TTC Bien Hoa (SBT) announces financial statement interpretation for third quarter

Net revenue (NR) of the first nine months of the year has increased 154 percent to reach VND8,200 billion compared to that figure of the same period last year, fulfilling 83 percent of the annual plan.

This revenue is attributed to the cumulative consumption of approximately 438,000 tons. Gross profit and profit after tax (PAT) topped VND966 billion and VND397 billion, and represented a yearly increase of 127 percent and 54 percent, respectively.

The fiscal year 2017-2018 is still in the downward trend of the sugar industry. However, the capability of planning, forecasting and executing strategies along with generated power from M & A transactions with BHS entail a yearly growth rate of 224 percent in terms of the third quarter’s consumption and 228 percent in terms of nine-month-accumulative consumption.

Estimated annual consumption is 616,000 tons of sugar, which is 250 percent higher than the number of the previous year and is 17 percent higher than the target of 525,000 tons approved by the board of shareholders. This target complies with the strategic path of increasing production and dominating the market to reach 1,118,000 tons of sugar in 2018-2020.

SBT took advantage of the diverse sales segments to focus on growing its sales volume, increasing market coverage and market share in all distribution channels in compliance with the orientation of increasing profit through sales expansion.

By the third quarter, revenue (R) and profit before tax (PBT) had achieved 83 percent and 72 percent of the planned target approved at the general meeting of shareholders. Achieving good performance in the first nine months of this year, SBT has great potential to complete its full-year plan of NR of VND9,900 billion and PBT of VND680 billion.

Before 2018, SBT actively invested in several potential real estate projects, particularly industrial zones, to create financial resources when divesting its shares. In the third quarter of this year, SBT estimated that it was the right time to divest its shares and contribute the revenue of over VND100 billion to the working capital for the company’s business operations.

In the third quarter, the cost of goods sold/NR ratio was reduced thanks to good control of the cost of raw materials and the input costs of all subsidiaries when the production cost at all plants was lower than planned.

It made the gross profit margin in the third quarter increase by nine percent over one year, reaching 13 percent compared to 12 percent of last year. By applying the value chain model in management and production, the company has been gradually self-reliant and stable in terms of stabilizing raw material resources, increasing productivity and lowering prices to increase low-cost competitiveness.

Thanks to the advantage of BHS's nationwide distribution system, selling expenses were controlled better and were 29 percent lower than the third quarter’s cumulative planned expenses.

Similarly, SBT also managed to make the general and administrative expenses be six percent lower than the third quarter’s cumulative planned expenses.

Since the beginning of the fiscal year 2017-2018, total assests (TA) have reached VND18,906 billion, equivalent to US$833 million, which is 2.42 times as high as TA at the beginning of the year. This is due to the short-term assets and long-term assets witnessing a rise of 150 percent and 131 percent, respectively, compared to the numbers on June 30, 2017.

In comparison to statistics on June 30, 2017, inventories (I) went up to VND1,724 billion due to seasonal factors in sugar production and business.

Annually, sugar mills officially start the season in December or January. Recently, production is in its peak stage when all the factories have large quantities of finished products to ensure supply for the market in the next period.

In addition, the increase in I is mainly related to raw materials, accounting for 57 percent of the total increase of I. Taking advantage of a drop in the world's raw sugar price, the company has been intentionally importing raw materials to proactively produce cheap sugar for the strategy of expanding the market in the future. Thus, with the reduction of cost price, SBT has a quantity of low-price finished products, in addition to cheap raw materials, which will be competitive advantages in the remaining period of 2017-2018 and early 2018-2019.

Receivables increased after the year due to a rise in receivables from M&A transactions and a strategy to expand market share, and efforts to focus on the segment of industrial customers and SMEs. Industrial customer growth rates have risen by 201 percent after one year.

Cash flow from business operations in the third quarter accounted for over VND1,072 billion, which is a positive sign considering the value of VND -315 billion in the third quarter of last year. This improvement comes from the outstanding sales growth and advanced cash flow management as well as a reasonable debt policy.

Long-term assets surged 132 percent mainly due to increased fixed assets investment to expand production and business activities.

Until March 31, 2018, equity (E) reached VND7,292 billion, representing a 134 percent increase compared to equity on June 30, 2017, mainly due to M&A transactions from BHS.

In the most difficult cycle of the sugar industry, SBT has been actively expanding its market share, strengthening competitive competency, ensuring short-term and long-term cash flow, managing financial risks properly, and being able to achieve the approved PBT target of VND680 billion.

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