VNM – Earnings slip by single digit; overseas revenue grows by high single digit - Earnings Flash
  • 2024-10-31T00:00:00
  • Company Research
  • 9M 2024: Net sales increased 3% YoY and NPAT-MI was VND7.3tn (+11% YoY), both of which complete 72% our respective full-year forecasts and slightly trail our expectations.
  • Q3 2024: Net sales slid by 1% YoY as domestic sales dropped 2% YoY, which we partly attributed to damage from Typhoon Yagi in northern Vietnam, a region where VNM has strong sales exposure. As a result, total GPM declined by 70 bps YoY to 41.2% and NPAT-MI declined 4% YoY in Q3. Conversely, sales from the overseas market (i.e.,  Export (mainly to the Middle East), Driftwood (US), and Angkor Milk (Cambodia)) grew 9% YoY, with corresponding GPM growing 3.6 ppts YoY.
  • Domestic sales: In Q3 2024, VNM’s parent domestic sales (excluding MCM – VNM’s indirect subsidiary) declined 3% YoY. In contrast, MCM’s sales declined 9% YoY. This is because MCM’s main market is the northern mountainous region, which suffered severe damage from Typhoon Yagi.  In 9M 2024, VNM’s total domestic sales increased 1% YoY.
  • Overseas market: Combined sales from overseas subsidiaries — including Driftwood (US) and Angkor Milk (Cambodia) — grew 8% YoY in Q3 2024. Export revenue increased 10% YoY in Q3 2024. In 9M 2024, total sales from the overseas market increased 16% YoY, mainly driven by export sales as VNM has benefited from the exit of competitors from Iraq due to political instability along with consistent demand in the country. Total GPM of overseas market increased 5.9 ppts YoY in 9M 2024.
  • Profitability: In 9M 2024, total GPM improved 1.4 ppts YoY to 42%, mainly due to strong expansion of GPM in overseas business. This is partly offset by a 30-bps YoY increase in SG&A/sales to finance active marketing activities in 9M. In Q3, VNM introduced a range of new products in its liquid milk and yogurt lines. Additionally, the company refreshed its nut milk, ice cream, and beverage categories through repackaging efforts.
  • Our view: We see potential downside risk to our 2024F NPAT-MI for VNM as 9M 2024 results slightly trail our forecasts. Nonetheless, VNM's resilient marketing efforts focused on high-margin categories in 9M 2024 align with our expectations. We believe this will support an improvement in overall GPM, which we forecast to improve to 42.9% in 2026 from 41.9% in 9M 2024. 

VNM’s Q3 and 9M 2024 results

VND bn

Q3 2023

Q3 2024

YoY

9M 2023

9M 2024

YoY

2024F

9M 2024 as % of 2024F

Net revenue

15,637

15,537

-1%

44,750

46,306

3%

64,454

72%

  • Domestic dairy

13,253

12,928

-2%

37,532

37,957

1%

52,988

72%

  • Overseas market

2,384

2,609

9%

7,218

8,348

16%

11,466

73%

Exports

1,246

1,375

10%

3,741

4,411

18%

6,076

73%

Driftwood & Angkor Milk

1,138

1,234

8%

3,477

3,937

13%

5,390

73%

 

 

 

 

 

 

 

 

 

Gross profit

6,555

6,401

-2%

18,103

19,380

7%

27,383

71%

  • Domestic dairy

5,634

5,299

-6%

15,439

15,804

2%

22,483

70%

  • Overseas market

921

1,102

20%

2,664

3,576

34%

4,900

73%

Exports

699

822

18%

2,014

2,674

33%

3,659

73%

Driftwood & Angkor Milk

222

281

27%

650

903

39%

1,241

73%

 

 

 

 

 

 

 

 

 

SG&A expenses

-3,815

-3,758

-1%

-10,776

-11,280

5%

-15,839

71%

EBIT

2,740

2,643

-4%

7,327

8,101

11%

11,544

70%

Net financial income

374

333

-11%

903

903

0%

1,158

78%

NPAT-MI

2,492

2,404

-4%

6,548

7,269

11%

10,045

72%

Gross margin

41.9%

41.2%

 

40.5%

41.9%

 

42.5%

 

  • Domestic dairy

42.5%

41.0%

 

41.1%

41.6%

 

42.4%

 

  • Overseas market

38.6%

42.3%

 

36.9%

42.8%

 

42.7%

 

Exports

56.1%

59.8%

 

53.8%

60.6%

 

60.2%

 

Driftwood & Angkor Milk

19.5%

22.7%

 

18.7%

22.9%

 

23.0%

 

SG&A/net sales

24.4%

24.2%

 

24.1%

24.4%

 

24.6%

 

EBIT margin

17.5%

17.0%

 

16.4%

17.5%

 

17.9%

 

NPAT-MI margin

15.9%

15.5%

 

14.6%

15.7%

 

15.6%

 

Source: VNM, Vietcap

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