Air Conditioner Sales Soar for MWG amid Scorching Heat
Air conditioners on display at a Dien May Xanh store owned by MWG
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Extreme heat has gripped Vietnam and Southeast Asia since the end of April, leading to record-breaking temperatures. This scorching weather, which also prevailed in the first quarter of 2024, has boosted air conditioner sales for companies like MWG.
According to MWG’s business update for the first three months of 2024, its consumer electronics segment achieved double-digit revenue growth, driven by a remarkable 50% surge in air conditioner sales compared to the same period last year. This growth significantly contributed to the overall revenue of the company’s two retail chains, The Gioi Di Dong (TGDĐ) and Dien May Xanh (ĐMX), which reached VND 21.3 trillion, an increase of 7%.
MWG also noted that the consumer electronics segment has increased its contribution to the company’s overall revenue while maintaining stable profit margins. This stability has been a key factor in improving the gross profit margin for the TGDĐ and ĐMX chains.
In its report for the first two months of 2024, MWG had already highlighted air conditioners as a major contributor to the modest 3% growth in total revenue across its two chains.
Similarly, ĐMX’s Indonesian joint venture, EraBlue, has also benefited from the increased demand for air conditioners. As of the end of the first quarter of 2024, MWG operated 55 EraBlue stores in two formats: EraBlue Mini (300m2) and EraBlue Supermini (180m2), with promising business results. Mr. Doan Van Hieu Em, Chairman of MWG, disclosed at the company’s 2024 Annual General Meeting of Shareholders that Mini stores generate an average revenue of VND 4.5 billion per store per month, while Supermini stores generate around VND 2.5 billion per month. These revenue figures exceed those of similar stores in Vietnam.
Hieu Em further announced that the EraBlue chain has achieved EBITDA break-even at the store level and plans to open no more than 100 new stores in 2024. Meanwhile, as per the partnership agreement with Erajaya, EraBlue is expected to have approximately 500 stores by 2027.
While the scorching weather may not be the sole factor contributing to the surge in air conditioner sales, it has undoubtedly influenced consumer purchasing decisions. Overall, the company’s first-quarter 2024 performance was strong, with net revenue exceeding VND 31.4 trillion, a 16% year-on-year increase. Net income surged 42-fold to VND 902 billion.
Q1: MWG’s revenue surpasses VND 31 trillion, Bach Hoa Xanh maintains core operating break-even
Source: MWG‘s business update report for the first three months of the year
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The positive performance in air conditioner sales is not only limited to 2024. Even in 2023, when the company faced numerous challenges, most of MWG‘s business segments experienced negative growth, except for air conditioners, which saw growth in both volume and revenue.
MWG attributes its success to careful product selection, effective promotional campaigns, and the ability to proactively manage logistics and installation, allowing ĐMX to capitalize on the peak season demand.
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Business Segment Performance at MWG in 2023
Source: MWG‘s 2023 Financial Statements
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