Q2 2026 Vietnam Dairy Products JSC Earnings Call
Speaker #2: Okay. Hello, everyone. Today, we have the analyst meeting for this section, which is followed by the key section we did yesterday. For this one, we are conducting the meeting in English only.
Speaker #2: Mostly for the investors outside of Vietnam. So actually, for this meeting, we just want to share the Q2 and the first half results. For the presentation today, we will also have another topic, which is about EAG or net zero.
Speaker #2: This is new, and the reason why we have this is because Vinamilk would like to apply the best practices in corporate governance. So, I would like to set up the channel between the company and the stakeholder investors who are concerned or interested in the EAG.
Speaker #2: The purpose of this topic is that Vinamilk would like to share our activities, as well as the roadmap on the EAG and so on. In return, we would like to get your opinions, contributions, or any other topics related to this so that Vinamilk can learn and improve our activities or the operation of the EAG and net zero in the coming times.
Speaker #2: So from now on, for any analyst meeting, we will have two topics: one about the business performance itself, and then one about net zero and EAG.
Speaker #2: Okay. The team from IR today—we have two persons from the IR team. Ms. Smith is my boss. Ms. Fernanda is my director, and I am the Senior Finance Manager and Corporate Secretary.
Speaker #2: And Mr. Tommy, IR executive. Okay, okay. Now we go to Q2 and the first half result. I think this one we posted both on our newsletter and on the website already.
Speaker #2: So this one just has the summary and then we can have a quick summary, and then we have Q&A later. So if you look at the performance, also the full financial statement is disclosed on the website. This remarks another good Q2 for Vinamilk, and as we shared a bit of a slate, Vinamilk is now coming back to check on growth, and this is also the special year that Vinamilk would like to perform much better than previous years.
Speaker #2: So for Q2, you see the profit grow more, and the profit after tax also grew by more than 2% as well.
Speaker #2: So, you look at the financial data, so the financial ratios, most of the figures are much better than last year. So this, I think, is more or less happy for this result.
Speaker #2: I think the key factors for the good performance for Q2 are still about the volume growth for the domestic sales, together with the international sales, including direct exports and subsidiaries.
Speaker #2: We have like the uncle meal or mocktail also have good performance as well. So overall you see the four the Q2 also the four first half the all revenue and the profit grow more than 2 digits.
Speaker #2: And we hope that that maintains, maybe the growth will be a little bit lower, but for the full year we expect around, you know, about high single-digit. At least, it should be high single-digit or, possibly, that’s maybe more than two digits.
Speaker #2: Okay. And next, we would like to share a little bit about the EAG and net zero. This roadmap was released yesterday—sorry, on August 5th.
Speaker #2: The strategy committee also reviewed the Net Zero Exit EAG roadmap, and we will submit it to the board for approval soon. So, basically, the key thing is that Vinamilk has already engaged with an external consultant to help Vinamilk do this professionally and based on best practices in the EAG framework.
Speaker #2: And we are using an SBTI—that's like the platform for the global net zero program. All the information will be checked and monitored through this one, so the investors can have all of this on this one.
Speaker #2: So the next phase of this one we will carry and develop the detailed plan how we can reach how we can achieve this target based on the roadmap the short term target is 2035 a little bit far but for the company we will develop in detail maybe 2027 or year on year so that we keep track what we are going to do in order to achieve the target by 2035 then what should we achieve year on year to keep track with that just not just wait for that year to reveal.
Speaker #2: So that's how we are doing this, and we have the action plan on how to achieve this, and the key factor or key areas that we focus on to achieve this one are also to lower carbon emissions as well.
Speaker #2: I think it's the key thing is about the improve the energy efficiency also we are using the solar or plant we use the green energy solar biogas in our operations in our factories also the farms.
Speaker #2: And the other one is that we can invest or we can develop something like CO2 absorption fuel, like for the forest, as well as any other areas where we can reduce the CO2 emission that we can apply.
Speaker #2: And mostly for scope one and scope two that we have actually engaged and we try to do to reduce every year. But for the scope three that's a third party that's a little bit harder but anyway in our roadmap we also start to look into the like the supply chain valuation we will set up let's say some criteria in selection of the supplier.
Speaker #2: So we require more from suppliers in terms of EAG together with Vinamilk to do this as well, because let's say, for the common terms, the suppliers, if you would like to supply to Vinamilk, you need to combine with our relations—our requirement about the net zero range—that's all together, because this is a direction from the government.
