F.I.T Group has announced the official results of the third quarter of 2017 on October 28th. The report is stored on the company’s website and publicly available on the financial pages as well as the relevant regulatory agencies.
There is nothing to hide, the business results in the third quarter are lower than the same period in 2016 in both revenue and profit. But it should be said that this result is better than the estimates at the end of September when I wrote an update on the group in the third quarter. For example, net profit after tax was 23.8 billion VND, higher than the estimate of 21.7 and the actual operating profit was 36.3 billion VND, higher than the previous estimate of 31.5 billion VND. Notably, due to the good financial performance in the second quarter, accumulation of the first nine months of the Group’s after tax profit reached 112 billion VND and is expected to reach over 150 billion ND over the year, higher than 143 billion VND in 2016.
In the newsletter to shareholders and interested parties on October 1st, I presented and explained the business results of the group, emphasizing that the reason for the poorer business results is only due to a drop in sales, while performance indicators such as net profit margin, operating margin, and after-tax profit margins were operating well, in line with the performance criteria set at the beginning of the year.
The drop in revenue is a tradeoff between restructuring commitment to sustainable development or following the numbers and then falling behind. FIT has chosen to follow the path of restructuring, towards efficiency and therefore the basic investment activities, new product development, improvement of management and operation efficiency is done in a consistent and stable manner. In addition to the activities reported in last month’s newsletter about what FIT has done in 2017, other basic investment activities have been ongoing.
For example, the group is developing a governance structure based on the best corporate governance practices in the world that are consistent with FIT’s ownership structure. The Group is also investing in ERP software to help companies plan and manage the business more efficiently. In addition, in the subsidiaries, the construction and expansion of the plant is nearly finished and is expected to come into operation in 2018. In particular, Cuu Long Pharmaceuticals (CLP) is in a full-fledged state of working with a foreign partner to supply cancer drug and build a factory for this drug. Due to security clauses, I can not elaborate, but shareholders can rest assured that the group is taking the final step to complete this investment deal. As in Westfood, business development with foreign partners is being discussed following the participation of the Fair in Germany.
The above changes are expected to bring efficiency in the business operations of the Group, towards sustainable development. This, inevitably, needs to be countered by a drop in sales due to pauses in production. The decline in sales has led to the decline of other business indicators, so it is normal. We only really have to worry if the way of doing business is normal, but sales decline, or revenue does not change much but the performance indicators decrease.
The changes are bringing the early results of business performance. For example, net profit margin ratio, operating profit ratio, and after-tax profit ratio in Q3/2017 are 21.25%, 9.2% and 6.1%, respectively, higher than the same period of 2016 which reached 20.06%, 7.25%, and 4.9%. This means that the business is operating more efficiently. When basic investment activities are finished and production resumes from 2018, we believe that this efficiency will bring better business results. In other words, the corporate restructuring process is bringing value to shareholders through greater efficiency in business operations.
In October, the group has also actively carried out community activities such as medical examination for poor people in Long An and Ha Giang provinces or participate in volunteer activities with patients and family members at the K Hospital. These activities are part of the strategy of building the group into a enterprise full of social and for the community responsibilities.
November will witness an extraordinary shareholder meeting in which the appointment of new board members who have experiences in corporate governance and development is an important highlight. All the changes at the group are aimed at creating sustainable long-term value for shareholders. Information transparency is also a change in the new strategy. I will return to the new information as soon as it appears and in the regular newsletter every beginning of the month.
