Racked by an internal conflict, Trung Nguyen Group’s profit has declined continuously over the last three years.
According to Trung Nguyen Group’s (TNG) newly-released 2018 financial report, the company recorded VND4.8 trillion ($205.93 million) in revenue, an increase of nearly 8 percent compared to 2017.
However, profit before tax dropped sharply by nearly 50 percent, to VND347 billion ($14.89 million) compared to nearly VND681 billion ($29.22 million) in 2017.
According to the report, TNG’s profit margins have been falling in the past three years. Gross profit margin in 2016 was 37.4 percent. It fell to 34 percent in 2017 and 27.9 percent in 2018.
Profits have been squeezed most by rapidly rising expenses. TNG spent nearly VND725 billion ($31 million) on operating expenses, which rose 19 percent over 2017 to equal half of the company’s gross profit in 2018.
Unlike its parent company, two of TNG’s key subsidiaries have recorded much better results in 2018. Trung Nguyen Instant Coffee Company JSC and Trung Nguyen Corporation JSC reported revenues of VND134 billion ($5.75 million) and VND1.48 trillion ($63.52 million), up 36 and 28 percent year-on-year, respectively.
Their profits also rose significantly, an increase of around 180 percent for Trung Nguyen Instant Coffee and 60 percent for Trung Nguyen Corporation.
At the end of 2018, Trung Nguyen Group had total assets of over VND6 trillion ($257.42 million), with undistributed profits of nearly VND1.9 trillion ($81.52 million).
Trung Nguyen Group is a leading coffee firm in Vietnam. It was founded in 2006 by Dang Le Nguyen Vu, who is currently the company’s chairman. The coffee trading group began experiencing difficulties six years ago, when Vu and his wife, Le Hoang Diep Thao, fell out on how the corporation should be run.
Speaking to VnExpress this week, Vu admitted that their “internal conflict was an obstacle to Trung Nguyen’s growth”.
Vu and Thao got divorced early this year. After months of litigation, the Ho Chi Minh City People’s Court ordered in March that the stocks and cash assets of TNG shared by Vu and Thao be split 60:40 in Vu’s favor in their divorce settlement. Thao has appealed, and Vu is expecting the appeal hearing to take place in July this year, he said.