Some Masan products. The group reported double-digit growth in revenues and operating profits across consumer-related business segments for the first nine months of the year.
Masan Group Corporation (MSN) achieved double-digit growth in revenues and operating profits across its consumer-related business segments in the first nine months of the year.
Its consolidated net revenues increased by 110.8 per cent to VND55.618 trillion (US$2.39 billion) from VND26.378 trillion ($1.13 billion) in the same period last year, primarily due to the consolidation of newly acquired businesses and supported by organic growth across all business segments.
On a like-for-like basis (which assumes consolidation of VinCommerce (VCM) numbers for first nine months), net revenues grew by 19.6 per cent.
MSN’s net profit after tax post-minority interest (NPAT post-MI) was VND852 billion ($36.7 million) in Q3 and VND969 billion ($41.8 million) in the first nine months, both lower year-on-year.
This was due to the consolidation effects of VCM (unprofitable and goodwill amortisation as required under the Viet Nam Accounting Standards), increase in minority interest leakage due to dilution of MSN’s effective ownership in Masan Consumer Holdings (MCH), lower profits at Masan High-Tech Materials (MHT) due to lower commodity prices, and higher interest expenses, though offset somewhat by higher earnings by Techcombank (TCB).
Of the group’s subsidiaries, VCM’s profit turnaround game plan was validated by earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin improving from 5.1 per cent in the first quarter this year to 2.8 per cent in the third quarter, with the operating momentum to achieve break-even EBITDA in the fourth quarter.
MCH delivered three consecutive quarters of strong double-digit growth in net revenues, which reached VND6.084 trillion ($262.39 million) in Q3, representing a year-on-year increase of 32 per cent.
A robust innovation pipeline contributed 55 per cent of Q3 revenue growth, which management believes set the foundation for similar growth rates in the medium term.
Masan MEATLife (MML)’s meat business achieved double digit quarter-on-quarter growth and entered the poultry segment with an impending acquisition of 3F VIET, a leading domestic poultry player. MML’s feed business segment achieved strong growth in Q3 with pig feed driving the growth.
Assuming consolidation of 3F VIET, Masan Group now has over VND3 trillion revenue in meat business, which will further unlock significant synergies with MSN’s modern grocery retail business where fresh is a key driver.
MHT’s net revenues increased by VND1.508 trillion ($65.05 million) year-on-year in Q3 mainly due to the consolidation of H.C.Starck’s global tungsten business that the company acquired recently. On a like-for-like basis, its revenues were up 5.6 per cent due to exports of copper concentrate.
MHT, formerly Masan Resources (HNX-UPCoM : MSR), signed an agreement with Mitsubishi Materials Corporation (MMC) to make it a strategic partner, and the Japanese company will also invest $90 million to buy 10 per cent of the fully diluted share capital of MHT.
The partnership validates MHT’s strategy to shift its business model from being predominantly mining-based to a vertically integrated high-tech industrial platform.
Post completion of the equity investment, the partners plan to discuss spinning off a separate business unit to strengthen their respective mid-stream tungsten platforms.
TCB posted impressive results in the first nine months, with profit before tax rising by 18.9 per cent to VND10.71 trillion ($461.9 million).
CrownX, MSN’s integrated consumer-retail platform, which consolidates its interests in VCM (modern grocery retail) and MCH (branded consumer products), delivered VND40.037 trillion ($1.7 billion) in net revenues and posted an EBITDA margin of 6.3 per cent.
Q4 outlook
MSN’s management still expects to land within the range of its 2020 targets approved by shareholders.
VCM targets EBITDA breakeven in Q4 while maintaining over 10 per cent revenue growth year-on-year driven by continuing revenue growth momentum and improving gross profit by optimising product assortment and renegotiating terms with suppliers.
MCH expects to continue building on its current momentum to achieve a 25-30 per cent year-on-year revenue growth rate.
MML’s integrated meat platform is expected to maintain its double-digit quarter-on-quarter growth momentum, with processed meat contributing 10 per cent of meat revenues by year-end and the feed business to achieve VND1.7 trillion EBITDA for fiscal year 2020.
Depending on commodity prices and global industrial activities, the management expects MHT to deliver a relatively neutral NPAT Post-MI in Q4.
Masan chairman Dr Nguyen Dang Quang said, “We believe in breakthrough transformation that results in breakthrough value for consumers.
“We are brave enough to openly share our vision, which many may not agree with or understand before the transformation is completed.
“I believe our integrated consumer retail strategy is starting to bear fruit as we hit our first strategic milestone in Q4, with VCM to break even. This is just the very beginning of what we envision, an online- offline consumer retail champion.” — VNS