Chương Dương soft drink company suffers record losses.

VnExpress•21/07/2023

Chương Dương soft drink company reported a loss of over 35 billion VND in the second quarter, its highest quarterly loss ever, extending its losing streak to 10 consecutive quarters.

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

The company's management stated that lower-than-expected consumer demand since the Lunar New Year, due to rising unemployment, particularly in key industrial zones, has led to a decline in sales. Additionally, sales were impacted by a one-time inventory adjustment for partners.

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Revenue decreased sharply, but interest expenses and selling expenses both increased, resulting in a net loss of 35 billion VND in the second quarter. "Despite continuous efforts to cut and optimize operating costs, the loss is still higher than the same period in 2022. The higher operating costs are also due to increased input costs from sugar, aluminum cans, and land lease costs," said Mr. Nguyen Ngoc Huy Dung, the company's director.

For the first half of the year, Chuong Duong soft drink company recorded revenue of 67 billion VND and a net loss of 38 billion VND. Both figures are far below the targets set at the beginning of the year. At that time, the company expected that increasing sales coverage and entering new markets would double this year's revenue to 365 billion VND, and generate a profit of approximately 3.8 billion VND to end two consecutive years of losses. This target was based on a plan to increase production by 77% compared to last year, reaching nearly 22 million liters.

However, the management also acknowledged that achieving this goal would not be easy because "the challenges the company faces this year are numerous." The company is concerned that rising bank interest rates will increase financing costs, and the proposed excise tax on soft drinks could significantly reduce demand.

Furthermore, a wave of sales staff resignations has put significant pressure on the traditional sales channel. This year, the company had to invest heavily to improve its sales capabilities by increasing the team size from 60 to 110 people. However, at the annual meeting held in April, Mr. Dung acknowledged that improving sales capabilities is also a major issue because it is not easy to find good personnel, and hiring at the wrong time will affect salary costs.

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