Vietnam's sugar major Quang Ngai Sugar JSC posts lowest Q1 profit in 2 years

Quang Ngai Sugar JSC, owner of famous soy milk brand Fami in Vietnam, reported its weakest Q1 profit in two years as its sugar business struggled under pressure from smuggled and imported sugar, though the soy milk segment continued to support revenue.

Quang Ngai Sugar’s net revenue dropped 10% year-over-year to VND 2.27 trillion ($87.42 million) in the quarter.

Gross profit fell 9% to VND739 billion ($28.45 million), despite a slight improvement in gross margin from 32% to 32.5%, according to its Q1 consolidated financial statement.

Rising expenses further eroded profits. Selling expenses surged 30% to VND268 billion ($10.32 million) in Q1, driven mainly by commissions and support costs.

Administrative expenses increased 10% to VND69 billion ($2.65 million). Financial expenses remained steady at VND27.4 billion ($1.05 million), while financial income dipped 5% to VND 63.5 billion ($2.44 million).

As a result, net profit for the quarter dropped 26% year-over-year to nearly VND392 billion ($15.09 million), the lowest level since Q2/2023.

Sugar segment tumbles while soy milk gains

The sugar segment saw revenue plunge 35% to over VND734 billion ($28.26 million), while gross profit tumbled 45%. Gross margin shrank to 24.1%, down from 28.9% a year earlier.

Quang Ngai Sugar, registered on the unlisted public company market UPCoM as QNS, attributed the sharp decline to "weak demand and a slight decrease in domestic sugar prices," citing growing pressure from smuggled and imported liquid sugar, which the company said "created significant pricing pressure and directly impacted operational efficiency."

Conversely, the soy milk segment remained a bright spot, generating VND937 billion ($36.08 million) in revenue - up 19% year-over-year. Gross margin improved to 42.5% from 39%. Sales volume rose 10%, supported by effective marketing and sales initiatives launched last year.

QNS noted it had proactively managed costs and capitalized on lower raw material prices, despite headwinds from foreign exchange fluctuations. As a result, the soy milk segment continued to be the company’s primary growth driver in Q1.

Navigating global uncertainty

QNS acknowledged that global economic and political instability, including the ongoing Russia-Ukraine war, Middle East tensions, supply chain disruptions, and rising protectionism, continues to affect its operations. The company also cited tight monetary policies worldwide as a factor adding to the uncertainty.

For 2025, QNS targets VND10 trillion ($385 million) in revenue and VND1.79 trillion ($68.9 million) in net profit, down 25% from 2024. As of Q1, the company had achieved 22% of its full-year profit target.

Inventory builds, investment expands

As of March 31, 2025, QNS’s total assets rose 9% to more than VND15 trillion ($577.7 million). Cash and bank deposits totaled VND8.17 trillion ($314.65 million), up 4% from the start of the year.

Inventories nearly doubled to VND2.45 trillion ($94.35 million), primarily due to a buildup of finished goods. Meanwhile, financial debt increased by nearly VND1.1 trillion ($42.36 million) to over VND3.8 trillion ($146.35 million).

On the UPCoM, QNS shares gained for five consecutive sessions ahead of the April 30 holiday but pulled back slightly on Monday this week, closing at VND45,200 ($1.74) per share. The stock is up 5.5% month-over-month, though still 7% below its February peak of over VND49,000 ($1.89).

No immediate plan to move to the HCM bourse

At the 2025 AGM, CEO Vo Thanh Dang stated that QNS has no immediate plans to transfer its listing to the Ho Chi Minh Stock Exchange, due to continued market volatility and ongoing efforts to meet upgrade criteria.

On the investment front, Dang revealed that QNS holds over VND5 trillion ($192.55 million) in surplus capital, which it plans to allocate toward three major projects, including expanding the An Khe sugar factory from 18,000 to 25,000 tons of sugarcane per day (with VND1.17 trillion or $45.05 million), enlarging the An Khe biomass power plant from 95 MW to 135 MW (VND847 billion or $32.6 million), and constructing a new An Khe ethanol plant.