The global economy experienced a slow recovery throughout 2021, as it was adversely affected by volatile prices of raw materials, rising transportation costs and intensified market competition, making it an extremely challenging year for the Group. In the face of such a complicated and fluctuating business environment, we continued focusing on innovation as our core value and elected to face the difficulties with fortitude and tenacity. Our strategy aimed at catering for the needs of the market by implementing a multi-level brand strategy to secure our market share and further demonstrate the strength of the Group as a leading brand in the industry.

Thanks to the improving quality of life and increasing consumption capacity of the public, the total retail sales of consumer goods have been growing year on year, with overall consumption steadily recovering. In addition, benefiting from the improved awareness of personal hygiene among the public, the demand for tissue paper, especially the premium products, has been consistently growing. The Group has been focusing on product innovation while optimizing its product structure with innovative thinking. Furthermore, the Group has been actively promoting the contribution from its premium product portfolio, and continuing to optimize its premium products to ensure profit growth. These strategies enabled the Group to maintain a solid performance during the year while building up impetus for its long-term development. During the year under review, the Group recorded an increase of 13.1% in its revenue to HK$18,676 million.

TISSUE BUSINESS

Throughout 2021 Vinda maintained its focus on premium and innovative tissue products as a key driver of its business development, bringing its tissue business ahead of its competitors in the mainland China and HKSAR markets¹. The contribution of its premium product portfolio to the Group’s revenue increased from 30.6% in 2020 to 36.3% in 2021, providing a constant driving force to its earnings. Tempo and Vinda 4D Deluxe maintained their popularity among consumers, especially in the mainland China market, where Tempo recorded a significant organic growth² of 36.7%, while Vinda 4D Deluxe and the wet wipes series maintained their double-digit growth. In addition, the Group has been actively exploring comprehensive health solutions, with its Tork series continuing to expand through online and offline channels, prioritizing airports with high passenger flows, areas of public interest and the property management sector. Initial penetration has been made in such areas as sporting events and culture & tourism, where we gained the trust of our end customers and e-commerce users with a “Zero Contact” approach and all-inclusive professional support, helping us secure a sales organic growth of 37.7% in mainland China. With our continuously improving product portfolio, efficient procurement strategy and effective cost control, we have managed to alleviate the pressure imposed by the fluctuating prices of certain raw materials, ensuring the Group’s growth at high quality levels and at a sustainable momentum.

PERSONAL CARE BUSINESS

With high-end technology enabling superior quality, our feminine care business delivered outstanding results during the year. The enhanced sense of independence and remarkable financial strength of our female clientele has resulted in this market sector gradually becoming the driving force of our premium feminine care products. Libresse, a brand of our premium sanitary pads, is committed to becoming an empowering brand for women. It refined its premium image with innovative patented technologies from Europe, which met with overwhelming recognition from its consumers. This success helped us secure a solid share of the premium sanitary pads market, while giving a significant boost to its sales in mainland China. In Malaysia, Libresse’s new Zero-allergen series has gained wide popularity, consolidating its leading position in the market.

With the global ageing phenomenon becoming increasingly serious, the silver economy has developed into a key consumer group that deserves our close attention. Vinda has been capitalizing on the opportunities in the incontinence care market, with a head-start advantage over its competitors in the PRC market, while simultaneously increasing its investment in the development of incontinence care products. The offline channels of TENA focused on penetrating key cities and stores to establish a benchmark, while its online channels focused on cooperating with the mainstream e-commerce platforms, and carrying out charitable and marketing activities to improve its brand influence. Dr. P maintained its strategy of developing online flagship stores and expanding channel coverage in a comprehensive way in conjunction with its offline channels. The Group’s more developed Malaysian and Singaporean markets succeeded in maintaining their leading positions during the year³. With the gradual increase in the elderly population comprising this target market, the potential of the silver economy will be greatly boosted, and the Group’s elderly care business will become another growth driver in the future.

Southeast Asia continues as the major stronghold of the Group’s baby care business. Drypers, one of our well-known brands, has successfully secured the support of a large number of young parents who are convinced of its spirit of innovation and excellent quality. Drypers strategically disseminated its brand concept through promotional videos and special targeted events, which in turn powered its business growth and consolidated its market competitiveness. Exceptional quality, coupled with the two-way interaction, has helped secure its leading position in Malaysia.

