Vinda International Announces 2012 Interim Results

*****

Revenue Climbed 31.6% to HK$2.89 Billion

Operating Profit Surged 53.8% to HK$381 Million

Profit Attributable to Equity Holders of the Company Grew 35.1% to HK$258 Million

 *****

Gross Profit Margin Expanded 3.6 Percentage Points to 31.3%

Operating Profit Margin Increased 1.9 Percentage Points to 13.2%

Financial Highlights

For the six months ended 30 June

2012

(HK$ million)

2011

(HK$ million)

Change

Revenue

2,887.5

2,194.6

+31.6%

Gross profit

903.0

607.3

+48.7%

Operating profit

381.5

248.0

+53. 8%

Profit attributable to equity holders of the Company

258.0

191.1

+35.1%

Basic earnings per share (HK cent)

26.7

20.4

+30.9%

Interim dividend per share (HK cent)

4.3

3.3

+30.3%

Key Operational Indicators

Gross profit margin

31.3%

27.7%

+3.6 p.p.

Operating profit margin

13.2%

11.3%

+1.9 p.p.

Net profit margin

8.9%

8.7%

+0.2 p.p.

(29 August 2012 – Hong Kong) Vinda International Holdings Limited (“Vinda International” or the “Company”, together with its subsidiaries collectively known as the “Group”; stock code: 3331), a leading manufacturer and branded seller of household paper products in the PRC, announced today, its interim results for the six months ended 30 June 2012 (“the Period”).

During the Period, the Group’s revenue increased by 31.6% year-on-year to HK$2.89 billion, while total sales volume grew 29.3% to 200,755 tons. Of the various product categories, performance of softpack was the most outstanding as its sales surged by 82.2% year-on-year.

In view of the easing wood pulp prices, the Group adopted a flexible and effective procurement strategy of increasing wood pulp procurement volume whenever prices hit a relatively low level. Furthermore, the Group leveraged the power of its brand to achieve a successful pricing strategy which propelled gross profit upwards by 48.7% to HK$903 million, while gross profit margin expanded 3.6 percentage points to 31.3%. Operating profit grew 53.8% to HK$381 million, while operating profit margin widened by 1.9 percentage points to 13.2%. Profit attributable to equity holders of the Company went up by 35.1% year-on-year to HK$258 million. Basic earnings per share were 26.7 HK cents (first half of 2011: 20.4 HK cents). The board has resolved to declare an interim dividend of 4.3 HK cents per share (first half of 2011: 3.3 HK cents). 

Administrative expenses as a percentage of sales increased slightly to 5.7% from 5.3% last year. This is mainly because the Group had granted 16,771,000 share options in May, which resulted in a respective share option cost of HK$31.6 million for the first half of 2012. Share option cost is considered a non-cash item, thus when this cost is excluded, administrative expenses as a percentage of sales was 4.5% only.

As at 30 June 2012, the Group’s financial position remained stable and healthy, with cash and cash equivalents amounting to HK$1.34 billion. Net gearing ratio also lowered substantially to a healthy level of 21.5% as at 30 June 2012. To satisfy the growing market demand for quality household paper, the Group has developed a thorough capacity expansion plan and established a solid financial base from net proceeds of approximately HK$470 million raised via top-up placement of shares in April. In 2012, the Group aims to add 150,000 tons of production capacity in addition to the 470,000 tons of existing production capacity. In particular, the Group plans to increase capacity by 80,000 tons at the new Sanjiang plant in Jiangmen, Guangdong Province; 30,000 tons at the Anshan plant in Liaoning Province; and 40,000 tons at the Xiaogan plant in Hubei Province. At the end of 2012, the Group’s annual production capacity will reach 620,000 tons, with a goal to reach 1 million tons by 2015.

During the Period, the Group reinforced its brand positioning, by continually optimizing its product portfolio and focusing resources to nurture its “Star Products” in facial tissue categories. The Group also successfully launched the ground-breaking “Ultra Strong” series featuring box tissues and softpacks with 3-ply-paper. Coupled comprehensive marketing campaigns which involved TV commercials and sponsorship of TV game shows, “Ultra Strong” successfully extended the Group’s product lines and reinforced Vinda’s brand position. Moreover, following the success of the “Pleasant Goat and Big Big Wolf” and “Kung Fu Panda” series, the Group joined forces with 20th Century Fox Film Corporation during the Period to promote the movie — “Ice Age: Continental Drift”, via the launch of its “Ice Age” products. This project infused new impetus to the Vinda brand image.

With a view to laying a solid foundation for penetrating into existing market and fostering new footholds, the Group has restructured the regional sales and marketing team by redefining the scope of work for each sales region during the Period. The Group is rapidly expanding its highly efficient modern channels. Traditional channels (i.e. distributors), modern channels (i.e. hypermarkets, supermarkets) and B2B, accounted for 46.9%, 37.6% and 15.5% of the revenue respectively. As at 30 June 2012, Vinda International had 176 sales offices (31 December 2011: 155) and 1,295 distributors (31 December 2011: 1,174).

In respect of the personal care products business, V-Care Holdings Limited (“V-Care”), an associate of the Group, had successfully set up three production lines and a quality inspection center in the Xiaogan plant in Hubei during the Period. V-Care also developed over 40 new SKUs of baby diaper products, and will first use field marketing activities to entice the consumers’ interest as well as to cultivate loyalty towards the Babifit brand, in order to help build another runway for the Group’s long-term growth. .

Mr. Li Chao Wang, Chairman of the Group concluded, “2012 marks the fifth anniversary of Vinda Internationals’ public listing. Facing uncertainties that loom over both domestic and international economies, as well as the ever-intensifying market competition, the Group had grasped tightly to the opportunity of favourable and growing demand of quality household paper products, successfully expanding its business scale and consolidating its overall core competency. During the first half, the Group won many meaningful awards, including first place in “Best Mid-Cap Company” category in a poll conducted by FinanceAsia, “Champion of National Best-selling Household Paper Product” by China Industrial Information Issuing Center, and “Best Breakthrough Supplier 2011 – Consumables” by Wal-mart. These aforementioned awards reflect recognition from various communities of the Group’s development path and spirit of innovation which it has maintained throughout the years. Such accolades affirm the success we have accomplished in different areas such as business innovation, product development, corporate governance, investor relations and corporate social responsibility. Looking ahead, the Group will adhere to and build on its strategy based on a solid brand image and first-in-class product quality so as to strengthen its market leadership and enlarge its market share.”