04th Dec., 2002

Positive interim sales growth for Vitasoy
despite weak retail environment

Higher productivity and operational efficiency result in steady overall growth

Hong Kong, 4 December 2002 – Vitasoy International Holdings Limited (VIHL) (SEHK Code: 0345), a leading Hong Kong-based manufacturer and distributor of non-carbonated drinks, today announced for the six months to 30 September 2002, a turnover increase of 5% to HK$1,158 million. The Group’s profit attributable to shareholders for this period was HK$80 million, representing a rise of 67%.

The Group’s basic earnings per share was HK8.2 cents (2001/02 interim: HK4.9 cents). In view of the increased profit and strong cash flow, the Group’s Board of Directors has declared an interim dividend of HK2.8 cents per share (2001/2002 interim: HK2.8 cents per share).

“We were able to achieve steady overall growth by achieving higher productivity and operational efficiency, despite the slow global economy and tough competition,” said VIHL Executive Chairman, Winston Lo Yau-lai. “Sales in most markets registered positive growth, boosted by the introduction of new products with new tastes and value packaging.

“The interim period also saw improved profitability in North America and Australia where we have made solid strategic investments over the past couple of years. Our aim of strengthening our presence in these markets is being realized.”

During the period under review, VIHL continued to record cost and operational efficiency by increasing sourcing in China and other parts of Asia, outsourcing the manufacture of new products with new packaging and implementing supply chain management.

In Hong Kong, VIHL recorded a healthy sales growth of 7.5%, despite the weak consumer environment and solid competition. Tea and water were the two best performing categories with double-digit growth in sales. The Group’s tuck shop business also fared well, which registered a significant growth of 22.6% in sales. The number of tuck shops also increased to 212 from 166 a year ago.

“Backed by strong brands, our strategy moving forward in Hong Kong will be to continue focusing on the development of new products and new tastes that bring higher value for money to consumers,” said Mr. Lo. “This will be bolstered by innovative advertising and marketing, to support sales in this competitive retail environment,” he added.

North American sales experienced a marginal drop of 3.3%, due to the weaker demand for unseasoned tofu and UHT soyamilk. However, the strong sales of refrigerated soymilk offset the decline, sales recorded a 17.8% increase, proving VIHL’s strategy to market refrigerated soymilk in mainstream US supermarkets successful.

Mr. Lo was satisfied that improved efficiency and lower marketing costs and slotting fees enabled VIHL to improve profitability of the North American operations, which will focus on diversifying the product range with new packaging as well as penetrating new market channels to boost VIHL’s market share in the US.

In Mainland China, VIHL registered a healthy sales growth of 12.7%, with the affluent Southern China continuing to perform well with 14.6% growth. While in Eastern China, sales performance was stable primarily due to the consolidation in sales and distribution channels in Shanghai.

“Our China operations, which manage two plants on the Mainland continue to improve their operational efficiency and supply chain management. We recognize the immense potential for further growth in the Mainland, where we plan on diversifying into other fast-growing and profitable product categories such as tea, juice and sports drinks,” said Mr. Lo.

Sales in Australia and New Zealand continued to grow steadily up 8.3%, which was boosted by the satisfactory performance of refrigerated soymilk. Mr Lo expects the market to grow and increase in importance for the Group.

Looking forward, Mr. Lo said the Group will continue to leverage the strength of the VITASOY and VITA brands and capabilities in meeting the needs of different markets.

“We will remain focused on market and product diversification, which will be supported by marketing and brand building. Investment in markets and products is expected to translate into a more diversified revenue base and long-term growth for the Group.”

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Vitasoy International Holdings Limited is one of the leading manufacturers and distributors of non-carbonated drinks with a base in Hong Kong. Founded in 1940 and with production facilities in Hong Kong, Mainland China, the United States and Australia, Vitasoy has successfully developed and launched more than 240 products in different forms and sizes that are consumed in over 30 markets throughout the world.

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For more information, please contact:
Stella Lung
Public Relations Manager
Vitasoy International Holdings Limited
Tel: 2468 9644 Fax: 2465 1008
e-mail:pubrel@vitasoy.com

Debbie Chu / Sue Gourlay
Golin/Harris Forrest
Tel: 2501 7916 / 2501 7936
Fax: 2810 4780
Email: debbie.chu@golinharris.com / sue.gourlay@golinharris.com