Q2 profit decreased by 55.5%, Dabaco (DBC) only completed 29.9% of the yearly plan

Dabaco Vietnam Group Joint Stock Company (Code: DBC) has just announced its business results for the second quarter of 2024. Of which, net revenue reached VND 3,184.7 billion, down 8.3% over the same period. Profit after tax was recorded at VND 145.4 billion, down 55.5% over the same period last year.

Gross profit in Q2 reached VND430.5 billion, down 35% year-on-year. Gross profit margin therefore also decreased from 19.1% to only 13.5%.

During the period, financial revenue decreased by 60% to VND4.7 billion. In contrast, financial expenses increased by 12.7% to VND80.2 billion. Selling expenses and administrative expenses decreased by 10.8% to VND205.5 billion.

It can be seen that the decrease in gross profit due to high cost of goods sold is the main reason for Dabaco's after-tax profit "evaporating" by half in the second quarter of 2024.

Cumulative revenue in the first half of 2024 reached VND 6,437.3 billion, up 11.2% over the same period last year. Profit after tax reached VND 218 billion, up 34.8 times over the first half of 2023.

Compared to the 2024 plan, revenue of VND 25,380 billion, profit after tax of VND 729.8 billion, Dabaco has currently completed 25.4% of the revenue plan and 29.9% of the annual profit target. With this result, Dabaco is behind the set annual plan.

Debt is 1.4 times higher than equity

Regarding asset structure, at the end of the second quarter of 2024, Dabaco recorded total assets of VND 13,326.3 billion. Of which, short-term assets accounted for VND 7,402.5 billion, equivalent to 55.5%.

Cash and cash equivalents were recorded at VND524.3 billion, deposits held to maturity were also at VND520.7 billion. Inventories accounted for a large proportion of short-term assets at VND5,828.8 billion, about VND300 billion higher than at the beginning of the year.

Regarding long-term assets, it accounts for 5,923.8 billion VND, most of which are tangible fixed assets with 4,443.1 billion VND. Long-term unfinished assets only recorded 679.6 billion.

In Dabaco's capital structure, payables also account for a very large proportion of VND8,441 billion, equivalent to 63.3% of total capital. Of which, short-term debt accounts for VND5,748.9 billion. Long-term debt accounts for VND917. billion. Compared to the beginning of the year, the total short-term debt has increased by more than VND900 billion.

Total short-term and long-term debt is currently at VND6,666.6 billion, 1.4 times higher than current equity. This clearly shows the risk in the company's capital management activities.

Business cash flow negative 579.9 billion VND

The decline in business results in Q2 2024 has caused some cash flow difficulties for Dabaco.

Specifically, the cash flow in the period had to be spent on interest of VND 167.9 billion, almost as high as the profit after tax. Increases and decreases in payables also caused negative cash flow by VND 666.1 billion. Along with that, increases and decreases in inventories caused negative cash flow by VND 370.3 billion.

Results after the first 6 months of the year, Dabaco recorded a negative net cash flow from business activities of 579.9 billion VND.

Net cash flow from investing activities was negative 288.5 billion due to expenses for purchasing and constructing fixed assets and other long-term assets. The company also borrowed an additional 30.9 billion to buy debt instruments from other units.

Net cash flow from financial activities recorded at 800.5 billion, showing that the company is borrowing more than before to make up for the cash flow shortage in business. Specifically, Dabaco borrowed an additional 7,462.9 billion but only paid the principal of 6,589.6 billion VND. This has led to a significant increase in total debt during the period.