TMT Motors must lower the selling price of Wuling Mini EV to increase competitiveness in the market - Photo: TMT
What did TMT Motors say when the auditor doubted its ability to continue operations?
According to the audited semi-annual financial report for 2024, TMT Motors Joint Stock Company (TMT) recorded revenue of VND 1,332 billion, down nearly 14% over the same period last year.
Sales did not decrease too much, but cost of goods sold accounted for more than 99% of revenue, causing gross profit to be only 9.6 billion VND.
In the first half of this year, interest and sales expenses have decreased significantly, but with a "super thin" gross profit, TMT Motors reported a loss after tax of nearly VND99 billion. This is also the biggest loss since the car company went public.
TMT Motors' difficulties occurred in the context of general difficulties of the entire automobile market. Other "big guys" in this market also had "headaches" because of falling sales, fierce pressure to reduce selling prices to compete while demand decreased.
Data: Corporate Financial Statements
Notably, at the end of June 2024, the total assets of this auto company reached 1,500 billion VND, down nearly 31% compared to the beginning of the year.
Most of the assets decreased in inventory, from 1,392 billion VND to more than 853 billion VND.
On the other side of the table, short-term liabilities also decreased sharply, to more than 1,107 billion VND. The main part is short-term loans and financial leases with more than 555 billion VND.
In the report, the independent auditor emphasized that at the end of June 2024, short-term debt exceeded short-term assets by more than VND 120 billion.
Therefore, the auditor found that "the existence of a material uncertainty may cast doubt on TMT Motors' ability to continue as a going concern".
According to the financial statement, in the second quarter of 2024, to ensure liquidity and reduce interest expenses, the company said it had to reduce selling prices to clear inventory.
In addition, they have also cut staff, reduced costs, determined to restructure product lines, and focused on new and better products.
The company also said it has plans to liquidate fixed assets, investments, and collect customer receivables to supplement business capital as well as cover debts and loans due.
Accordingly, the company expects to be able to repay its debts as they fall due and continue operations in the next accounting period. Based on this basis, the company's management prepares the consolidated financial statements on the basis of meeting the going concern assumption.
Auto companies reduce prices, "clear" inventory
In the difficult context, at the end of July, the Board of Directors of TMT Motors passed Resolution No. 601 approving the plan to temporarily suspend the operations of Ngoc Anh Trading - Service - General Joint Stock Company (a subsidiary of TMT Motor) for 1 year, starting from August 1, 2024.
Mr. Bui Quoc Cong - vice president of the company - said that 2024 is a very difficult year for the economy in general and businesses in particular.
The difficult economic situation and people tightening their spending have caused car consumption to decrease sharply, despite businesses continuously reducing prices to clear inventory, according to TMT leaders.
On the website, TMT Motors is introduced as a prestigious manufacturer, assembler and distributor of commercial vehicles in Vietnam with about 50 years of operating experience.
At the end of June last year, TMT cooperated with manufacturer SGMW (SAIC-GM-Wuling) to launch the Wuling Hongguang Mini EV assembled at the factory in Hung Yen.
This car line has a fairly cheap price, only about 200 - 300 million VND, in the same competitive segment as Vinfaset VF3.
In early August, TMT Motors lowered the price of Wuling Mini EV. Accordingly, the 120km and 170km versions of Wuling Mini EV are priced at 197 million VND and 231 million VND respectively.
According to the introduction, Wuling Mini EV is the model that opens the first mini electric car segment in Vietnam. In the Vietnamese market, this is the smallest car model with a length of less than 3m, a turning radius of only 4.2m. Although the car has only 2 doors, it has 4 seats.
Source: https://tuoitre.vn/nha-phan-phoi-wuling-mini-ev-noi-gi-khi-kiem-toan-nghi-ngo-kha-nang-hoat-dong-lien-tuc-20240902095036946.htm
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