Ichitan Group Public Company Limited (ICHI) posted a stunning financial performance in the second quarter of 2020, despite the COVID-19 crisis. The Company’s quarterly net profit jumped 9.2% from a year earlier to 149.3 million baht while revenue amounted to 1,370 million baht, mainly thanks to efficient cost management. ICHI’s first half net profit surged 22% to 308.5 million baht, bolstered by continuous profit contribution from its Indonesia’s business. ICHI’s earnings are expected to fare better in the second half in light of its planned launch of new products in the third quarter and its full-year revenue growth target is now set at 5%.
Tan Passakornnatee, President & CEO of ICHI, said that ICHI’s net profit rose 9.2% year-on-year to 149.3 million baht for the April-to-June quarter while its sales revenue fell 16.7% to 1,370 million baht, with gross profit margin and net profit margin standing at 21.5% and 10.9%, respectively.
The upbeat net profit was attributed to domestic sales which dominated 77% of the Company’s total sales and good internal control which enabled ICHI to keep lid on production costs and launch marketing campaigns for each product to reach the right consumer target groups. The efficient internal control contributed to ICHI’s net profit increase despite the Covid-19 pandemic and a contraction of the country’s ready to drink tea market.
ICHI’s joint venture company Ichitan Indonesia has so far this year swung back to profit, propelled by products which have gained popularity and efficient product distribution. ICHI realized profit contribution in a tune of 1.4 million baht from the Indonesia-based company in the second quarter of 2020.
For the six months through June, ICHI delivered a 22.9% jump in its net profit to 308.5 million baht though its sales revenue dropped by 10.4% to 2,655 million baht. The Company’s gross profit margin was 20.6% and net profit margin at 11.6% in the first half of 2020.
ICHI in the second half of 2020 focuses on healthy products after a success in Shizuoka green tea which manages to retain consumer loyalty coupled with the Company’s product line expansion by recently rolling out an alkaline water with Vitamin B “Ichitan’s Alkaline water PH PLUS 8.5” to tap the huge and high growth potential market. ICHI prioritizes profitable products and it aims for a 5% growth in revenue this year to 5,300 million baht.
“We’re optimistic that the overall beverage business in the second half will grow at a faster pace than the first six months due to the country’s improving coronavirus situation. Without the COVID-19 infection, people are more confident to spend money and the government’s tourism stimulus measures to shore up economy will get warm responses from public. The Company’s products are consumer goods which are in-demand and strategy shift to focus on healthy products is the right approach. In the third quarter, the Company plans to unveil two new products to be the growth drivers of healthy products, particularly ICHI’s alkaline water PH PLUS 8.5, which is aimed for sales revenue of 1,000 baht in the first year. I think the target is achievable,” added Mr. Tan.
At the end of June, 2020, Thailand’s ready to drink tea market amounted to 5,639 million baht, down 12.71% in terms of value and 13.02% in terms of volume. Premium tea controlled 11.49% of the overall tea market value and Shizuoka green tea topped the premium tea market with a 28.09% market share.