At the recent mid-year review conference held on July 31 in Hanoi, VEAM representatives shared that despite a 7% decrease in revenue and a 15% drop in pre-tax profits compared to the same period last year, the Corporation remains committed to following directives and supporting functional units in their efforts to meet the set targets and goals.
While VEAM’s financial revenue and post-tax profits decreased by 14% compared to the first six months of 2023, they still managed to achieve 94% and 98% of the annual plan, respectively. Notably, long-term financial investments have recognized dividends from HVN, and dividends from other VEAM-invested enterprises are expected to be recorded in Q3 2024.
VEAM’s performance in the first half of 2024 was impacted by the armed conflict between Russia and Ukraine, escalating tensions in the Gaza Strip, and attacks on transportation activities in the Red Sea. These events pushed the global economy into a new crisis and triggered high inflation worldwide. Consequently, the Corporation, along with its subsidiaries and associated companies (excluding joint ventures), experienced a decline in their key business indicators compared to the same period in 2023.
Specifically, the estimated industrial production value reached VND 1,569 billion, a 10% decrease compared to the previous year, and achieved 44% of the annual plan. For the parent company alone, the industrial production value reached 80% of the same period last year and only 27% of the planned value.
The low ratio of business performance to the plan can be attributed to the ambitious goals set for 2024, with the parent company aiming for a nearly 75% increase in industrial production value and revenue compared to 2023. These targets were set with the expectation of boosting production and sales of new products at the VEAM Automobile Factory (VM).
However, VEAM continues to face challenges in managing inventory at the VM automobile factory, and the factory’s performance for the first six months remains unsatisfactory. Most of the factory’s key indicators showed a decline compared to the same period in 2023, except for the number of vehicles sold and pre-tax profits.
While VF’s performance was on par with the previous year and achieved over 50% of the plan, VM’s industrial production value and sales revenue reached only 10% and 20% of the planned figures, respectively.
Regarding the group of subsidiary companies, the total profit of profitable units was estimated at VND 130 billion, while the loss of unprofitable units was approximately VND 4.8 billion. The combined profit of the subsidiary companies was estimated at VND 125.2 billion, representing 53% of the same period in 2023 and achieving 36% of the annual plan.
The significant drop in shared profits was mainly due to DISOCO not recognizing the dividends received from FVL. In the previous year, FVL distributed dividends of VND 106.3 billion to DISOCO. Overall, the performance of the subsidiary companies declined in most indicators, achieving between 36% and 49% of the annual targets. The group of four companies, DISOCO, SVEAM, FUTU1, and FOMECO, continued to be the top contributors, accounting for 82% of VEAM’s revenue.
Export turnover decreased by 12% compared to the same period and achieved 50% of the annual plan, with a decline in the agricultural machinery sector due to currency devaluation, reduced purchasing power, and political instability in key markets such as Myanmar, Indonesia, and the Philippines. The units that contributed significantly to export value were FOMECO (USD 9 million), SVEAM (USD 3.3 million), DISOCO (USD 3.4 million), FUTU 1 (USD 2 million), and VF (USD 1.3 million).
Mr. Ngo Khai Hoan, Chairman of the Board of Directors of VEAM, acknowledged that in the first half of 2024, the parent company and its subsidiaries had made efforts to implement the production and business plan for 2024. However, the results achieved so far are modest and have not met expectations, with some indicators showing a decline compared to the plan.
Going forward, the management and subsidiary companies need to devise strategies to ensure the fulfillment of the targets approved by the Annual General Meeting of Shareholders. During the implementation process, if any challenges or obstacles arise, they should be promptly reported to the management for appropriate solutions. Mr. Hoan affirmed that with these collective efforts, VEAM will successfully accomplish its production and business plan for 2024.