E-COMMERCE BUSINESS

Vinda has remained the leader in e-commerce sales for years, thanks to its ability to foresee changes in consumer habits, which enabled it to complete its migration from traditional channels to e-commerce channels expeditiously. Resultantly, Vinda has surpassed its competitors with exceptional e-commerce sales performance, further enabled by its highly constructive and confident teamwork, the reliable relation with the e-commerce platforms it has diligently maintained, and its effective smart supply chain management. The Group also stayed abreast of the trends in fashion and data traffic by cooperating with emerging e-commerce platforms such as TikTok. Priorities therefore focused on expansion of the customer base, demand for high-profit products, and consolidation of the Group’s competitive edge in online business. During the year under review, the Group’s e-commerce sales reached an organic growth of 19.0% compared with last year, accounting for 40.8% of its total sales. The Group also actively exploited the opportunities in the online segment to promote its diversified development, further enhancing the competitiveness of its e-commerce business.

ALLOCATION, OPTIMIZATION AND UPGRADE OF PRODUCTION CAPACITY

In the face of the normalized efforts to keep the COVID-19 pandemic under control, the Group actively implemented its COVID-19 combat measures to ensure prompt restoration of production while continuously expanding its production capacity. By the end of the 2021, its designed capacity for tissue had reached 1,390,000 tons, including the completed, planned expansion of tissue production capacity across manufacturing sites in South, East and Central China, which has further enhanced our production capacity of premium tissue. In response to the significantly increasing demand for wet wipes, the Group’s new production facilities in South and North China were put into production during the year to increase the capacity.

During the year, the construction of our regional headquarters in Malaysia continued to make steady progress and is scheduled to be completed in 2022. Similarly, production facilities and innovation centers are also expected to be completed in 2022, with all our other construction projects progressing as expected. The expansion and optimization of our tissue production capacity will underpin the Group’s future market expansion. Equally, the establishment of our new regional headquarters will help improve our operating efficiency, support the long-term development of the emerging markets, and further expand the Group’s business territory.

RECOGNITION OF OUR SUSTAINABLE DEVELOPMENT

Vinda has been committed to promoting its sustainable development in all divisions and creating longer-term value for the Group. During the year under review, Vinda was the first fast-moving consumer goods company in HKSAR to receive the HK$300 million sustainability linked loan from China Construction Bank (Asia) in recognition of its environmental, social and governance performance. The loan proceeds will be used for our environmental protection operations to work towards the sustainability performance targets.

During the year, Vinda again received the “Outstanding Award for Green and Sustainable Loan Issuer (FMCG Industry)” and “Leadership Award for Green and Sustainable Finance Development” from the Hong Kong Quality Assurance Agency (the “HKQAA”). Additionally, Vinda was accorded the “Excellence in ESG Reporting Award” under the “Best Annual Reports Award 2021” from the Hong Kong Management Association, the “ESG Leading Enterprise Awards”, as well as the “Leading Environmental Initiative Award” and the “Leading Social Initiative Award” under the “ESG Leading Initiative Awards” from Bloomberg Businessweek. In consequence of our outstanding performance, Vinda was once again granted the Platinum Award of the “ESG Corporate Awards” by The Asset, an internationally renowned financial magazine. Such a variety of sustainability awards in different areas received by the Group clearly demonstrates Vinda’s exceptional contributions, excellence in governance, and our environmental and social responsibilities.

OUTLOOK

In 2022, as peoples’ living standard continue to rise, driving consumption higher, the market demand for premium tissue and personal care products will increase concomitantly. Furthermore, the Group’s premium products segment, which it has been persistently cultivating, is also expected to gradually become the mainstream of consumption and to tap into new markets. We will continue to enhance the Group’s market competitiveness through online and offline brand building, marketing promotion and channel development. Vinda will maintain its high sensitivity to the movements in the market, while proactively identifying and responding to changes in consumer needs. We will continue to focus on developing new products with innovative technologies, and actively implement our advanced, diverse strategies to ensure sustainable growth of the business.

Consistent with our commitment to “Becoming a Leading Hygiene Company in Asia”, Vinda will maintain focus on the Asian market while striving to enhance the overall strength of the Group. These initiatives and commitments will ensure Vinda progresses with its stakeholders into a positive and profitable future.

Remarks 1 Source: Kantar Worldpanel, sales value year-to-date at 31 December 2021 & Nielsen, value share year-to-date December 2021

2 Organic growth:Year-on-year growth at constant exchange rates

3 Source: Kantar Worldpanel, sales value year-to-date at 5 December 2021