Noodle firm earnings plunge
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Colusa-Miliket Foodstuff Joint Stock Company’s (Miliket) audited financial report for 2016 showed a 40 per cent drop in pre-tax earnings compared with the previous year, indicating a loss of market share.
The report showed revenue of VNĐ461 billion (US$20.7 million) and pre-tax earnings of VNĐ25 billion ($1.12 million), declining by 3.5 per cent and 39 per cent, respectively, from 2015, and currently the lowest since 2012.
The noodle company’s market share reduced to only 2-4 per cent in total.
In 2016, despite the company’s effort to introduce a new line of products with better packaging and another line with flavour diversity, it failed to attract customers and accumulated 15 per cent more inactive stock compared with 2015.
The stock of VNĐ23.3 billion ($1.04 million) caused the company’s liabilities to increase from VNĐ61.1 billion ($2.74 million) to VNĐ72.8 billion ($3.27 million).
In total, Miliket’s total capital in 2016 was VNĐ196 billion ($8.8 million), with cash flow of VNĐ122.3 billion ($5.5 million).
According to financial experts, the company will soon be depleted of cash if it fails to increase quantity consumed.
At present, Miliket’s instant noodles is in the lowest price bracket on the market, at VNĐ3,000 ($0.13) per package. This allows the company to focus on low income customers and cheap restaurant chains, both market segments neglected by larger companies.
Miliket is one among several large noodle producers on the scene in Việt Nam today facing challenges. Other brands such as Acecook, Masan and Asia Food are also facing problems generating revenue.
Although Acecook holds nearly 50 per cent of domestic market share, it experienced continuous drop in earnings between 2013 and 2015, whereas Masan’s 2016 revenue dropped by 20 per cent from the previous year.
According to the World Instant Noodles Association, the amount of instant noodles consumed annually in Việt Nam has gradually declined since 2013, from 5.2 billion packages to 4.8 billion in 2015. The country has the fourth largest quantity of instant noodles consumed per annum.
Read more at https://vietnamnews.vn/economy/373605/noodle-firm-earnings-plunge.html#ZMULl4oFsddSQVRI.99
Questions & Answers
Q.What was the main financial outcome for Miliket in 2016?
What was the main financial outcome for Miliket in 2016?
Miliket's pre-tax earnings fell by 40 per cent compared to 2015, reaching VNĐ25 billion ($1.12 million). This was accompanied by a 3.5 per cent decline in revenue.
Q.What impact did Miliket's new product lines have on its financial performance?
What impact did Miliket's new product lines have on its financial performance?
Despite introducing new product lines with better packaging and flavour diversity in 2016, Miliket failed to attract customers. This led to a 15 per cent increase in inactive stock.
Q.What is Miliket's current market strategy and who are their target customers?
What is Miliket's current market strategy and who are their target customers?
Miliket focuses on low-income customers and cheap restaurant chains by offering instant noodles in the lowest price bracket. These market segments are often overlooked by larger companies.
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