Speaker #2: So we have to do this together, okay? So then lastly, that's about the external consultant. When we're doing this, we will follow the global standards.
Speaker #2: And the best practices in corporate governance, as well as in the EAG. So, the EAG is now a part of corporate governance as well.
Speaker #2: So we are doing this as OK. I think that will be very brief for all of you today, and we are happy for the Q&A session where we can discuss further.
Speaker #2: Okay. So maybe we can come back to this slide, or we can move on. I can share with you the—okay.
Speaker #1: So, you can tie the session to your chat box, or you can open your mic.
Speaker #2: Yeah, I think just go ahead. I just opened the newsletter.
Speaker #3: Hi. Can you hear me? My name is Hùng from Vietcombank Fund.
Speaker #2: Okay. Just go ahead, very quickly. I can hear you very clearly.
Speaker #3: Yes. Thank you for spending time today. So I have two questions. The first question relating to the green farm SKU. So I am aware that the green farm has a huge growth pace but can you share about how much of the revenue that is represent so far?
Speaker #3: The second question is related to the export category. In the direct export segment, the revenue growth is above 30 to 40%. But I know that Q2 is the peak of the world.
Speaker #3: So, what is the supply chain factor here in Q2?
Speaker #2: Okay. For Green Farm, I think Green Farm is one of the key SKUs for us at the premium segment in the liquid milk, fresh milk, in general.
Speaker #2: And this one, we would like to see the growth continue to be very, very high. I think it's—we do not have the, you have the figure.
Speaker #1: Right now, the revenue contribution from Green Farm is around 7% to 8% of domestic revenue.
Speaker #2: Yeah. I think Green Farm is like the premium brand we have, and the growth from Q2 is still very high. We expect this to continue to be the key competitive advantage for Vinamilk to continue competing in the market.
Speaker #2: And this is the leading SKU, so you have other SKUs in the fresh milk world as well.
Speaker #3: Yes, thank you. Let's address the export one.
Speaker #1: Yes.
Speaker #2: For the export, I think it's export. Despite the conflict in the Midwest for the supply chain, we still maintained the two-digit growth of 12% to 14%, right, for Q2.
Speaker #3: Okay. Can you share that in detail that which market or which region that contribute to the most growth in the direct export revenue like in the Middle East or in the Iraq or in Afghanistan specifically or in other region?
Speaker #2: Okay. Actually, for the direct exports, our main market has been premium chains in the past 10 to 20 years. The Midwest market is still the key, in which we have countries like Iraq, Afghanistan—so countries around the Midwest remain the key market.
Speaker #2: And the demand is still there. We have a very dominant market position there. However, in our business strategy, we continue to expand our market so as to mitigate the risk from the key market there.
Speaker #2: But it takes a long, long time to do it. So, right now, we are still expanding our products into any country around, like even in Korea, in Japan, or in the Philippines or Cambodia. Even high market, any market we have, there's no limit for expansion into the overseas market.
Speaker #2: So we take it step by step to do this. That's our strategy.
Speaker #3: Oh yes. Thank you. Please spend time on other questions.
Speaker #1: Okay, so we will read the question in the chat box. Please share a little bit more about the direct export. How much percentage?
Speaker #1: So, we do not disclose the exact figures for each market, and as necessary said before, most revenue contribution right now is still from the Middle East—unchanged for like 10 to 15 years.
Speaker #1: And can I ask about the motivation for revenue growth of nearly 17% in Q2 2026?
Speaker #2: Yeah. I think that, as I said, the key driver, the key factor for growth, is the volume growth for domestic. You see, we had the soft, you know, we had the low growth in Q1 last year.
Speaker #2: So, this effort to achieve this is not just for the short term, but this is about the restructuring of the sales force and also the rebranding of the company over the past two years.
Speaker #2: In the past two years we have the slow slowdown in the revenue in the domestic as well as the performances as not good. And that now it's turned into the good result because now the let's say the salesman now we are more focused on the selling because the we are we have review and we what we call that the general term is restructuring sales force.
Speaker #2: So that also happens, and now people are not worried about their jobs, or they normally say if you are not very happy, then you cannot work, right?
Speaker #2: So now everything is done. People are focused on their jobs, so the company is trying our best efforts to deliver the best performance for this special year, the 50th anniversary of the company.
Speaker #2: That is their, you know, session before, and I think all the factors is that when we discuss with the marketing team, we also, based on the engineering results, we see that it seems the purchasing power from the demand is improving a little bit, a little bit improving.
Speaker #2: So, we have in Q3—Q3 normally is the peak sales season, and we continue to keep track of growth as well.
