Net profit of 28 billion in Q3, Nafoods completed 71% of profit plan after 9 months

Focusing on risk management, product quality control, targeting the premium segment compared to the market, Nafoods Group's (HOSE: NAF) revenue in the first 9 months of the year decreased but gross profit margin improved sharply compared to the same period.

In the first 9 months of 2024, Nafoods Group completed 71% of the annual profit plan.

Source: Investor Newsletter Q3/2024 – Nafoods Group

In Q3/2024, NAF achieved VND 358.3 billion in net revenue, down 29.4% year-on-year. Gross profit reached VND 96.9 billion, down 24.2% year-on-year. Gross profit margin reached 27.0%, up 1.8 percentage points year-on-year, the 11th consecutive quarter with improved gross profit margin year-on-year. Profit after tax in Q3 reached VND 28.1 billion, down 17.8% year-on-year. Profit after tax margin reached 7.8%, up 1.1 percentage points year-on-year.

Accumulated in the first 9 months of 2024, NAF's net revenue reached VND 1,109.8 billion, down 18.1% year-on-year. Gross profit reached VND 325 billion, down 3.4% year-on-year. Gross profit margin reached 29.3%, up 4.5 percentage points year-on-year. Profit after tax reached VND 92.1 billion, down 3.8% year-on-year. Profit after tax margin reached 8.3%, up 1.2 percentage points year-on-year.

With this result, after the first 9 months of the year, NAF achieved 50.5% of the announced revenue plan and 71.4% of the announced profit plan for the whole year.

Gross profit margin improved thanks to strategy focusing on high-quality segment and risk management

The company said the reason for the decrease in revenue was due to a decrease in output of about 10% compared to the same period last year, mainly due to a poor crop of some key products such as lychee this year, passion fruit facing competition from South American countries due to increased shipping costs... At the same time, the average selling price also decreased due to the decrease in raw material prices this year, especially passion fruit.

Meanwhile, gross profit margin has continuously improved due to the effectiveness of the company's restructuring process starting from mid-2022. The strategy of cooperating to develop raw material areas, investing in the Nafoods Tay Nguyen factory, merging Nghe An Food factory and Nafoods Tay Bac factory, helps the company complete the value chain, manage the entire supply chain, more closely control product quality, costs, and better take advantage of opportunities from the market and seasons. In addition, the company also changed its strategy, not pursuing price competition but focusing on risk management, product quality, and premium segments compared to the market, helping to improve gross profit margin, reduce claims, complaints and loss of reputation with customers.

The company also said that with this foundation, the strategy in the coming time will focus on developing and expanding new markets such as China, Australia... new fruits such as Durian, Coffee... and new product segments such as Fresh Fruit, B2C consumer products... to rebalance, minimize risks, maximize the capacity of the chain and grow more effectively. With the increasing demand for delicious, healthy tropical fruit products in the market, along with the impact of Trade Agreements and Protocols on expanding access for Vietnamese fruits in some markets, it is expected that this strategy of NAF will be effective, helping sales return to growth in the coming time.

Capital restructuring

At the end of the third quarter of 2024, the total assets of the enterprise increased by 5.7% compared to the beginning of the year, reaching VND 2,161 billion, with VND 1,126 billion in short-term assets, up 10.7%; and VND 1,035 billion in long-term assets, up 0.8% compared to the beginning of the year. The amount of cash held at the end of the third quarter reached VND 242 billion, up 33% compared to the beginning of the year. The value of ending inventory reached VND 274 billion, equivalent to the beginning of the year.

On the other side of the balance sheet, liabilities are mainly short-term debt with VND 1,110 billion, up 15% compared to the beginning of the year. Of which, short-term debt is VND 881 billion, up 18% compared to the beginning of the year. The company continues to maintain a payment capacity of more than 1 time, the debt/EBITDA ratio has gradually improved and is currently at 3.5 times, relatively safe.

The company also said that in recent times, the company has been actively restructuring its capital sources to ensure financial security and better suit the current situation. The company has continuously approached and expanded its credit relationships with many new domestic and foreign banks and credit institutions to have new sources of capital and new credit limits. Currently, the company has credit relationships with over 10 banks, with a total credit limit granted of about 1,400 billion VND, much higher than the current outstanding loan balance.

Source: Investor newsletter Q3/2024 Nafoods Group

During the period, NAF also completed the issuance of shares to pay dividends to shareholders at a rate of 10%, and spent more than VND 72.8 billion to buy back 2,675,000 redeemable preferred shares (phase 1), with a buyback price of VND 27,200/share. The remaining redeemable preferred shares are 9,683,933 shares, which NAF plans to continue buying back in the fourth quarter of 2024 and the first quarter of 2025. This is the entire number of redeemable preferred shares that NAF issued to the International Finance Corporation (IFC) in 2019.

At the 2024 Annual General Meeting of Shareholders earlier this year, NAF said the reason for buying back these redeemable preferred shares was because both NAF and IFC agreed that this investment had fully played its role after 5 years and was no longer suitable for the current context. In addition, the annual financial costs for this investment were quite high compared to the general level. Therefore, the two sides agreed to end this investment by NAF buying back IFC's shares, while IFC was also ready to reinvest in Nafoods at the right time, with more suitable financial instruments in the future.

Stock price increased nearly 50% compared to the beginning of the year

In the market, NAF shares have performed quite positively recently. At the end of the trading session on October 30, 2024, NAF closed at VND 20,700, up 48% compared to the beginning of the year. Stock liquidity has also shown improvement recently with an average trading volume of 20 days reaching 326 thousand shares/session, much higher than the first 8 months of the year.

This result, in addition to reflecting positive information from the company's production and business activities, position and growth potential, is also partly due to improvements in the company's IR activities. During the period, NAF was honored to be one of three small cap companies honored at the IR Award 2024 co-organized by Vietstock newspaper with two award categories: small cap with IR activities most loved by investors, and small cap with IR activities most highly appreciated by financial institutions.

In addition, NAF also surpassed hundreds of other listed enterprises to enter the final round of the 2024 Listed Enterprise Selection jointly organized by the two Stock Exchanges and Investment Newspaper in both categories of Listed Enterprise with the Best 2023 Annual Report and Listed Enterprise with the Best Corporate Governance.

Source: https://baodautu.vn/lai-rong-28-ty-quy-iii-nafoods-hoan-thanh-71-ke-hoach-loi-nhuan-sau-9-thang-d228921.html