CDbeco witnesses significant hardships

Having undergone nine consecutive loss-making quarters and a nosedive in revenue, the financial picture of Chuong Duong Beverages JSC (CDbeco) – the South's largest beverage firm in the period before national liberation – is covered with gray tones.

Entering its 71^st year of operation, CDbeco is falling into a critical situation. The company’s revenue from the sale of products fell to a negative $86,900 in the second quarter of 2023.

Only by leveraging income from warehouse rental service, the company’s revenue hit nearly $68,700 during the period – still far below the nearly $2.17 million it counted one year ago.

It is also far lower than the company’s revenue figure in Q3/2021, which bore the brunt of the pandemic.

“Consumption after the Lunar New Year was lower than the projection. Rising unemployment, particularly in key industrial parks, is the main cause of the sinking sales revenue,” said Nguyen Ngoc Huy Dung, the company’s director.

Dung has also attributed this negative revenue in Q2 to inventory revision requirements from its partners.

Aside from sliding revenue, CDbeco has incurred spiking borrowing costs and expenses, despite its constant cost-saving and cost-optimisation efforts.

In Q2 alone, the company incurred net losses amounting to $1.52 million, its highest quarterly loss level and also its ninth in succession.

Accordingly, its sales expenses rose 2.3-fold on-year while land rental more than quadrupled to reach $65,200, further exacerbating the situation.

In Q2 alone, the company incurred net losses amounting to $1.52 million, its highest quarterly loss level and also its ninth in succession.

Looking at CDbeco’s current business picture, one could hardly imagine that the firm was the southern region's largest beverage company before the national reunification in 1975.

Over the first half of this year, CDbeco has witnessed a 35 per cent drop on-year in its revenue, falling to $2.91 million. Its post-tax profit dropped to negative $1.65 million, nearly triple the loss level seen one year ago.

With capital scale of a mere $3.7 million, and cumulative losses by June 30 surpassing $5.17 million, the company has just escaped negative equity status by leveraging capital sources from its investment development fund.

At CDbeco’s 2023 AGM in April, the company set to achieve $15.86 million in revenue and $165,200 in profit this year.

This growth ambition was rooted in an anticipated 77 per cent hike in the company’s output. In practice, however, this fell far below the outlined business plan.

According to the AGM prospectus, by the end of Q2, the company’s total asset value approximated $26.9 million, with a debt ratio of nearly 89 per cent.

Song Thuy

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