Hoa Sen Group shuts down ten more branches

Additional tens of Hoa Sen Group branches to be closed

In its latest announcement, Hoa Sen Group (HSG) announced stopping the operations of ten branches in order to restructure its distribution points in provincial branches to improve performance. Earlier, in the end of January, Hoa Sen also closed down 21 branches for the same reason.

HSG’s move follows the liquidation of land, premises, factories, machinery, and vehicles to mobilise capital and overcome business difficulties.

HSG’s board of management said the move 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 the keywords. 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 price of 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, earning VND2.6 trillion ($113 million) in revenue and VND60 billion ($2.6 million) in after-tax profit. The group also set the full-year targets of VND31.5 trillion ($1.37 billion) and VND500 billion ($21.7 million), respectively.

Additionally, Hoa Sen Group will take over 60 branches of Hoa Sen Investment Co., Ltd. across the southern provinces of Ninh Thuan, Lam Dong, Long An, Binh Duong, and Dong Nai. Thereby, the group will take over around 161 branches in total (including 101 ones handed over last year).

On the other hand, HSG’s board of management has approved to issue stocks valued VND0.5-1 trillion ($21.75-43.5) to shareholders, strategic partners, and other investors, in order to collect capital for business.

On the stock market, since early this year, HSG’s stock has gained 40 per cent, reaching VND9,300 from VND6,500.