Vinamilk will begin constructing a 4,600 billion dong dairy factory in Hung Yen by the end of this year29/09/2022
Hung Yen Dairy Factory project implemented by joint venture Vinamilk and Vilico has a total investment of VND 4,600 billion. It is expected that this will be Vinamilk’s largest dairy factory in the Northern region and also the largest dairy processing project in Hung Yen province.
At a meeting with Hung Yen Provincial People’s Committee on September 7, a representative of Vietnam Dairy Products Joint Stock Company (Vinamilk – Code: VNM) reported on the implementation of the Hung Yen Dairy Factory project, according to the portal Hung Yen province.
Specifically, the Hung Yen Dairy Factory project with a total investment of VND 4,600 billion, was built in Phung Chi Kien ward, My Hao town, Hung Yen province. The project is divided into two phases, phase I from the fourth quarter of 2021 to 2028; Phase II from 2028 to 2030.
According to the plan, it is expected that this September, Vinamilk will develop a detailed planning project for the 1/500 Hung Yen Dairy Factory project and on December 28, the company will start construction of the factory. In the fourth quarter of 2025, the company with the leading dairy market share will put the entire phase I factory into production and business operations.
Earlier at the end of last year, Hung Yen province granted the decision to approve the investment policy of the above dairy factory project implemented by Vinamilk and its member company Vilico. With a total design capacity of about 400 million liters per year, this is expected to be Vinamilk’s largest dairy factory in the Northern region and also the largest dairy processing plant project in the province. Hung Yen was granted a decision on investment policy.
By the end of 2021, Vinamilk has 13 farms and 13 dairy factories across the country, including two factories including Vietnam Dairy Factory (producing liquid milk with a capacity of 800 million liters/year) and Dairy Factory Vietnam powder (producing powdered milk, the capacity of nearly 54,000 tons/year).
Vinamilk is facing increasingly fierce competition from rivals (including domestic and imported brands). This has led to a year-to-date drop in revenue for the company and a drop in most product categories, except condensed milk. Accumulated in the first 6 months, Vinamilk’s revenue and profit reached VND 28,808 billion and VND 4,386 billion, down 0.3% and 20% respectively over the same period.
In addition, an unpredictable factor that is weighing on commodity prices is the Russia-Ukraine war, which has caused commodity prices and oil prices to increase sharply since February. The main input materials of the industry milk companies increased like powdered milk, up 30-40% over the same period; sugar, up 30% over the same period. This has affected the gross profit margin of dairy businesses despite increasing the selling price by 2-5% to pass the cost on to consumers.
Dairy companies are also under pressure to increase selling costs due to high fuel prices driving up transportation costs and fierce competition which significantly increases promotion and sales support costs to maintain market share when price increases.