Hoa Sen Group closes 21 branches

2019 will be a year of consolidation for Hoa Sen Group

The board of management of Hoa Sen Group (HSG) has just issued the resolution on terminating the operation of affiliated branches to convert them into business locations under provincial branches. During this restructuring, 21 branches have cancelled operations, including 13 in Binh Dinh and 8 in Tay Ninh province.

HSG’s board of management justified the move by claiming it will improve performance as well as strengthen the handling of debts, liquidated contracts, and social welfare activities for the employees of these branches.

According to the annual statement released in early-2019, HSG had 491 branches and stores across the country after 15 years of significant development and success. Moreover, the group has applied the enterprise resource planning (ERP) system in order to optimise organisation and operation, reducing the number of employees to 7,000 from 9,300.

In the time coming, HSG will stop expanding. “In 2019, safety and cautiousness will be highlighted. The board of management decided not to speculate on raw materials as before, but keep inventories at 70-80 per cent of monthly demand to promote cash flows and continuous production,” said Le Phuoc Vu, HSG chairman.

During 2017-2018, the steel has been in constant flux, which increased costs. HSG’s profit has also reduced sharply due to fierce competition. A large amount of debts equalling VND14 trillion ($608.7 million) making up 70 per cent of HSG's capital, along with extensive inventory, have decreased the group’s profit.

In 2018, HSG recorded a profit of VND410 billion ($17.8 million), down 69 per cent on-year, which is the smallest profit figure it has reported in the past four years. Particularly, in the fourth quarter, HSG lost VND100 billion ($4.35 million).

In the first quarter of the new fiscal year, HSG targets selling 428,000 tonnes of steel products, achieve VND2.6 trillion ($113 million) in revenue and VND60 billion ($2.6 million) in after-tax profit. The group also set the full-year of VND31.5 trillion ($1.37 billion) and VND500 billion ($21.7 million), respectively.