Soydrink and beverage producer Vitasoy International Holdings posted an 8-percent decrease in net profits to HK$97 million for the first six months that ended Sept 30 due to a HK$26 million one-off provision for staff's leave pay entitlements in Hong Kong, said the company's group senior director of finance and administration William Lo.

Stripping off the provision, the company's net profits were HK$120 million, up 14 percent year-on-year, he said. Meanwhile, Vitasoy's net sales rose 20 percent to HK$1.42 billion.

Speaking about the retail outlook, the company's executive chairman Winston Lo said that the company doesn't have any plan to lay off employees at the moment, but he did not rule out the possibility of streamlining operation amid the worsening economy.

He added that in-house consumption will increase due to the economic slowdown. This will benefit the company's supermarket sales.

The company's group chief executive officer, Larry Eisentrager, said the company will raise the beverage products' average price by as much as 5 percent.

With the expansion of factories, the company's production capacity in Hong Kong and Guangdong will increase by up to 30 percent between 2008 and 2009, said William Lo.

Although the company's first-half capital expenditure was only HK$33 million, as compared with the whole-year target of HK$170 million, William Lo believed the company can achieve the goal with significant spending on new projects over the next six months.

As for the company's cash position, he said that the company currently has about HK$260 million cash on hand. Its debt-to-equity ratio was 9 percent.

Vitasoy acquired Singapore-based soyfood manufacturer Unicurd Food in April. William Lo said that the company will continue to look for new acquisition opportunities in the future, though it has no specific target in mind at the moment.

About the melamine contamination of mainland dairy products, Eisentrager noted that the incident has tainted the company's image.

On the other hand, the company has benefited because more customers took soymilk as a safer alternative for milk, he said.

The company's mainland market contributed HK$62 million in net profits during the period with a 60 percent sales growth.

Shares of Vitasoy yesterday closed at HK$2.71 apiece, down 3.42 percent from the previous session.

(HK Edition 11/25/2008 page2)