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Mr. Winston Yau-lai Lo, Executive Chairman of VIHL said, "Under anorchestrated campaign of aggressive product innovation and effective marketinginitiatives, the four operating markets reported satisfactory operatingperformance. These efforts have also helped strengthening the leadingposition of many of our products in various markets. During the period, therewas remarkable growth in the Mainland China and Australian markets, while HongKong also reported some solid growth. We achieved our goal of reducing theNorth American business operating loss, paving the way for furtherimprovement. The Group strategically increased its advertising andpromotional expenses in order to effectively launch new products andsubstantially reinforce the brand value of 'Vitasoy'. We believe it willbenefit the Group's expansion and brand value in the long run despite itsshort-term impact on the growth of operating profit."
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The Group's basic earnings per share were HK10.4 cents, representing 5.1%growth over the same period of the preceding year. The Board of Directors hasdeclared an interim dividend of HK2.8 cents per share (2006/2007 interim:HK2.8 cents per share).
During the interim period, Vitasoy reported an encouraging growth of 14.8%in gross profit, amounting to HK$894 million. Despite the general rise inproduction costs, the Group's gross profit margin stood at 59.0%, which is inline with the same period last year.
Hong Kong
In the Hong Kong market, Vitasoy continued its strong focus on productinnovation and brand building, and recorded a 7.4% growth in domestic sales.The number of new products launched during the interim period was more thandouble the number of new products launched during the entire previousfinancial year. New Vitasoy products include VITASOY SAN SUI Tofu, VITASOYJasmine Soya Bean Milk, reformulated VITASOY Chocolate Soya Bean Milk, VITADouble Chocolate Milk and VITA Less Sweet Lemon Tea. In addition, very hotweather during this year's summer months in Hong Kong stimulated healthygrowth in all business segments, especially the on-the-go market. The waterbusiness also showed satisfactory sales growth, which was a result ofeffective selling strategy and market consolidation.
Mr. Lo said, "Our emphasis on building our brand, expanding our productportfolio, and launching effective marketing campaigns has strengthened ourleading position in the local beverage market. In the 2nd half of the fiscalyear, we will continue to invest in brand reinforcement and promotion of ourcore products and newly launched items. Despite the challenges brought byincreasing raw material costs and inflationary pressure, we will closelymonitor all developments and adopt appropriate cost management measures. Inaddition, we will plan our promotional strategy carefully, in order to captureopportunities for effective price increases brought about by the revivedeconomy and general inflation."
Mainland China
Thanks to the successful strategy of "core business, core brand and corecity", Vitasoy China maintained strong expansion during the interim period,reporting a significant sales growth of 68.5% over the same period last year.
"In spite of intensifying market competition, we are still able tomaintain our leading position in the soymilk category in the Mainland marketby offering premium products at premium prices. We have also applied oursuccessful experience in Southern C
