Vitasoy International (00345.HK) announced its interim financial results on November 26th, with the company's revenue at 3.443 billion Hong Kong dollars, a year-on-year increase of 1.54%; gross margin of 1.777 billion Hong Kong dollars, a year-on-year increase of 3.82%; net profit attributable to shareholders of the company at 0.171 billion Hong Kong dollars, a year-on-year increase of 4.82%; basic earnings per share at 15.9 Hong Kong cents, proposing an interim dividend of 4.0 Hong Kong cents per share.

During the reporting period, calculated in Hong Kong dollars, the group's gross margin rose to 51.6%, mainly due to lower raw material prices and the benefits of production process optimization. Operating profit surged by 50%, mainly driven by business in Mainland China and Hong Kong.

In Mainland China, overall sales remained stable compared to the same period last year. Due to improvements in sales execution and product innovation, revenues in various regions increased, albeit offset by the decline in online business. This is because the group ensures its profitability while maintaining competitiveness in brand and sales development activities in the online business. Despite intensified price competition in this market, the group was able to enhance profitability through a focus on sales mix, reducing raw material prices, and strict cost control, resulting in a 15% increase in operating profit and an operating profit margin of 11% in the interim.

The Hong Kong business (including the Hong Kong Special Administrative Region, Macao Special Administrative Region, and exports) achieved a 3% revenue growth, leveraging its strong brand value, extensive market influence, and product innovation. Operating profit saw a significant increase of 44%, primarily driven by increased sales volume and lower raw material prices, achieving an operating profit margin of 14% in the interim.

Revenue from Australia and New Zealand business recovered to a 7% growth, reflecting strong product demand in these two regions. In the interim, there was an operating loss of 46,000,000 Hong Kong dollars, mainly impacted by production issues affecting business operations during the interim period. These issues have been resolved, and the factory has resumed normal operations.

Improved revenue and profitability in the Singapore business were driven by the increasing demand for tofu exports. The joint venture company established by the group and Universal Robina Corporation in the Philippines is expanding, particularly driven by single-use drink products.

The substantial profit growth in Mainland China led to the utilization of deferred tax assets, resulting in a deferred tax expense of 43,400,000 Hong Kong dollars. Together with the reduction in deferred tax credits from (i) Australia, and (ii) changes in deferred tax assets and liabilities in other markets, the group had a deferred tax expense of 32,900,000 Hong Kong dollars, compared to a credit of 38,700,000 Hong Kong dollars from the previous year.