Mobile World profit to decline: chairman

Mobile World, which sells a range of items like home electronics, bicycles and groceries, targeted revenue growth of 14% to VND140 trillion and profit growth of 30% to VND6.35 trillion.

But the company, with 5,760 stores around the country, achieved only 60% of the profit target in the first 10 months though sales, at 81% of the target, remain on track.

Company chairman Nguyen Duc Tai told shareholders at a meeting this week that profits are down because people’s incomes have dropped.

In previous years workers would work overtime for the end-of-year shopping season, but are now forced to take two weeks off every month. Some are even losing their jobs due to declining export orders.

Tai said: "Workers are cutting down on non-essential expenses. If they cannot cut, they are choosing a cheaper option."

Smartphones and electronic items are non-essential, he pointed out.

The problems for retail are caused by a chain of events such as inflation, war and exchange rate fluctuations, and no one can solve them right away, he said.

They would either ease in the first quarter next year or linger until the third quarter before things start to improve, he predicted.

"We cannot expect an immediate recovery within the next one or two months. That is overoptimistic."

Another reason for the fall in profits is the restructuring of the grocery business, he said.

The company had spent around VND500 billion closing 400 Bach Hoa Xanh stores in the second and third quarters, he said.

But the management assured shareholders that there are no cashflow issues, saying the company recently redeemed VND1.135 trillion worth of bonds issued five years ago and repaid a $120-million loan it had obtained from HSBC two years ago.

It borrowed $250 million in September.