Speaker #2: Okay. Any other question?
Speaker #3: Oh, hi. It's Hung again. Yeah, so I have a few questions for the director for the subsidiary. In the Driftwood, I noticed that the revenue is flat, but the net profit after tax is going up quite a lot.
Speaker #3: So I want to understand the pricing mechanism of the Driftwood. So how does it work for Driftwood in the pricing?
Speaker #2: Okay. For Driftwood operations, this is a little bit, you know, different from other markets, even in Vietnam, because Driftwood—we supply milk mostly for the school meal program in the US.
Speaker #2: So, in the US market, the price will depend on the input price of fresh milk determined by the local government. So that's why, for 2026, the price of milk will sell.
Speaker #2: So that's why you see the revenue was flat, even a little bit down. So if we look at the revenue in the past few years, it's not, you know, significant growth.
Speaker #2: Maybe up and down, we call it flat. So that's why, for the company performance, we also try to look at improvements in cost control.
Speaker #2: This is how we focus on the operational excellence cost control. That's why to improve let's say for the external consultant the services cost where we can you know we can control what we can cut to maintain in the internal capability rather than getting the outsource for example.
Speaker #2: Normally, in the US, outsourcing services to external consultants is very expensive. So this is something that we are doing as well. For example, for the trucks especially, I think it's one of the key factors that contribute to the improvement of profit as well.
Speaker #2: Let's say in the past two years, Driftwood, we hired the trucks to deliver our products to the consumers, to schools. But in 2025, I think the end of 2025 or 2026, we start to invest in our own truck.
Speaker #2: So, it's more, you know, we sell some costs and financial expenses as well. This is how we improve. This is one typical example of how we control that.
Speaker #2: And of course, we expect to get the profit from our investment in the US back to Vietnam in the coming years.
Speaker #3: So in terms of pricing, I noticed the price of the inputs, such as SMP and WMP, which is skim milk and whole milk, have gone up about 30 or 40% in the US market.
Speaker #3: So does that mean that Middle Meal can adjust the price of your product in Driftwood according to the increased price of the input in the US?
Speaker #3: Is that the case? Am I understanding this correctly?
Speaker #2: No, actually for Driftwood, because the key raw material for Driftwood is fresh milk, not powdered milk.
Speaker #3: So sorry. What are the key inputs? What is it?
Speaker #2: The key raw material for the Driftwood operations—mostly Driftwood mostly produces fresh milk, liquid milk—for the US market. So the powdered milk price does not, you know, substantially impact on the Driftwood operation.
Speaker #3: Okay. Thank you for your question. So I have a question. If you cannot share the specific figures, could we have more color on whether the direct export to the Cambodia market also grew strongly, similar to the uncategorized meal revenue growth or not?
Speaker #2: We do not share very, very detailed information, but the outlook is like this: because right now, the Cambodia market is the same as the Vietnam market was maybe 15 or 20 years ago.
Speaker #2: So it's on growth, and the consumption of dairy—consumption of dairy in Cambodia is also increasing, because we are the market leader there.
Speaker #2: So that's why you see the growth in the market. If you look at the whole market in Cambodia, I think it's more than 20, it's very high.
Speaker #2: So we have the factory in Cambodia, and we are producing locally in Cambodia to serve the local market. However, for example, for condensed milk and some liquid milk, we have the full capacity there already.
Speaker #2: So that's why to Cambodia and through uncalled milk to serve the local market. And we also have the investment project to produce and install more production lines for condensed milk in Vietnam, or even in Cambodia.
Speaker #2: Because Cambodia and Vietnam are near to each other, that's why we can support very closely and very, very effectively for the domestic markets.
Speaker #2: As long as the market is still growing in Cambodia, we have sufficient supply of products for that market.
Speaker #3: Okay. So the domestic revenue increased 6.5% year-on-year, and price will be 3 to 4% in April. So the volume grew about 2 to 3% year-on-year.
Speaker #2: Sorry.
Speaker #3: So the revenue increased 6.5%. The price grew 3 to 4% in April. So this means the volume grew about 2 to 3% year on year.
Speaker #2: So, for Q2, right? You mean for Q2?
Speaker #3: Yeah.
Speaker #2: Roughly, yeah, based on the figures you can say so. I think it's because the price increased by 1 or 2—I think it's just about 2%—but we increased from the beginning of the year already, and last year I think in terms of same, so the volume for Q2 alone for domestic may be just lower than Q1.
