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Vietnamese carmaker VinFast reports $284mn loss in H1 2020

Thursday, September 10, 2020, 16:25 GMT+7
Vietnamese carmaker VinFast reports $284mn loss in H1 2020
VinFast automobiles are seen at the Landmark 81 skyscraper in Ho Chi Minh City, Vietnam. Photo: Bong Mai / Tuoi Tre

Vietnamese carmaker VinFast reported an after-tax loss of VND6,591 billion (US$286 million) in the first half of 2020, a four-fold increase from the same period in 2019.

Vinfast Trading and Production Co. Ltd. is a unit of Vietnam’s largest conglomerate Vingroup.

By the end of June, VinFast had raised its equity to VND28,116 billion ($1.22 billion), a VND3,000 billion ($130 million) year-over-year increase.

Its debt-to-equity ratio fared at 2.81, which equated a VND79,000 billion ($3.43 billion) liability – a VND15,000 billion ($651 million) rise year over year, but a VND7,500 billion ($325 million) plunge compared to the latter half of last year.

The return on equity (ROE) rate of the Vietnamese carmaker progressed from negative 6.26 percent of the prior year’s first half to negative 23.44 percent in this year’s figure.

However, this is seen as an improvement from the 2019 year-end figure of negative 29 percent.

A total of 9,900 cars and 21,400 electric bikes were sold by VinFast in January-June, Vingroup revealed.

“The perplexing development of COVID-19 during this period has left a big impact on the business operation at the majority of subsidiaries in the group,” Vingroup stated in its semi-annual financial report.

The manufacturing business of Vingroup, which includes VinFast’s car and electric bike manufacturing, also reported a huge loss.

In the first half of 2020, Vingroup saw VND38,727 billion ($1.25 billion) in net revenue, a 37 percent fall year-over-year.

Contributing a total of VND6,335 billion ($276 million), manufacturing ranked second in net revenue among Vingroup's business operations, only inferior to real estate.  

It also accounted for VND5,228 billion ($227 million) in operating loss, a 78 percent surge year-on-year and the largest loss among Vingroup’s sectors.

Other VinFast-related subsidiaries in Vingroup also posted losses, including the plastic auto parts supplier VinFast – An Phat and VinFast’s lithium battery manufacturing unit.

Meanwhile, the funding allotted to ongoing infrastructure projects under VinFast amounted to VND7,058 billion ($306 million) in the first half of 2020, an 18 percent increase year-over-year.

The ambitious car manufacturer announced a focus on the domestic market as part of its strategy in 2020, besides the pursuit of export opportunities and the launch of the high-end sport utility vehicle V8.

Earlier this month, VinFast debuted its limited-edition automobile President, with only 500 cars distributed exclusively to the Vietnamese market.

VinFast is the very first domestic carmaker in Vietnam, with VND26,916 billion ($1.14 billion) in charter capital as of mid-2020.

In his recent interview with Bloomberg last year, Pham Nhat Vuong, chairman of Vingroup, divulged that VinFast is operating at a loss of roughly VND18,000 billion ($781 million) per year, as its products are priced under their manufacturing costs.

The carmaker is launching an array of new showrooms and is mulling over expanding their presence in all 63 provinces and central-level cities of Vietnam.

It has also launched a series of demand stimulation policies, including a flat price cut of up to VND600 million ($26,000) on its automobiles.

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Xuan Tung - Bong Mai / Tuoi Tre News

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