale the dairy farms in Vietnam.

Talent destination

By creating a favorable environment for talent, Vinamilk has successfully maintained higher employee satisfaction and lower turnover rates compared to the industry average. This has enabled us to satisfy almost all recruitment needs over the past year. We also prioritize the recruitment of young talents equipped with extensive technological knowledge, ensuring a competent workforce for digital transformation and e-commerce development. Currently, at Vinamilk, Gen Y-Z accounts for 63.7% of the present young workforce, with 18.4% of middle- to upper-level managers aged 25-35.