Main gate of Mercedes-Benz Vietnam factory on Quang Trung street - Photo: PHUONG NHI
How much profit does Samco make when investing thousands of billions in joint ventures and associates?
Mercedes-Benz Vietnam Co., Ltd. is a joint venture between Saigon Transport Mechanical Corporation - Samco (holding 30% of charter capital) and Mercedes-Benz AG Group (holding 70%).
As of the end of June 2024, Samco had invested in 16 joint ventures and associates, including Mercedes Benz Vietnam.
Looking at financial reports over the years, it can be seen that a significant contribution to Samco's business results comes from profits from joint ventures and associated companies, regularly several hundred billion VND each year.
Data: Financial statements from 2014-2023
According to the financial statement, the capital invested in Mercedes Benz Vietnam was VND 1,028 billion at the beginning of 2023.
This is also the largest investment, accounting for 50% of Samco's total investment in joint ventures and associates.
Not only in 2023, looking back over the past decades, the amount of money poured into Mercedes Benz Vietnam has always accounted for a large value in Samco's long-term investment portfolio.
Therefore, Mercedes Benz Vietnam's business results are largely reflected in the profits from joint ventures recorded in Samco's annual financial report.
Data: Notes to financial statements over the years from 2014 - 2023
Mercedes-Benz may have lost money in 2023?
Looking at the data range from 2014 to 2022, the profits from joint ventures brought to Samco fluctuated between 200 - 500 billion VND.
According to the report of the Department of Planning and Investment of Ho Chi Minh City, Mercedes-Benz Vietnam has a good growth rate, providing jobs for about 800 workers.
According to a government report, in the period 2017 - 2021, this company achieved revenue of more than 9,000 billion VND/year, contributing more than 5,500 billion VND/year to the city budget.
It can be seen that the business situation of this luxury car manufacturer is quite good, except for 2023. The audited financial report shows that Samco recorded a loss of more than 28.8 billion VND from the joint venture company.
In previous years, Samco's profits came largely from Mercedes Benz Vietnam and another automobile company, Isuzu Vietnam.
Not to mention, the value of Samco's investment in Mercedes Benz Vietnam has also decreased from VND 1,028 billion at the end of 2022 to VND 958 billion at the end of 2023 (a decrease of VND 70 billion).
According to the notes to Samco's financial statements, the corporation's capital contributions to joint ventures (such as Mercedes-Benz - PV) are presented in the consolidated financial statements using the equity method.
Under the equity method, the capital contribution in the joint venture is initially recorded at cost, then adjusted (increase/decrease) for changes in Samco's ownership share of the net assets of the jointly controlled entity.
In 2024, Mercedes-Benz Vietnam's profits are likely to "start to improve" again. According to Samco's semi-annual financial report, in short-term receivables, there is profit, dividends distributed from Mercedes Benz Vietnam of 15 billion VND in the first 6 months of 2024.
Mercedes-Benz distributor also struggles
Looking at the broader market context, 2023 is a very difficult year for the auto industry. Despite stimulus support measures from both the Government and distributors, sales of many automakers remain low as consumers delay buying cars during difficult economic times.
For example, Hang Xanh Automobile Service Joint Stock Company (Haxaco - HAX), the distributor of Mercedes-Benz brand in Vietnam, recorded a revenue drop of several thousand billion VND.
Specifically, in the 2023 financial report, HAX's revenue only reached 3,981 billion VND, equal to 59% compared to 2022. Profit after tax was 37 billion VND, "evaporated" more than 200 billion VND (equivalent to -84%) compared to 2022.
This is also the lowest level since 2016 of this luxury car distributor.
Haxaco leaders liken "the automobile industry to a thermometer reflecting the health of the economy." With economic difficulties, people continue to tighten their spending, especially in the luxury segment.
In the first half of 2024, the financial report shows that after-tax profit in this period reached nearly 53 billion VND, about 9 times higher than the same period in 2023.
According to Haxaco leaders, luxury car business is in the process of recovery, although not really stable.
Source: https://tuoitre.vn/lien-doanh-voi-mercedes-benz-doanh-nghiep-o-tp-hcm-gop-30-von-loi-lai-ra-sao-20240820113155984.htm
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