Construction businesses still face difficulties, revenue plummets

Construction enterprises are facing many difficulties and challenges when the real estate market is sluggish, especially construction companies closely related to real estate. In the difficult context, some enterprises have accelerated restructuring activities and reduced costs to achieve positive results in the first half of this year.

Typically, Vietnam Construction and Import-Export Corporation (Vinaconex, code: VCG) recorded a sharp decrease in revenue but increased profit. The main reason is that the company reduced the cost of goods sold and cut costs, helping to increase profits.

Accordingly, Vinaconex's consolidated net revenue reached VND2,799 billion, down 39% year-on-year. The cost of goods sold this period was over VND2,459 billion, down more than 40% year-on-year, helping Vinaconex's gross profit reach nearly VND340 billion, pushing the gross profit margin up to 12%, a significant improvement compared to 9.4% in the same period last year.

In addition, sales expenses were only over 1 billion VND, while in the same period last year it was over 23 billion VND; business management expenses also decreased sharply by 28%, to 14.6 billion VND. As a result, Vinaconex reported a profit after tax of 163 billion VND, up 25% over the same period last year.

Accumulated in the first 6 months of the year, Vinaconex's net revenue reached 5,449 billion VND, down 16.6% compared to the same period last year; profit after tax reached 645 billion VND, 3.6 times higher than the same period last year.

Similarly, Hoa Binh Construction Group Joint Stock Company (Code: HBC) reported a sudden profit, but mainly thanks to the liquidation of assets and machinery and equipment.

In the second quarter of 2024, the company recorded net revenue of VND 2,160 billion, down 5% year-on-year. However, due to the sharp increase in cost of goods sold and remaining high, gross profit was only VND 99.8 billion, causing the gross profit margin to drop sharply from 17.2% in the same period last year to 4.6% this period.

Notably, Hoa Binh recorded financial revenue of more than VND46 billion, double that of the same period last year thanks to the successful transfer of Matec Construction Machinery Company Limited (member company), Anh Viet Mechanical and Aluminum Glass Joint Stock Company (affiliated company).

In particular, the company had other income of nearly 527 billion VND, this revenue came from the sale of machinery and equipment to outsiders. As a result, Hoa Binh Construction earned a profit of more than 684 billion VND while in the same period last year it lost more than 268 billion VND. In its history, this result reflects the highest profit quarter of the enterprise.

Thanks to this result, in the first half of the year, Hoa Binh Construction earned a profit of nearly 741 billion VND, while in the same period last year the company lost 713 billion VND. This result also helped the company's accumulated loss decrease by nearly 23%, down to 2,498 billion VND as of June 30.

At Construction Corporation 47 (Code: C47), the situation is quite gloomy with consolidated net revenue decreasing by nearly half, to only 160 billion VND. Cost of goods sold continues to be high, at 138.6 billion VND, accounting for 86% of revenue, causing gross profit to decrease to 21 billion VND. However, gross profit margin this period was at 13.1%, an improvement compared to 8% in the same period last year.

As a result, after-tax profit at Construction 47 was 1.3 billion VND, while in the same period last year, the company's profit was only below 1.2 billion VND.

In the first 6 months of the year, the company's net revenue reached 301 billion VND, down 29.7%. However, after-tax profit in the past 6 months only reached 2.5 billion VND, compared to 3.2 billion VND in the same period last year. With this result, Construction 47 has only achieved 10% of the yearly plan.

Hung Thinh Incons Joint Stock Company (Code: HTN) also had a poor performance with consolidated net revenue in the second quarter of 2024 reaching VND 437 billion, down 72% year-on-year, due to a sharp decrease in construction output. Cost of goods sold remained high, up to VND 401 billion, accounting for 91% of revenue, pulling gross profit down to VND 36 billion. As a result, Hung Thinh Incons' profit plummeted 97%, to nearly VND 2 billion.

In the first half of the year, the company's net revenue reached VND900 billion, down 55% over the same period last year; after-tax profit also decreased by more than half, to VND12 billion.