Chuong Duong Sarsaparilla suffers record loss

Chuong Duong Sarsaparilla lost more than 35 billion VND in the second quarter, the highest level ever calculated by quarter, thereby extending the losing streak to 10 consecutive quarters.

The financial report of Chuong Duong Beverage Joint Stock Company (stock code: SCD) recorded second quarter revenue of less than 2 billion VND, while in the same period last year it was approximately 50 billion VND.

The company’s management said that lower-than-expected demand since the Lunar New Year due to rising unemployment, especially in key industrial zones, was the reason for the decline in sales. In addition, sales were also affected by one-time adjustments to inventories for partners.

Revenue decreased sharply but interest expenses and sales expenses both increased, causing the second quarter's after-tax profit to be negative VND35 billion. "Despite continuous efforts to cut and optimize operating costs, the loss was still higher than the same period in 2022. Higher operating costs were also due to increased input costs from sugar, aluminum cans and land rental costs," said Mr. Nguyen Ngoc Huy Dung - Director of the company.

In the first half of the year, Chuong Duong Sarsaparilla had a revenue of 67 billion VND and a loss after tax of 38 billion VND. Both of these targets are far below the target set at the beginning of the year. At that time, the company expected that increasing sales coverage and penetrating new markets would help this year's revenue double last year's, reaching 365 billion VND and making a profit of about 3.8 billion VND to end the streak of losses for two consecutive years. This target was set based on a planned output increase of 77% compared to last year, reaching nearly 22 million liters.

However, the board of directors also admitted that it would not be easy to achieve this goal because "the challenges the company faces this year are numerous." The company is worried that bank interest rates will continue to rise, causing financial costs to rise, and the draft special consumption tax on soft drinks could sharply reduce consumption demand.

In addition, a series of sales department staff quitting put great pressure on traditional sales channels. This year, the company had to invest heavily to improve sales capacity by increasing the team size from 60 to 110 people. However, at the annual meeting held in April, Mr. Dung admitted that improving sales capacity is also a big problem because it is not easy to find good staff and if recruited at the wrong time, it will affect salary costs.

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