Vinamilk profits to decline for 2nd year in a row

Vinamilk is set to see profits decline for a second straight year in 2022 due to rising costs of raw materials and transportation.

Vietnam’s leading dairy company targets pre-tax profits of VND12 trillion ($524.70 million), down 7 percent from last year, though revenue is likely to grow by 5 percent to VND64 trillion. Last year, profits were down 4.4 percent from a record VND13.52 trillion in 2020.

The company said that last year it faced many challenges including a shortage of raw materials and rising prices of animal feed and transportation.

Animal feed prices jumped 30-40 percent last year and are set to continue to rise this year, it said. Transport costs rose by 20 percent domestically and 500 percent globally, it said. The Covid-19 pandemic also made milking difficult due to prolonged social distancing, while the rising costs of animal feed forced farmers to switch to other vocations, it added.

But the dairy giant aims reach a profit of VND16 trillion in 2026, up 33 percent from 2022. It targets revenues of VND86.2 trillion in 2026. Vinamilk plans to achieve these targets by stepping up research into new products and using new technologies for sustainable livestock farming.

It also eyes new growth opportunities through mergers and acquisitions and new investments. Last year its exports rose 18 percent to VND1.8 trillion and went to 57 countries and territories. Vietcombank Securities said in a recent note that Vinamilk does not have much potential for growth in the next two or three years. The segment with the most growth potential in the next two years is beef, and it plans to start importing the meat from Japan this year.