Kido targets $440 million in 2018 revenue

January 25, 2018 | 11:16
Based on the increasing revenue thanks to the contribution of newly acquired subsidiaries Vocarimex and Tuong An Vegetable Oil, Vietnam’s leading food firm Kido Corporation (KDC) set the revenue target of VND10 trillion ($440.3 million) this year.
Kido's acquisition of Vocarimex and Tuong An paved the road to an ambitious revenue target

Soaring revenue after double acquisition

The highlight in Kido’s business results in 2017 was the soaring revenue thanks to the contribution of Vietnam Vegetable Oil Industry Corporation (Vocarimex) and Tuong An Vegetable Oil JSC (Tuong An) after Kido acquired these two cooking oil manufacturers.

Notably, Kido reported a net revenue of over VND7 trillion ($308.2 million), doubling the 2016 figure with a gross profit of VND1.49 trillion ($65.6 million) and pre-tax profit of VND569 billion ($25.05 million).

After being acquired by Kido, both Vocarimex and Tuong An changed their business and manufacturing strategies, boosting revenue and profit. Notably, in 2017, instead of only focusing on small-scale retail traders, Vocarimex turned to trade with enterprises with a high demand for cooking oil as well as exports.

As a result, revenue from large-scale sales channels increased by 53 per cent and exports by 15 per cent. Besides, Vocarimex earned VND297 billion ($13.07 million) in pre-tax profit, exceeding its initial plan for 2017.

In 2017 Tuong An reported a net revenue of VND4.34 trillion ($191.1 million) and pre-tax profit of VND166 billion ($7.3 million), signifying on-year increases of 9 per cent in revenue and double in pre-tax profit.

To reach this revenue increase, Tuong An conducted wide restructuring, refocusing manufacturing and distribution activities towards the high-end segment. Besides, the company extended its product portfolio by adding packaged products in manufacturing, contributing to expanding its operations in general.

Building momentum for VND10 trillion ($440.3 million) target

In order to realise the VND10 trillion revenue target this year, Kido spent massive efforts integrating Vocarimex and Tuong An, which had differing corporate cultures as well as working processes.

According to Tran Kinh Thanh, chairman of the Kido Board of Directors, the time after an M&A deal is completed is the most crucial to create added value for the enterprise. The management policies of the parent enterprise play a major role in creating added value by boosting the operations of the new enterprises.

The case of Vocarimex is a prime example, as after the M&A deal was completed, Kido spent two months to study the entire operations of Vocarimex in order to find similarities with Kido. Then, in the next two months, Kido co-operated with Vocarimex to adjust its operations to suit Kido’s.

Thanh stated that restructuring the operations of acquired firms was completed in 2017, creating the premise for increasing revenue in 2018. Also, in order to realise the VND10 trillion ($440.3 million) revenue target, Kido will continue to develop its major distribution channels, namely frozen and packaged products, and simultaneously launch new products.

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By By Chi Tin

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