The only domestic air conditioner manufacturer listed on the stock exchange reports record profits.

In the first quarter, Nagakawa Group recorded its highest revenue and second-highest profit in its operating history thanks to an effective marketing strategy.

Nagakawa Group Joint Stock Company (NAG) achieved revenue of over VND 533 billion, a slight increase compared to the same period last year and marking the third consecutive quarter of growth. However, the cost of goods sold increased more rapidly, causing the gross profit margin to fall to 11%. During the period, interest expenses also increased sharply by more than 66% as the company has nearly VND 890 billion in loans and financial lease liabilities.

Nevertheless, Nagakawa still reported a net profit of nearly 10 billion VND, a 16.5% increase compared to the same period last year. The management explained that this year, operations have stabilized and become more efficient, helping to reduce investment costs for sales activities. This quarter, sales expenses were reduced by more than 37% compared to the first quarter of 2022.

This quarter saw the highest revenue and second-highest after-tax profit in Nagakawa's history. Following the first quarter, the company also completed more than a quarter of its business plan for 2023.

Nagakawa Group is one of the pioneering domestic electrical appliance manufacturers since 2002, with its main product being air conditioners, accounting for 70% of its revenue. It is also the only company in the industry whose shares are listed on the Hanoi Stock Exchange (HNX).

From 2021 to the present, despite the pandemic, Nagakawa's business results have been increasingly positive. Previously, the company's annual revenue typically did not exceed 300 billion VND, and annual profits were only around 10 billion VND. Net profit margins were generally very low, only 1-3%.

Nagakawa's leaders have repeatedly stated that the company's constant risk is the "extremely fierce" competition with 100 air conditioner manufacturers. The business consistently has low net profit margins due to price reductions in response to pressure from cheap Chinese products. Furthermore, to increase sales, Nagakawa has to sacrifice large marketing budgets, while its distribution network remains limited, especially in major electronics retail chains.

With positive business results, the company aims to be among the top 5 air conditioner manufacturers and distributors, and a leader in the high-end kitchen appliance industry in Vietnam. The company is focusing on expanding its market and distribution channels, concentrating on rebuilding the market in the South, strengthening traditional sales channels in the North, and developing its e-commerce channel in depth. The company aims to reach 12,000 sales points nationwide.

This year alone, Nagakawa aims for a 6% increase in revenue while projected profits are expected to nearly halve. This plan is quite challenging given the declining consumer spending. Recently, large retail chains like The Gioi Dien Thoai (Mobile World) andFPT Retail have reported unfavorable business results, and smaller chains have also indicated record low consumer demand for electronics.

However, Nagakawa's main product line is affordable air conditioners, priced between 7 and 10 million VND. This segment has significant sales potential, as the preference for lower prices for the same product is currently prevalent. Furthermore, the increased heat this year has also boosted demand for air conditioners.

Tat Dat

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