Speaker #2: But still on growth, yeah. I think that's much better than previous years as well, because the volume growth in previous years was flat.
Speaker #3: So, could you share some information about the performance of Vietnamese stocks? What is your opening plan in the upcoming years after reaching 1,000 stocks?
Speaker #2: Okay. So far, the performance of Vietnamese stock in e-commerce has been extremely well. And that's also in line with the shift from traditional channels to modern trade in the whole market, and Vietnamese is in line with that.
Speaker #2: So that's also how we expect, and that's the reason we invest in e-commerce and Vietnamese stocks. For the coming years, there's no limit on opening more and more stores, but we also focus more on efficiency and the effectiveness of the performance results of the stores.
Speaker #2: After 1,000, then we continue to another, you know, target to open. The number of stores may not be big, but we step by step. The key thing is the minimal focus on the quality.
Speaker #2: That means when we open the store, the store should deliver good performance. And if it does not, then we have to close it and open a new one.
Speaker #2: It's based on the location, and also, we monitor the performance store by store. So that's how we were doing that, to make sure that the store performance is always good.
Speaker #2: And this is profitable cost.
Speaker #3: Okay. From my information, right now we are operating around 950 stores across the country, and the revenue contribution from the stores and e-commerce as a whole is around 15%.
Speaker #2: I think it's more information for your better understanding. Our stores will take growth of the retail point of sales, where the consumers can go directly there to choose and to pick up and to have the experience of the feelings of the milk there.
Speaker #2: In addition, the minimal stores are also the delivery points for e-commerce. Let's say for consumers, they can order on our platform online, and then the order will be allocated to the nearest store for delivery.
Speaker #2: So that's a mix, so sometimes we have to combine e-commerce and Vietnamese stores on one channel to monitor the whole chain. And this is growing very fast.
Speaker #3: Okay. So, what is the total market size in Cambodia?
Speaker #2: Cambodia, I don't think that we have the number there. I think they will check with marketing and come back to you with this one.
Speaker #2: But roughly, you see that Cambodia has about 15 million people. This is like Ho Chi Minh City, or even less than Ho Chi Minh City.
Speaker #2: And okay, I think I'll come back to you later. This is not a very big market, but, you know, it's a very remote yet promising market because it's nearby Vietnam, and consumption of milk is increasing very nicely.
Speaker #3: Okay, so how does the margin in export compare to domestic?
Speaker #2: For export margin, it is lower than domestic, but not very substantially lower, because for export market, competition is also very strong, as we have to compete with other international players as well.
Speaker #2: So, because we have the scale and low cost of production in Vietnam, that's why we can still compete. I think the net margin for export is a little bit lower than domestic, but still, it means more than 10% of the net profit is from exports.
Speaker #3: Okay. So, we calculate that overseas gross margin declined year-on-year in Q2. Could you help us understand the key driver behind the contraction?
Speaker #2: For export?
Speaker #3: Yeah. Overseas.
Speaker #2: Yeah. Overseas margin will include the direct exports and performance of subsidiaries like Ripple and Uncle Milk, or even—we have, yeah, those two subsidiaries.
Speaker #2: I think that's what makes sense for the speeding up of the margin for overseas. This is because the logistic costs increased a lot, especially for direct exports.
Speaker #2: We have to pay more, you know, for shipping fees or logistics in general. And the margin increase, this is also because, you know, the cost itself—the cost of raw materials—that also impacts a little bit.
Speaker #2: But the contribution to the constraint is more from, what do you call, logistics.
Speaker #3: And how about the overseas margin?
Speaker #2: In the second half, I think it's not the same, right? If we look at the gross margin from the international—sorry, we don't have it here.
Speaker #2: But I think it's from the figure here—you can, I do not have the figure to calculate. You have that. Sorry.
Speaker #3: Can you you can share?
Speaker #2: The you mean the domestics?
Speaker #3: Overseas.
Speaker #2: Overseas. Overseas increasing right?
Speaker #3: Yeah.
Speaker #2: I think that's increasing because of the export point in Cambodia.
Speaker #3: Yeah.
Speaker #2: Yeah. So, in Q2, the export and overseas sales increased a little bit because we exported a lot of the names to Cambodia. That also contributed to the higher margin.
Speaker #3: Okay. So how far ahead have you hedged your key two costs, and approximately what price band?
Speaker #2: I mean the cost of raw material, I think we already fixed up to November 16. Yeah. And the trend is that the cost is increasing because, you know, the conflict—political, the war from the Midwest.
