Noodle firm earnings plunge

The report showed revenue of VND461 billion (USUS$20.7 million) and pre-tax earnings of VND25 billion (US$1.12 million), declining by 3.5% and 39%, respectively, from 2015, and currently the lowest since 2012.

The noodle company’s market share reduced to only 2-4% in total.

In 2016, despite the company’s effort to introduce a new line of products with better packaging and another line with flavour diversity, it failed to attract customers and accumulated 15% more inactive stock compared with 2015.

The stock of VND23.3 billion (US$1.04 million) caused the company’s liabilities to increase from VND61.1 billion (US$2.74 million) to VND72.8 billion (US$3.27 million).

In total, Miliket’s total capital in 2016 was VND196 billion (US$8.8 million), with cash flow of VND122.3 billion (US$5.5 million).

According to financial experts, the company will soon be depleted of cash if it fails to increase quantity consumed.

At present, Miliket’s instant noodles is in the lowest price bracket on the market, at VND3,000 (US$0.13) per package. This allows the company to focus on low income customers and cheap restaurant chains, both market segments neglected by larger companies.

Miliket is one among several large noodle producers on the scene in Vietnam today facing challenges. Other brands such as Acecook, Masan and Asia Food are also facing problems generating revenue.

Although Acecook holds nearly 50% of domestic market share, it experienced continuous drop in earnings between 2013 and 2015, whereas Masan’s 2016 revenue dropped by 20% from the previous year.

According to the World Instant Noodles Association, the amount of instant noodles consumed annually in Vietnam has gradually declined since 2013, from 5.2 billion packages to 4.8 billion in 2015. The country has the fourth largest quantity of instant noodles consumed per annum.