Viz Branz's revenue slipped 0.6% to S$42.8m

Blame it on competitive pressures in Myanmar.

According to OCBC Investment Research, as expected, Viz Branz reported a 0.6% YoY decline in 3Q13 revenue to S$42.8m due to sustained competitive pressures in its Indochina market, particularly Myanmar.

Here's more:

Nonetheless, favourable raw material costs and management’s continued emphasis on cost management saw gross profit and operating margins increase by 5.5ppt and 1.5ppt to 39.5% and 17.4% respectively from a year ago. As a result, 3Q13’s PATMI grew 5.7% YoY to S$4.6m.

The slide in revenue came mainly from the ongoing competition in Myanmar’s coffee segment. Management had previously highlighted attempts to arrest the slide via more aggressive promotional activities but positive results have yet to follow.

Fortunately, VB’s other product mainstays of cereal and tea remained resilient due to their relatively stronger branding.

The third straight quarter of revenue declines force us to reduce our FY13 revenue projections as we enter the seasonally weakest 4Q. However, the lower raw material cost environment has more than offset this decline, and VB has actually seen an improvement in operating figures (9M13 operating and PATMI +7.4% YoY and +4.1% YoY to S$21.0m and S$14.2m respectively).