Mobile World slides backward on lower-than-expected profit: chairman

Mobile World Investment Corporation (MWG) is "sliding backward" as its 2022 profit is expected to reach VND4.4 trillion ($177.6 million) or 90% of last year’s figure, said the firm’s chairman Nguyen Duc Tai.

“This is the first year Mobile World has seen its profit go down,” he told a recent meeting with investors. However, Tai predicted that the company’s revenue growth target could be reached.

MWG aimed to reap a revenue and after-tax profit of VND140 trillion ($5.65 billion) and VND6.35 trillion ($256.4 million) this year, up nearly 14% and 30% year-on-year, respectively.

In the first 10 months of 2022, the corporation earned VND113.71 trillion ($4.59 billion) in revenue and VND3.84 trillion ($155 million) in profit, up from the same period last year and equivalent to 81% and 60% of the year's plans, respectively.

Explaining MWG’s possible failure in fulfilling its profit growth target this year, Tai said that the main reason is people's falling income, which leads to reduced purchasing demand. Amid difficulties, consumers tend to tighten spending, only purchasing necessities at cheaper prices, he added.

"This year is very strange as the year-end is often the time for people to work overtime but now they have their working time cut. With reduced income, many had to return to their hometown. Some companies even laid off employees," he noted.

Another reason for MWG’s slowdown this year is the restructuring of its store chain. The company estimated that expenses incurred from asset liquidation and site return as a result of the closure of more than 400 stores amounted to VND500 billion ($20.18 million), which was recorded in the second- and third-quarter financial statements.

Answering the question "How long will this difficult situation last?" Tai said "it is difficult to predict - it would be the first quarter of next year at the earliest, and if unlucky, it would last until the third quarter of 2023."

"So the pilots [business owners] need to be clear-headed to navigate their planes through this bad weather territory, towards a bright future."

“If we expect something to pass quickly, it will be very difficult. The current context is not like the Covid-19 period when we locked down to protect our health, and we could act flexibly.

"Now we do not face a certain issue but a series of problems like inflation, war, exchange rate risks so we cannot expect difficulties to go away fast and the economy to recover within one to two months," he told investors.

Sharing the firm’s business strategy, MWG finance director Vu Dang Linh said the corporation would take a prudent and defensive strategy at present and in future.

MWG has changed its strategy by streamlining the chain of Bach Hoa Xanh stores and focusing on better control of inventories and costs. MWG would also implement a cautious financial investment strategy in collaboration with banks, he added.

Regarding investment activities, Mobile World will also stay prudent in expanding its chain of stores in Indonesia or the chain of An Khang pharmacies.

Doan Van Hieu Em, a board member, said MWG would open its first five stores in Indonesia in December. The chain expansion would only be considered in the first quarter or the beginning of the second quarter next year.

MWG planned to increase the number of An Khang pharmacies to 800 this year. However, by the end of the third quarter, it decided to stop at 500. Hieu Em said the company chose to take this chain one step at a time to evaluate its optimization, and would expand it at a favorable and appropriate time next year.

In the stock market, MWG closed the Friday session at VND37,800 ($1.53) per share, a drop of over 50% as compared to its peak of VND80,000 ($3.23) in April.