Chương Dương soft drink company remains mired in losses.

Chuong Duong Beverage Company incurred a loss of nearly 20 billion VND in the first three months of the year, marking its 13th consecutive quarter of operating below cost.

Recent financial reports show that Chuong Duong Beverage Joint Stock Company (SCD) had revenue of approximately VND 56.8 billion, a decrease of 11% compared to the first quarter of 2022. Of this, revenue from investment real estate doubled, reaching over VND 6.2 billion, but this was not enough to offset the shortfall in revenue from finished product sales (which decreased by nearly VND 10 billion to VND 52.7 billion).

Financial income increased tenfold compared to the same period last year, reaching over 1.1 billion VND. This was largely due to interest on deposits, loans, and dividends/profit distributions.

However, this amount was insufficient to offset fixed costs. Financial expenses increased 2.5 times to nearly 10 billion VND, entirely due to interest payments. The company currently has over 609 billion VND in loans and lease liabilities. In addition, selling expenses also rose by 64%, primarily due to increased land lease fees.

In total, Chuong Duong soft drink company reported a net loss of nearly 20 billion VND after tax, seven times higher than the same period last year. However, this figure has decreased compared to the losses of the three preceding quarters.

This marks the 13th consecutive quarter that SCD has experienced a profit deficit. As of the end of Q1/2024, the company's accumulated losses reached nearly VND 218 billion, and its equity was negative VND 28.7 billion.

Earlier this month, the Ho Chi Minh City Stock Exchange (HoSE) announced the mandatory delisting of SCD shares effective May 6th. The reason given was that the company incurred losses for three consecutive years between 2021 and 2023, and its charter capital had fallen into negative territory.

Chuong Duong, formerly the Usine Belgique factory of the BGI Group (France), was the largest beverage factory in Southern Vietnam at the end of the last century. Chuong Duong's strength lies in carbonated soft drinks, with its sarsaparilla (sarsaparilla sage) product line being the most consistently popular. Thanks to this product line, business results from 2007 to 2016 were consistently stable, with profits of 20-30 billion VND per year.

However, while many beverage brands flooded the market, SCD increasingly lost ground due to its outdated technology from the 2000s. After its parent company, Sabeco , was acquired by the Thais, SCD experienced a resurgence before the pandemic struck. The new management chose to minimize operating costs and find solutions to improve sales by expanding distribution channels, investing heavily in packaging, and promoting its products.

Last year, the company made efforts to cut and optimize costs. However, business operations continued to be severely impacted by rising input costs coupled with challenging external economic conditions, with demand remaining lower than expected as unemployment rose.

Tat Dat

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