In the first quarter, Nagakawa Group recorded the highest revenue and second highest profit in its operating history thanks to an effective marketing strategy.
Revenue of Nagakawa Group Joint Stock Company (NAG) reached over VND533 billion, a slight increase compared to the same period and the third consecutive quarter of growth. However, the cost of goods sold increased faster, causing the gross profit margin to decrease to 11%. During the period, interest expenses also increased sharply by more than 66% when this enterprise has nearly VND890 billion in loans and financial leasing debts.
However, Nagakawa still had a profit after tax of nearly 10 billion VND, up 16.5% over the same period last year. The management explained that this year, operations have stabilized and become effective, helping to reduce investment costs for sales activities. This period, sales costs were saved by more than 37% compared to the first quarter of 2022.
This is the quarter with the highest revenue and second highest profit after tax in Nagakawa's history. After the first quarter of the year, the company also completed more than a quarter of its business plan for 2023.
Nagakawa Group is one of the pioneer domestic electrical appliance manufacturers since 2002 with its main product being air conditioners, accounting for 70% of revenue. It is also the only unit in the industry that is listed on the Hanoi Stock Exchange (HNX).
Since 2021, despite the pandemic, Nagakawa's business results have been increasingly positive. Previously, the company's annual revenue often did not exceed 300 billion VND, and the annual profit was only around 10 billion VND. Net profit margins were generally very low at only 1-3%.
Nagakawa's leaders have repeatedly said that the company's constant risk is "extremely fierce" competition with 100 air conditioner brands. The company always has low net profit margins due to price reductions under pressure from cheap Chinese goods. In addition, to increase sales, Nagakawa also has to trade off large marketing budgets, while the distribution network is still limited, especially in large electronics retail systems.
With positive business results, in the near future, this company wants to be in the top 5 brands manufacturing and distributing air conditioners, leading the high-end kitchen equipment industry in Vietnam. The company is focusing on expanding the market and new distribution channels, focusing on rebuilding the Southern market, strengthening traditional sales channels in the North and developing e-commerce channels in depth. This business aims to reach 12,000 points of sale nationwide.
This year alone, Nagakawa wants revenue to increase by 6% while profits are expected to increase by nearly half. The plan is quite challenging in the context of decreasing consumer spending. Recently, large retail chains such as Mobile World and FPT Retail have recorded poor business results, while smaller retail chains have also said that purchasing power for electronics is at a record low.
However, Nagakawa's main product line is "affordable" air conditioners, priced at around 7-10 million VND. This is a group with a lot of potential for consumption, as the psychology of prioritizing cheaper prices for the same type of product is prevalent. Not to mention, the increased heat this year has also helped increase demand for air conditioners.
Siddhartha
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