Vietnam conglomerate REE recalls septuagenarian ‘female general’ as CEO amid profit declines

REE Corporation, one of Vietnam's largest multi-sector companies, saw its profits declining by the time it effected a major leadership change, with Nguyen Thi Mai Thanh stepping down as chairperson and taking over the CEO post.

Thanh, 72, has stepped down as chairwoman of REE Corp (HoSE: REE) and taken over the CEO post with immediate effect, REE said in an announcement last Friday.

Thanh was chairperson of REE from 1993 and its CEO between 1993 and July 2020. She made REE one of the first two Vietnamese companies to list on the Ho Chi Minh Stock Exchange (HoSE) in 2000. Thanh replaced Nguyen Minh Quang, who became CEO in July this year.

Meanwhile, Alain Cany, non-executive vice chairman, became chairman of the Vietnamese company. Cany has sat on REE’s board of directors since 2021 at the nomination of Platinum Victory Pte. Ltd.

Platinum Victory Pte. Ltd. last week registered to buy another 30 million REE shares to raise its holding in the Vietnamese firm to 42.07% from 35.7%, or 168.16 million shares.

Shrinking profits since Q2/2023

From 2020 to 2022, REE saw remarkable growth in revenue and profit, from below VND5 trillion to over VND9.3 trillion ($365.93 million), and from VND1.6 trillion to nearly VND2.7 trillion ($106.24 million), respectively.

However, in 2023, its revenue dropped 8.5% year-on-year to VND8.6 trillion, and after-tax profit fell 19% to VND2.2 trillion.

In the first nine months of 2024, the company reported a 7% decline in revenue to VND6.05 trillion ($238 million), achieving 57% of the year's target. Its after-tax profit reached VND1.32 trillion ($51.94 million), down 22% and equalling 55% of the year's target.

The corporation’s after-tax profit was around VND700 billion ($27.54 million) per quarter before Q1/2023. However, this dropped to about VND500 billion in Q2/2023 and just VND355 billion in Q2/2024.

The fall stemmed mainly from a sharp drop in revenue in the mechanical and electrical engineering segment, which has not significantly recovered since 2021, while the energy segment has also seen a downturn since 2023.

While the real estate segment has remained stable, it has not been transformative, contributing roughly VND1 trillion ($39.35 million) annually from leasing office spaces.

REE said that the drop in the energy segment was mainly due to unfavorable hydrological conditions in the first half of the year; and some improvement expected in Q3.

In the first nine months of the year, energy revenue fell 18% year-on-year, while the mechanical and electrical segment grew by 5%, and real estate went up 9%. Despite the challenges, the firm has achieved some positive results.

REE Energy successfully completed two M&A deals, including the acquisition of a 100% stake in Tra Khuc 2 Hydropower JSC and 70% in Duyen Hai Wind Power JSC.

The VND1.2 trillion Tra Khuc 2 Hydropower Plant has a designed capacity of 30 MW and an average electricity output of 120 million kWh. Construction began in June 2024 and the project is expected to be operational by September 2026.

Meanwhile, the VND2.2 trillion Duyen Hai Wind Power Plant has a designed capacity of 48 MW, with an annual output of 150 million kWh. Contractor selection is planned for Q1/2025, construction to begin in Q2 and commercial operations to begin by December 2025.

The real estate segment is expected to improve in the coming months, with REE Land starting to record positive business results from the "The Light Square," a residential area developed in the northern province of Thai Binh.

Phase 1 of the project includes 45 low-rise houses and technical infrastructure. The project was launched in mid-Q2, and the company is focusing on selling the remaining units in Q4.

The mechanical and electrical services segment reported new contracts worth VND3.9 trillion ($153.45 million) by the end of Q3, four times higher than the same period last year, largely thanks to contracts for the Long Thanh International Airport that is being built in the southern province of Dong Nai.

For REE Tech, the sale of Reetech air conditioners increased by 36.6% year-on-year, primarily driven by contracts to supply air conditioning units for various projects.

According to its 2024 annual report, the corporation has set a revenue target of VND10,588 billion ($427.28 million) and an after-tax profit of VND2,409 billion ($97.2 million), up 23.5% and 10% from 2023, respectively.

REE, which has total assets exceeding $1.4 billion, announced the change after a short-lived tenure by CEO Le Nguyen Minh Quang, who was relieved of his duties effective November 22.

Quang had been appointed CEO in July 2024, replacing Huynh Thanh Hai, who had held the position for four years.

However, after just five months of Quang’s leadership, the board decided to bring back Thanh as CEO, a role she’d stepped down from in 2020 in accordance with corporate governance rules requiring that the chairperson and CEO of a company are different people.

Known popularly as the “female general”, Thanh is a seasoned veteran. When REE Corporation celebrated its 46th anniversary, she had spent 42 years contributing to its growth.

After REE became a joint-stock company in 1993, she served as both chairwoman and CEO, leading the company to grow from a small mechanical and electrical enterprise to the diversified conglomerate it is today.

REE, listed on the Ho Chi Minh City exchange (HoSE), closed Tuesday at VND67,000 ($2.64) per share.