Confectionery firm Huu Nghi posts Q2 profit drop of 67%

Vietnamese confectionery company Huu Nghi Food JSC reported an after-tax profit of VND5.3 billion ($224,000), down 67%, on net revenue of VND332 billion ($14 million), flat compared to the same period last year.

The company said that it has stepped up investment in commercial activities in foreign markets this year. Therefore, export revenue and volume in Q2 increased sharply. However, due to the orientation of expanding its market share, selling and trading expenses rose significantly.

As of June 30, the company's total assets had stood at VND1.75 trillion ($74 million), down 14% compared to the beginning of the year, of which inventory was VND130 billion ($5.5 million), down 22%. Notably, cash and cash equivalents hit VND140 billion ($5.9 million), up 4.2 times.

The company, registered on the unlisted public company market UPCoM as HNF, said that competition in the confectionery sector is rising, especially in the mid- and high-end segment.

This year, Huu Nghi plans to pay a cash dividend of 50%.

"Packaging prices, logistics costs, asset depreciation costs, and high interest rates have affected the company's business results," the firm said.

Huu Nghi has set a revenue target of VND2.17 trillion ($91.98 million) in 2023, up 2% year-on-year, but pre-tax profit of only VND52 billion ($2.2 million), down 62%.

To meet its 2023 targets, Huu Nghi will focus on investing in marketing and trade activities to improve branding and competitiveness.

The firm, formerly known as Huu Nghi Premium Confectionery Factory, was established in 1997. It is one of the most famous companies in Vietnam's confectionery sector, owning brands like Tipo, Daisy, and Staff.

In 2006, it was equitized and renamed Huu Nghi Premium Confectionery JSC, located in Hanoi.

Regarding its shareholder structure, the chairman is Trinh Trung Hieu, who represents the capital contribution of Vietnam National Tobacco Corporation (Vinataba) and currently holds nearly 3.1 million HNF shares, equivalent to a 10.3% stake.

Trinh Trung Son has a 12.8%s take, equivalent to more than 3.8 million shares. Meanwhile, the largest shareholder and veto power holding more than 15.4 million HNF shares, equivalent to a 51.37% stake, is DNA Holdings JSC.

On the UPCoM, HNF finished at VND23,600 ($0.99) on Friday.