HO CHI MINH CITY -- Vietnam Dairy Products says that its overseas operations were hit by a halt in its exports to the Middle East due to geopolitical conflict there.
Despite recording a 8.9% rise in total sales at 51 trillion dong ($2.23 billion) for 2017, the company, better known as Vinamilk, reported a 14.2% decline in revenue from overseas. It said that net profit grew 9.7% to 10.27 trillion dong.
Public Relations Director Do Thanh Tuan blamed geopolitical uncertainties in the Middle East, especially in Iraq, for the slump in overseas sales. Iraq is Vinamilk's first overseas market to which it started exporting in 1998.
From Iraq, Vinamilk was able to build a distribution network to other markets in the Middle East, including Syria and Yemen. It had targeted a growth rate of 10% annually from the Middle East. However, due to war and instability there, Vinamilk halted its exports to the region last year.
This is a blow to Vinamilk's growth plans. It had wanted sales from foreign markets to contribute 25% to total revenue by 2020, from 18.5% in 2016. But in 2017, that figure had actually fallen to 14.6% of total revenue.
Tuan said that the company had to push domestic sales to make up for the shortfall overseas. Vinamilk's domestic sales expanded 14.3% to 43.57 trillion dong last year. This meant that Vinamilk's domestic market share increased to 58% at the end of 2017 from 55.9% in 2016, in revenue terms.
The leading Vietnamese dairy producer will hold its annual shareholders' meeting next month to give a full report of its 2017 performance and to obtain approval for this year's targets.