VNM - Earnings grow by 21% in Q2 due to strong foreign businesses - Earnings Flash
  • 2024-07-30T00:00:00
  • Company Research
  • H1 2024: Net sales increased 6% YoY to VND30.8tn and NPAT-MI grew 20% YoY to VND4.9tn, completing 48% and 51% of our respective full-year forecasts. NPAT-MI tracked ahead of our expectation. 
  • Q2 2024: Net sales increased 10% YoY and NPAT-MI rose 21% YoY due to foreign businesses’ strong top-line growth and GPM expansion. Vietnam’s FMCG value growth turned positive at +2% YoY, however, the value of Vietnam’s milk-based products declined 2% YoY in Q2 2024, per Nielsen.
  • Domestic sales: In Q2 2024, VNM’s parent domestic sales (excluding MCM – VNM’s indirect subsidiary) increased 4% YoY, which outperformed the trend of Vietnam’s dairy sector value reported by Nielsen, as above. Growth was mainly driven by a double-digit expansion in (1) drinking yogurt, (2) condensed milk, and (3) plant-based milk, along with VNM’s gradual recovery of the infant formula category. Growth was backed by continuous product launches (for condensed milk and plant-based milk), a new packaging launch (drinking yogurt), and marketing activities in Q2 and H1 2024.
  • Regarding MCM, its sales also increased 2% YoY in Q2, after declining 15% YoY in Q1. In H1 2024, MCM’s sales declined 6% YoY.
  • Overseas market: Combined sales from overseas subsidiaries — including Driftwood (US) and Angkor Milk (Cambodia) — grew 22% YoY in Q2 2024. Export revenue jumped 37% YoY in Q2 2024.
  • Profitability: GPM improved 2.0 ppts YoY in Q2 due to strong expansion of GPM in foreign business. Specifically, export’s GPM surged 9.2 ppts YoY, and Driftwood and Angkor’s GPM jumped 6.3 ppts YoY in Q2. Operating margin improved 1.7 ppts YoY in Q2, which was partly offset by a 30-bps YoY increase in SG&A/sales to finance active marketing activities during the quarter.
  • Our view: VNM’s H1 2024 results are ahead of our forecasts in terms of bottom line due to better-than-expected foreign businesses. We see upside potential to our 2024F NPAT-MI forecast, pending a fuller review.

VNM’s Q2 and H1 2024 results

VND bn

Q2 2023

Q2 2024

YoY

H1 2023

H1 2024

YoY

2024F

H1 2024 as % of 2024F

Net revenue

15,195

16,656

10%

29,113

30,768

6%

63,468

48%

  • Domestic dairy

12,789

13,532

6%

24,280

25,029

3%

52,946

47%

  • Exports

1,270

1,740

37%

2,495

3,037

22%

5,431

56%

  • Driftwood & Angkor Milk

1,136

1,384

22%

2,339

2,702

16%

5,091

53%

 

 

 

 

 

 

 

 

 

Gross profit

6,150

7,068

15%

11,548

12,980

12%

26,604

49%

  • Domestic dairy

5,280

5,657

7%

9,805

10,505

7%

22,465

47%

  • Exports

676

1,088

61%

1,315

1,852

41%

3,089

60%

  • Driftwood & Angkor Milk

194

323

67%

428

623

46%

1,050

59%

 

 

 

 

 

 

 

 

 

SG&A expenses

-3,630

-4,031

11%

-6,961

-7,522

8%

-15,669

48%

EBIT

2,520

3,037

21%

4,587

5,458

19%

10,935

50%

Net financial income

268

286

7%

529

570

8%

1,158

49%

NPAT-MI

2,199

2,670

21%

4,056

4,865

20%

9,556

51%

Gross margin

40.5%

42.4%

 

39.7%

42.2%

2.5%

41.9%

 

  • Domestic dairy

41.3%

41.8%

 

40.4%

42.0%

 

42.4%

 

  • Exports

53.3%

62.5%

 

52.7%

61.0%

 

56.9%

 

  • Driftwood & Angkor Milk

17.0%

23.4%

 

18.3%

23.1%

 

20.6%

 

SG&A/net sales

23.9%

24.2%

 

23.9%

24.4%

 

24.7%

 

EBIT margin

16.6%

18.2%

 

15.8%

17.7%

 

17.2%

 

NPAT-MI margin

14.5%

16.0%

 

13.9%

15.8%

 

15.1%

 

Source: VNM, Vietcap

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