Vietnam Pharmaceutical Materials (DVM) profit declines in Q3, inventory increases sharply

Costs increase across the board, profits of Vietnamese medicinal materials decline

In the third quarter of 2023, Vietnam Pharmaceutical Materials JSC (Code DVM) recorded net revenue of VND 341.7 billion, up 24% over the same period last year. Of which, cost of goods sold accounted for VND 296.5 billion, up 22%. Gross profit in the period reached VND 45.2 billion, gross profit margin increased from 12.1% to 13.2%.

Financial revenue in the period increased 2.4 times, from 680 million VND to 1.6 billion VND. However, financial expenses, mainly interest expenses, also increased sharply, from 9.2 billion VND in the same period to 13.8 billion VND.

Vietnam Pharmaceutical Joint Stock Company (DVM) recorded a decline in business in the third quarter despite revenue growth (Photo TL)

In addition, other operating expenses in the third quarter also increased significantly. Selling expenses increased 2.8 times, from 4.8 billion to 13.2 billion VND. Business management expenses increased from 5.7 billion to 7.4 billion VND, corresponding to an increase of 30%.

Increased costs have eroded almost all of DVM's gross profit, leaving DVM's after-tax profit at only VND11.2 billion, down 10% year-on-year.

DVM's accumulated revenue in the first 9 months of the year reached VND 953.1 billion, up 11%, and after-tax profit reached VND 40.1 billion, down 6%. Compared to the 2023 target, after 9 months, DVM has completed 76% of the revenue plan and 67% of the annual profit plan.

Cash has dropped sharply, liabilities account for a large proportion in the asset structure

By the end of the third quarter of 2023, the total assets of Vietnam Pharmaceuticals reached VND 1,498.1 billion, an increase of 10% compared to the beginning of the year. Of which, cash and cash equivalents decreased sharply to only VND 72.4 billion, equivalent to a decrease of 43%.

Short-term financial investments increased sharply, tripling the beginning of the period, reaching VND92.5 billion. Inventories also showed signs of increasing, from VND289.5 billion to VND408.9 billion, an increase of 41%. This is a sign that the company is accumulating a relatively large amount of raw materials for upcoming orders.

Regarding capital structure, liabilities tend to increase by 14%, accounting for VND 812.4 billion in the company's total capital. Of which, DVM is borrowing short-term VND 633.4 billion, 11% higher than at the beginning of the period. In addition, the company is also borrowing long-term debt of VND 47.6 billion.

Owner's equity accounts for VND685.7 billion with owner's contributed capital accounting for VND356.5 billion. The company is currently accumulating VND117.2 billion in undistributed profit after tax.

DVM invests in precious medicinal herbs area with 230 billion VND

In the main business activities, the Board of Directors of Vietnam Pharmaceutical Joint Stock Company has just approved the investment cooperation project "investment support for the development of precious medicinal herb growing areas in Na Hang district, Tuyen Quang province". The project has a total investment of about 230 billion VND.

This is a project led by Tuyen Quang Biology Joint Stock Company, with an investment area of ​​215 hectares of land in Na Hang district, Tuyen Quang province. In fact, Tuyen Quang Biology Joint Stock Company was only established in mid-March this year. Its main business is growing spices, medicinal plants, and perennial aromatic plants.

Implementing a new medicinal plant project will require DVM to prepare a large amount of capital. However, the business results of the third quarter show the opposite when increasing cost pressure has caused after-tax profit to decrease, despite strong revenue growth.

Regarding capital, in early October, DVM also stopped implementing the application for offering 18 million shares to the public, and at the same time issued 7 million shares to increase charter capital from equity capital.

Source: https://www.congluan.vn/duoc-lieu-viet-nam-dvm-loi-nhuan-di-lui-quy-3-ton-kho-tang-manh-post269989.html