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Vinacafe Bien Hoa Profit May Beat Forecast by 44%, Dung Says

Vinacafe Bien Hoa Joint-Stock Co., a unit of Vietnam’s second-biggest coffee exporter, said full- year net income may exceed its forecast by 44 percent as raw- material costs were less than anticipated.

Profit for the year ending Dec. 31 may rise to 200 billion dong ($9.6 million), compared with the previous forecast of 139 billion dong, said Deputy General Director Le Hung Dung. Net income at the maker of roasted and instant coffee may have reached 140 billion dong in the first eight months, Dung said in an interview yesterday.

Vinacafe Bien Hoa, the target of a takeover offer from Masan Group Corp. (MSN), said last month the purchase of raw materials “at a good price” had boosted year-to-date profit. Lower global prices will help the company cut the cost of importing coffee to be processed at its plant in Bien Hoa, Dung said at his office in the southern city.

“It depends on what happens with coffee prices the rest of the year,” he said.

Profit rose 19 percent last year to 161.6 billion dong, helped by growing domestic consumption. Vietnam’s retail sales gained 22.2 percent in the first eight months of 2011 from a year earlier, according to the General Statistics Office.

Shares of Vinacafe Bien Hoa have jumped 77 percent since the company’s listing on Jan. 28. The stock rose 5 percent today to 94,500 dong, compared with the 0.8 percent gain in the benchmark VN Index.

Increase Exports

Vinacafe Bien Hoa is planning a new plant in Long Thanh, a district in the province of Dong Nai adjacent to Ho Chi Minh City. The factory, which would have annual capacity of 3,200 metric tons, is scheduled to open in October 2012, Dung said.

The new plant will allow Vinacafe Bien Hoa to reduce its imports of instant coffee, he said. “This will also help to meet market demand and increase our exports,” Dung said.

The U.S. is the destination for about 85 percent of Vinacafe Bien Hoa’s coffee exports, while markets including Hong Kong, Taiwan and China account for the rest, he said.

The U.S. was the biggest market by volume after Germany for Vietnamese coffee exports in the marketing year ending Sept. 30, 2010, according to a report from the agricultural attache’s office at the U.S. Embassy in Hanoi. Vietnam is the world’s second-biggest coffee producer after Brazil.

“In China, the young people are shifting to coffee from a tradition of drinking tea, so the Chinese market provides great potential,” Dung said. “In Vietnam too there is a shift from drinking tea, particularly in the north.”

Starbucks Corp. (SBUX), the world’s largest coffee-shop chain, said this month it plans to open its first Vietnam store in 2013.

A unit of Masan, the biggest company by market value on the Ho Chi Minh City Stock Exchange, offered this month to buy 50.1 percent of Vinacafe Bien Hoa’s shares for 80,000 dong a share for a total value of 1.07 trillion dong.

--Jason Folkmanis and Diep Ngoc Pham in Bien Hoa, Vietnam. Editors: Ryan Woo, Keith Gosman.

To contact the reporters on this story: Jason Folkmanis in Ho Chi Minh City at folkmanis@bloomberg.net; Diep Ngoc Pham in Ho Chi Minh City at dpham5@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net.

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