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Southern food ‘giant’ escaped losses

After 9 quarters of operating below cost, Southern Food Corporation (Vinafood II – VSF) escaped losses but profits were still very low.

In the first quarter of the year, Vinafood II had a total revenue of more than VND 2,800 billion, down more than 24% over the same period. Thanks to a sharper decrease in cost of goods, gross profit margin this period still nearly doubled to 10%.

The group of recurrent expenses increased sharply, totaling 23% more compared to the first quarter of 2021, mainly in selling expenses. In return, Vinafood II recorded a nearly 3-fold increase in financial revenue, the strongest being the exchange rate difference. Plus other income increased by 40%, the total “giant” of Southern food has a profit after tax of more than 480 billion VND.

Management said that the company has focused on managing expenses, completing export contracts in 2021 and signing new contracts. Meanwhile, in the same period last year, the production and consumption of goods were heavily affected by the epidemic.

Although it escaped losses after 9 quarters, this is still the lowest positive profit of Vinafood II ever. If calculating the profit after tax of the parent company, this business is still negative more than 5 billion dong. The accumulated losses of the Southern food giants are still more than 2,800 billion VND, 11% higher than equity.

To reduce losses, this year Vinafood II focuses on streamlining its apparatus and reorganizing its new operating model from decentralized to centralized in the stages of organization, finance, business and investment. Enterprises want to focus on food business, increase competition, divide markets, and coordinate trading activities at dependent units. Vinafood II also considers suspending or closing inefficient factories, enterprises and branches.

“According to calculations, if these solutions are successfully implemented, this year Vinafood II will escape losses and is expected to have a consolidated profit of over VND 100 billion,” said Chairman Nguyen Huy Hung.

Previously, in the annual meeting document, Vinafood II’s leadership set a revenue plan of more than VND 15,717 billion and profit after tax of more than VND 104 billion. Thus, in the first quarter, the company completed nearly 18% of the revenue target and only reached nearly 0.5% of the profit target.

Siddhartha

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