Speaker #2: So the cost is also increasing in terms of the logistics cost as well as the cost itself. So that will impact the margin as well.
Speaker #2: So, for Vinamilk, this question is about the volume. As soon as we roll the volume, that will compensate for the cost increase. The impact will not be very significant, and what I mean is that we will not give very surprising results for the common orders.
Speaker #2: Everything is under control. It's just left between. The trend is that if we continue to maintain good volume growth for Q2 and for Q3 and Q4, the margin may be maintained. But if the volume is down, the revenue is down, and then that will hit the margin as well.
Speaker #2: But we are confident that Q3 and Q4 will still have good performance, okay.
Speaker #3: So, we are still waiting for more questions.
Speaker #1: Oh, hi. It's Hung again. Yeah, I want to ask a bit about the competition in the domestic market. I know we do not discuss this topic quite often, but can you share about the domestic competition right now in Vietnam? Since I noticed quite a lot of brands have entered the market in the last six months or one year.
Speaker #1: Thanks.
Speaker #2: All right. I think for the domestic market, the competition is always severe, very strong every year, and even increasing among the local players. Even Vinamilk. Next, we have Q4; the hedge, they also try to perform.
Speaker #2: This is still a very promising industry with high profit. So every company tries to enter the market. That makes sense. But as I said, if you look at our performance, you can see that—it tells you how we can compete with the local players there.
Speaker #2: But the key things we mentioned—let's say we still focus on the quality and the customer service—that's the key value that we can maintain. Especially for liquid milk, we are really fine. For aged milk, that's the key SKUs to compete with the local players.
Speaker #2: We compete not only in the products we compete in all the factors in order to get the good result to get the market share we have to have the good image to be able look good about the company in terms of the quality customer services the innovation the value we pay for that all together so at Vinamilk quality always key thing is to keep together with that we have the innovation is mean that the like rebranding that we have that but we continue to do the for the new launch for the products as well but it's not direction is continue with that but for 2026 we focus on nurturing we are focus on to grow the product we already launched in the past one two years so the that's all about the competition.
Speaker #1: Oh yes. So in terms of the level of rivalry, have you witnessed any sign of other competitors also doing their rebranding since your rebranding is a very successful case in the market? They could benchmark that as their actions to begin to rebrand, so I expect if they do that, the competition will get more intense in the next one or two years. Have you witnessed any sign of that?
Speaker #2: So far, I'm not aware of that. But now, if we have been doing this very successfully, any other one would like to follow, the impact for the market may not be as good as we have now.
Speaker #2: But this also depends on their strategy. We are not concerned with that. We focus on our rebranding. If it's successful, then it's very good.
Speaker #2: Then we try to get the market share back.
Speaker #1: Oh okay. Okay. Thank you.
Speaker #2: Okay. See Ms. Red, one. Okay.
Speaker #3: Hi. Can you hear me?
Speaker #2: Yeah.
Speaker #3: Yeah, thanks, Management. I have a few questions, and I will go over them one by one. So the first one is just a quick one.
Speaker #3: What was Nelson's industry growth data in the second quarter? Because if I remember, the first quarter was still negative.
Speaker #2: I think for aged milk, then the latest one we have was—I think we have got the latest one for Q2. We still had a Q1 here.
Speaker #2: But we feel that the FMCC, I think, is a little bit better for dairy. I think still for just—I think just a positive role, but a very small role.
Speaker #2: So, I think the performance for Q2 at Vinamilk is more on the internal strengths that we have. So, it means the purchasing power from the whole market is still a little bit improving, but there’s no significant growth yet.
Speaker #3: Oh, got it. So then our very strong domestic performance isn’t mainly because of gaining market share, or is it more because the inventory we sell to retailers increased more than the sell-out at the stores?
Speaker #2: Yeah. That's more from the market share again from the volume increase. The volume increase mean that the consumption increase from the retail consumers. Because now you see for 2026 all our stuff especially for sales mean if you focus on the selling because all the witnesses in the sales force in the past already corrected last year and that's why everybody is now is in the high spirit of selling so the performance that's also the anniversary of the 50 year of the company so everybody's to sell.
Speaker #2: I think that's the key trend in the, let's say, in the last year. We also took time to correct the sales force, the distribution—many things to worry about. But for 2026, we focus on the performance.
Speaker #2: So that's why the improvement in the service quality and customer satisfaction, e-commerce, and export sales—everything looks good.
Speaker #3: Got it. How does it look on the market share? Or for the main categories—liquid milk, yogurt, condensed milk—are we gaining share versus competition?
