Wednesday, January 19, 2022
Martin Hennecke

Vitasoy net plunges 95pc in wake of mainland boycott
<p>Vitasoy International&#39;s (0345) interim net profit slumped by 95 percent to HK$32.80 million in the wake of a mainland boycott that was triggered by a leaked July memo that offered condolences to the family of a worker who had stabbed a police officer.</p><p>The beverage firm declared no interim dividend, executive chairman Winston Yau-lai Lo said, given &quot;the disappointing results and the priority being given to restoring the performance of the mainland business.&quot; It was the first time the Hong Kong-based firm has skipped an interim dividend since its listing in 1994.</p><p>Revenue slid 18 percent to HK$3.60 billion year on year for the six months ended September 30, of which mainland revenues, which took up 62 percent of the total, dropped 28 percent to HK$2.27 billion, or 35 percent in local currency, due to products being off the shelves during the July-September peak summer months.</p><p>The mainland unit recorded a loss of HK$32.58 million for the first half, compared to a profit of HK$742.62 million last year.</p><p>In comparison, the mainland unit accounted for over 70 percent of the total revenue for the same six-month period in 2020.</p><p>The setback came months after the beverage maker&#39;s profit warning in August, which said an &quot;unauthorized internal memo containing inappropriate contents&quot; circulated in social media on July 2 resulted in repercussions from customers in mainland China against the company, including the removal of products from the shelves in various sales channels for July.</p><p>The memo had offered condolences to the family of a 50-year-old Vitasoy worker who had stabbed a police officer and then killed himself on July 1. All Vitasoy products were removed from the shelves at that time amid the media frenzy and outrage.</p><p>But sales are forecast to improve as products have been back on the shelves since end-September and advertising campaigns are restarting, the announcement said.</p><p>Lo said in an online meeting that he expects the mainland business to pick up in the coming year and the group will strengthen the research and development of new products.</p><p>Meanwhile, the group grew its revenues in other operations including Hong Kong, Australia and New Zealand, and Singapore.</p><p>Despite a 3 percent jump in revenue, profit from the Hong Kong operations dropped 42 percent to HK$124.07 million, mainly resulting from lower government subsidies and higher investment spending to support anticipated peak season demand.</p>

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