Viglacera (VGC) first half profit drops 46% due to poor first quarter

Q2 profit recovers, Viglacera still cannot "recover" for Q1

Viglacera's (VGC) first quarter business results report recorded net revenue of VND3,927.8 billion, down slightly by 8% compared to the same period last year. Cost of goods sold accounted for VND2,708.9 billion, the company's gross profit was VND1,219 billion, gross profit margin was recorded at 31%.

VGC's financial revenue reached VND22.4 billion, but financial expenses, mainly interest expenses, increased to VND92.8 billion, an increase of 34%. Sales expenses decreased to VND226 billion, a decrease of 6%. Notably, business management expenses also decreased sharply by 40%, down to only VND122.3 billion.

quarter 2 no profit in quarter 1 viglacera vgc first half of the year down 46 image 1 — Q2 profit is not enough to save Viglacera's gloomy Q1, accumulated profit in the first half of 2023 still decreased by 46% (Photo TL)

After deducting all expenses, VGC's after-tax profit reached 625.6 billion VND, nearly 4 times higher than the previous quarter. However, this result still could not make up for the terrible first quarter that VGC had recorded.

By the end of the second quarter, VGC's cumulative revenue reached VND6,720.5 billion, down 17% over the same period. Meanwhile, sales revenue reached VND3,761.2 billion with tile products accounting for the majority. Service revenue also recorded VND2,933.5 billion.

The company's after-tax profit only reached VND777.2 billion, down 46% compared to the same period last year. The reason is that in the first quarter, the company only recorded revenue of VND2,774.7 billion, and after-tax profit was only VND151.5 billion, down 79.9% compared to the same period.

Short-term debt increased by nearly 600 billion in just 6 months

By the end of the second quarter of 2023, Viglacera's total assets reached VND 23,155 billion and had a slight increase compared to the beginning of the period. Of which, the company is holding VND 2,392.3 billion in cash and VND 128.2 billion in bank deposits.

The company's short-term receivables increased sharply from VND1,183.3 billion to VND1,488 billion. Of which, the company's provision for short-term bad debts was up to VND276.4 billion.

Regarding capital structure, the company has up to 13,650.6 billion VND of short-term debt. Of which, short-term loans and financial leasing debt increased from 1,959.4 billion VND to 2,597.6 billion VND, an increase of 24.6%. Thus, in just the first 6 months of the year, the company's short-term debt increased by nearly 600 billion VND.

Viglacera's short-term debt also recorded up to 1,628.4 billion VND, a slight decrease compared to the beginning of the year. However, the company still has up to 2,672.5 billion VND in unrealized revenue. This is the source of revenue that Viglacera has collected from customers but has not yet performed services or delivered goods to partners and still has to owe.

VGC's equity is VND9,465.1 billion, with owner's equity accounting for VND4,483.5 billion. The company spent heavily on the Development Investment Fund, with VND1,121.2 billion. Undistributed profit after tax only accounted for VND1,480.7 billion.

Due to declining results, Viglacera has to cut its 2023 target by nearly 1,000 billion VND

With the business situation not looking very optimistic, in the 2023 annual report, the company had to cut down on its target plan. In particular, consolidated revenue in 2023 is expected to be at 16,000 billion VND, an increase of 10% compared to 2022.

Although the revenue target increased, the target for after-tax profit was only VND 1,300 billion, a decrease of more than VND 1,000 billion compared to the implementation in 2022. According to the company's explanation, in 2023, although the Vietnamese economy showed signs of recovery, there were still geopolitical instabilities in the surrounding areas affecting the company's business results.

In addition, the COVID-19 pandemic has been controlled but the world economy has not improved, which also affects the company's business activities. It is expected that in 2023, the company will pay a cash dividend at a rate of 20%.

Source