Speaker #2: For Q2, we haven't got the data from the aged milk yet. But I think it's from our performance; we feel across that should be it.
Speaker #3: Okay, okay. Given that so far, our first-half performance has been very strong, what do we think about the four-year target approved at the AGM?
Speaker #2: Probably should have achieved more than that. You say okay because normally, for Vinamilk, we look at this figure—Q2, sorry, Q3—and Q4 will not be any negative surprise to the seller.
Speaker #2: So for a company we do not disclose okay the what should be the new target for the full year. But based on this results also the my experience the full year target should be minimum should be the high single digit or possibly can be more than two digit.
Speaker #2: 10, 12 maybe.
Speaker #3: Oh, got it. And you mean the profit growth, right?
Speaker #2: Yeah. Profit and stuff like as well. Because now for the first half for the first half if the revenue grows let's say 18% so there's no way that we'll be down to below 10.
Speaker #2: For the full year.
Speaker #3: Yeah, so understood that this year we're very strong. But going into next year, we'll have a very high base to grow from, and given the end-channel consumption you mentioned, the industry growth is still at a very small positive growth.
Speaker #3: So, how should we think about the outlook going into next year, given that consumption is still a bit sluggish?
Speaker #2: Yeah. That's also the big question that the management and also the board are discussing. And when the management is happy, the board is also happy. And then the question is what we are going to do to maintain this role of Q10 with this role.
Speaker #2: I think this mainly depends on the overall microeconomics. If the purchasing power and the consumption are still growing, then I think we can keep track with that.
Speaker #2: Given the high base for this year, next year maybe the growth rate may be lower, but as long as—because now our sales force, our, let's say, the distribution network—everything is all right, and we just focus on performance.
Speaker #2: Deliver goods, serve the service to customers to get better performance. That's how we are doing. So even though there's no significant change, we expect that Vinamilk will get back on track for growth.
Speaker #2: It's just like, okay, the role—high or low—that is uncertain at the moment. But that's why there's confidence that, with the base and the foundation we have this year, it's also the encouragement for the team, the whole team, to continue to keep track of the role for the coming years.
Speaker #3: Got it. Okay, I have just, quickly, two more questions. One is to dive more into the export to the Middle East. I think a lot of us are very surprised at the strong result, given the war.
Speaker #3: Can you share some insight on why the growth was achieved? Is it because some competitors exited the market and we gained market share, or is it due to factors such as inflation, price increases, or currency? Or is it mostly volume-driven? Are there any drivers behind that?
Speaker #3: And is this level of export sustainable? Because historically, it has been very volatile.
Speaker #2: Right. Actually, for Xbox, our key Xbox in the Midwest, the demand is there. It's just because of the concern in the last quarters about the shipment of the products, because the hardware—the conflict in the Midwest, right?
Speaker #2: However, what Vinamilk can manage is that we have the flexibility in discussing with the shipping agency and also the customer how we can deliver our products to the Midwest. Luckily, we can manage that, even in the very difficult situation in the direct market at the moment.
Speaker #2: I think in terms of this, the logistics issue is not about market demand. The market demand is always there. They are waiting for our products.
Speaker #2: To arrive there. The key thing is in the Midwest and other markets, we also have contribution in other markets. It's still relatively small, but we see that in many other markets, we have very good performance as well. Especially, this year we export a lot to Cambodia as well, because, let's say, condensed cream in Cambodia and liquid milk in Cambodia have increased a lot, and we have full capacity in the Cambodia factory.
Speaker #2: So, we export from Vietnam to Cambodia. That also contributes to the overall overseas sales, including the internal direct exports and the performance of the anchor mill.
Speaker #3: Got it. Do we recognize the export revenue when we ship it to the Middle East, or when the customer receives the products?
Speaker #2: Yeah, because of the war in the Midwest, we also changed the shipping term to MOB so that the customers will take care of the logistics shipment from the Vietnamese port.
Speaker #2: So they have experience, so they take care better.
Speaker #3: Okay, understood. Last question from me is on the SG&A. What's the outlook for the second half, given it's the 50-year anniversary? Are most of the events in the first half, or is the second half where most of the promotions take place?
Speaker #2: Yeah, I think it's to be fair, because, let's say, for the cost to repair for the anniversary, that's for the full year. So we book, we share the cost between the Q first half and second half.
Speaker #2: That will not significantly impact the second half. That's the first one. The second one is for SG&A. We tend to monitor for the full year because quarter by quarter may be a little bit different, depending on the brand we are running.
