Vietnam's major food maker Kido delays 2024 dividend payout due to economic headwinds

Kido Group has postponed its planned cash dividend payment for 2024, citing persistent economic difficulties and the need to preserve cash flow for operations in late 2025 and early 2026.

Since listing its shares on the stock exchange in 2005, Kido Group (HoSE: KDC) has distributed cash dividends to shareholders every year, to varying degrees.

In 2015, after selling shares in Kinh Do Binh Duong JSC (confectionery segment) to Mondelez and generating significant profits, the group distributed a special cash dividend of up to VND20,000 ($0.73) per share.

In 2022, Kido planned to sell all 28.1 million treasury shares to a foreign partner. At the same time, the company expected to pay a special cash dividend at a rate of 50%. However, only 5.6 million shares were successfully sold, and Kido subsequently adjusted the special dividend down from 50% to 10%.

Under a plan approved at its 2025 annual general meeting, Kido was set to pay a 12% cash dividend for 2024, equivalent to VND1,200 ($0.05) per share, with a total payout of nearly VND348 billion ($13.2 million). However, shareholders have now approved a proposal to temporarily delay the payment.

Kido’s management said the economic environment in 2025 remains challenging, with companies facing rising costs, intense competition, and tighter access to capital, pressures that have also weighed on the group’s operations.

Earnings pressure, asset sale seen as key boost

Kido’s business performance has weakened since the Covid-19 pandemic, with net profit falling to VND67 billion ($2.54 million) in 2024 from VND653 billion ($24.79 milion) in 2021.

In the first nine months of this year, revenue rose 14% year-on-year to VND6.59 trillion ($250 million), while net profit more than doubled to VND127 billion ($4.82 million).

However, profits from core businesses such as cooking oil and bakery products have not fully covered costs, with earnings supported mainly by financial income, other activities, and contributions from joint ventures and associates.

The group has completed less than 20% of its full-year pre-tax profit target of VND800 billion ($30.37 million). Kido has missed its pre-tax profit targets (VND800-900 billion) for four of the past five years, increasing pressure on results in the final quarter.

Shareholders recently approved the sale of a 49% stake in Kido Frozen Foods (KDF) to Nutifood Nutrition Food JSC for an estimated 2.5 trillion ($94.9 million).

Kido said the book value of the stake stood at VND1.22 trillion ($46.39 million) as of September 30, implying a potential gross profit of nearly VND1.3 trillion from the transaction, which could be crucial for meeting the year's targets.

In contrast, during Q3, Kido spent VND880 billion ($33.4 million) to acquire a 40.05% stake (11.1 million shares) in Bac Binh Construction Investment JSC, a real estate and warehouse leasing company that owns and operates Van Hanh Mall in Ho Chi Minh City. Tran Le Nguyen, vice chairman of the board of directors of Kido Group, owns 7.4 million shares, equivalent to 26.61% of Bac Binh.

Regulatory penalties and bond repayments

Kido has recently received two administrative penalty decisions. On December 12, the tax authority under the Ministry of Finance fined the group for tax violations identified during inspections covering 2023 and 2024.

The company was required to pay VND2.6 billion ($98,710) in underpaid taxes, including corporate income tax (VND1.5 billion), value-added tax (VND610 million), and personal income tax (nearly VND60 million), along with VND502 million in late payment interest calculated up to December 5.

Earlier, on October 16, the State Securities Commission fined Kido VND240 million for late and inaccurate disclosures related to corporate bond information on the Hanoi Stock Exchange’s platform.

In early December, Kido repurchased VND250 billion worth of bonds issued in 2021 and due to mature on January 4, 2026, using operating cash flow. As of September 30, the group’s outstanding bond balance had stood at VND249.3 billion, secured by 92.1 million shares in Vocarimex and 17 million shares in Tuong An.

On the Ho Chi Minh Stock Exchange (HoSE), KDC shares closed Friday at VND52,500 ($2) apiece.