Speaker #2: Also, from time to time. But normally, for Q4, we tend to spend a little bit more because, for the full year, we still keep the same benchmark as last year.
Speaker #2: But for, let's say, this year, if the performance is good, the percentage of SG&A may be flat or a little bit lower.
Speaker #3: Okay. Understood. Thank you.
Speaker #4: We'll continue with the question from the chat box. So, please share whether that four-digit network after-tax growth figure is your own opinion or has been discussed internally at Vinamilk.
Speaker #3: Sorry. Sorry.
Speaker #4: So the double-digit growth in after-tax is—is that your own opinion, or has it been discussed internally?
Speaker #2: That's my own opinion because, you see, the performance—the profit increase—mainly arrived from the sales growth. Because the SG&A is something that we can manage in terms of the percentage already.
Speaker #2: And absolute value as well, because we focus more on the efficiency of the money we spend. So in case if we have the good brand, we have the good advertisement, or the distribution network, or the salesman perform better, that all will contribute to the role of the volume.
Speaker #2: And then the cost may not increase in line with the volume lower. That's how we managed to improve the profitability of the company. So, let's say for this year, Q1 and Q2, the performance is good because we do not necessarily need to spend the same percentage of the revenue.
Speaker #2: We focus on the efficiency and the absolute value as well. So that's why, if the efficiency—the effectiveness—of the money we spend is better than the previous year.
Speaker #2: That will contribute to the role in the profit margin.
Speaker #4: Okay, so can you share some basic metrics on Vinamilk’s solution from store and online now, which is missing at 15% of revenue? So, first question is: store revenue contribution versus online contribution.
Speaker #4: Secondly, retail profit margin of the store and logistics exporting Vinamilk manufacturing margins.
Speaker #2: What was the first one?
Speaker #4: The store revenue contribution and online contribution: for the contribution of stores, we saw 10%, and the remaining is for the online contribution. The second question is about the retail profit margin of the store and...
Speaker #2: Okay. The profit margin for what we call D2C—D2C includes the e-commerce and our stores. Right now, because let's say for 2026, we change the design of the store.
Speaker #2: We invest in the new stores, so that's why the margin is probably lower than the average of the company. But likely, the minimum is about less than—sorry.
Speaker #2: The minimum, I think, is more than 5%. But the target of the company is that the profit margin from our D2C channel will be the same as supermarkets—more than 3%. In general, that's how we are doing it. Next year, or in one or two years to come.
Speaker #2: That will be the same. But for this year, because of the depreciation or allocation, amortization of the cost we invest, so for one or I think just one year, the margin is lower.
Speaker #2: But I think it's up to three years, two or three years, the margin will be at minimum equal to, or more than, 20%—the supermarkets.
Speaker #4: The average sales per store, so right now, it's around 600 million VND per month per store, which appears to be $23,000 per month per store.
Speaker #2: Yeah, that's just the average. But for the store operation, we have different types of stores. We have big stores, moderate stores, or low-scale stores.
Speaker #2: It depends on the location, yeah. The location as well. So even some stores, they have the billion—even four or five billion—is also normal.
Speaker #2: It depends on that one. But on average, yeah, maybe it's about 600 million per month.
Speaker #4: How much higher is the selling price compared to the supermarket?
Speaker #2: The store?
Speaker #4: The selling price at the Vinamilk store—how much higher is it than at the supermarket?
Speaker #2: And then we need to check, like, the stock and the pricing policy for our store. So I think that should be, that should be the retail store, the same as the supermarket.
Speaker #2: Not more expensive.
Speaker #4: Supermarket is.
Speaker #2: Yeah, you take that, okay. I will come back with this one about the pricing policy for our source. That should be retail store. It cannot be, yeah.
Speaker #2: Minimum is equal; it should not be higher.
Speaker #4: Okay. So, how long does it typically take for a Vinamilk store to reach EBITDA breakeven?
Speaker #2: Break even? No. We are making a profit now. We are not losing because our store is profitable. The store, we just have the rental fee and one offsetting fee like the decoration and the sales equipment, like cooler, freezer, and stock cost.
Speaker #2: Stock costs and rentals, they are captured based on a monthly or yearly basis. And for sales equipment like coolers, freezers, and decorations, these are one-off costs that are amortized over one or two years.
Speaker #2: Three years or two years. Yeah. So it means that I think all our stores are profitable, no losses. That's the retail convenience store.
Speaker #3: So, like, if you open, it will make money right away, right?
Speaker #2: Yeah. Just like for the newly opened stores, when the volume is low, they haven't gotten enough consumers and enough revenue. Then you can't make lots of payments.
Speaker #2: But for the full year, I think it's mostly that we got the profit.
Speaker #3: So in terms of.
Speaker #2: Yeah. Normally, we do the BNL analysis for each store. Let's say when we open, we look at what the stock cost is, what the rental fee is, and what the equipment cost is for one investment.
Speaker #2: Then we can see, okay, with this location and this investment, what should be the minimum sales target for each month to get the profit.
Speaker #2: That's how we are doing. So, sometimes let's say if the store doesn't make profit for three months, then we consider whether we need to close it and find another location.
Speaker #2: We cannot keep the store for long if they are making losses. But overall, most of the stores are profitable.
Speaker #3: Yes, thank you. So in terms of long-term development, I usually witness some other companies, such as Mobile World or Masan, they have a very far, specific number of store milestones, such as 5,000 or 10,000.
Speaker #3: So, until 2030, how many stores will Vinamilk target, or is this target set every year? Do you have any long-term milestones?
Speaker #2: Yeah. I think it's for the long term. We do not have a target limit. We can continue as long as this is profitable and efficient.
Speaker #2: Because we are not under pressure to help the big sales, because let's say, for Mobile World or Masan, they say this is their own business.
Speaker #2: Their key business. So the key driver for opening stores which generate profit and revenue for them. But the Vinamilk this is the we are doing this in term of the trend of the market and to sell better for the customers.
Speaker #2: So we pay more attention to the efficiency of the operation rather than getting revenue and the number of stores. So that's why we say we do not put a very long-term ambition for the number of stores we have.
Speaker #2: We just say that there is no limit, but we will set the target maybe year on year, because we need to review the operation of the last year and then see what should be the plan for the next year.
Speaker #2: So that's the target when we set that should be achievable. Not something like, okay, we just put a figure, and whether we achieve it or not—maybe that's a big concern.
Speaker #2: Uncertainty to achieve this. So normally, for Vinamilk, we are doing this. If we set a target, likely we can hit it. So we don't need to put a lot of number of store targets there.
Speaker #2: But we try to deliver. The key thing is that the market trend is that modern trade will grow bigger and bigger, that's the trend.
Speaker #2: We cannot get out of that, so we have to be well prepared for that. So that's why we built the e-commerce. We have Vinamilk Store that goes together to support better for the consumers.
Speaker #2: This is how we get the growth from the Vinamilk stores and e-commerce—not really from new customers, not really from new revenue. This may be because consumers from the traditional channel switch to buying from the Vinamilk store.
Speaker #2: And then we attract more consumers. That is how we make sure that the whole distribution network—from modern trade and traditional trade, all together—should grow.
Speaker #2: And then, from time to time, maybe the role from the traditional channel will slow, slower than the modern trade.
Speaker #3: Yes, thank you. So, what is the store gross margin? Is it higher than 30% or 40%?
Speaker #2: Gross margin?
Speaker #3: On level, yes. I don't ask the whole company.
Speaker #2: Sorry, I do not have that figure because, yeah, I don't want—we do not disclose.
Speaker #3: Okay. So, if compared to the whole company level, is it higher or lower?
Speaker #2: If we look at the gross margins, that should be, I think, should be similar. Just about net margin, because if the gross margin is about the cost of product and the revenue, so I think the margin should be high.
Speaker #2: But the HG&A will be higher than the traditional one on average because we spend on the line one of setup decoration and the investment, one of investment.
Speaker #2: So that's why I think the net margin may be lower, but the gross margin should be the same.
Speaker #3: Okay, thank you. Thank you. I have no more questions.
Speaker #2: Yeah, okay. So I think—does anyone have a last question before we close and leave the meeting at this time? Or is anyone concerned about ESG or the natural activities that Vinamilk is undertaking? Vinamilk is willing to hear your contributions and ideas about our activities.
Speaker #2: Okay. So I think if there are no more questions, then we can close the meeting today. Thank you very much for attending this one, and I hope to see you at the next analyst meeting in Q3.
Speaker #2: Hopefully, we will still have a better result in the coming quarters.
Speaker #1: Okay, so if you still have any questions, you can send them to the IR department and we will answer right away.
Speaker #1: Thank you.
Speaker #2: Okay. Thank you.
Speaker #3: Thank you team.
Speaker #2: Yes.
Speaker #3: And cảm ơn anh Sơn nha. Dạ em là Hùng bên Vietcombank rồi. Em cảm ơn anh nhiều.
