Why did TTF's profits go away following an audit?

According to the newly issued 2024 Semi-Annual Consolidated Financial Statement, TTF's revenue was more over VND 669 billion, which is consistent with the previous self-prepared financial report. TTF's gross profit improved by 10% compared to before the audit, to greater than VND 106 billion.

TTF's semi-annual financial revenue increased by 17% after the audit, to nearly VND 16 billion; financial expenses decreased by 50% after the audit and by 90% compared to the same period, to more than VND 3.3 billion; interest expenses decreased by 85% compared to before the audit, to more than VND 4.5 billion; and sales expenses decreased by 1%. Meanwhile, company management expenditures rose by 31% to more than VND 58.6 billion from before the audit.

Although most of TTF's operation costs reduced dramatically from the previous self-prepared financial statement, TTF recorded a net loss of more than VND 5.4 billion following an audit.

TTF stated that the cause was the greater provision for receivables from consumers. Specifically, as of June 30, 2024, TTF's provision for doubtful receivables was reduced from over VND 33 billion in the self-prepared financial statement to over VND 48 billion following audit. This sum has climbed by more than VND 7 billion during the same period.

In summary, TTF's client receivables by the end of 2Q2024 had a net value of about VND 514 billion, with Vinhomes JSC (HoSE: VHM) accounting for nearly VND 172 billion.

It is known that this is not the first time TTF has had practically all of its earnings destroyed following an audit. For example, in the 2023 certified financial statement, TTF changed from a profit of VND 11 billion to a net loss of VND 134 billion following audit. The explanation is that TTF experienced higher tax fines as well as losses from account write-offs and liquidations.

TTF's fairly bleak financial performance came at a time when the Vietnam wood sector was exhibiting indications of improvement. According to Mr. Nguyen Quoc Khanh, Chairman of the Handicraft and Wood Processing Association of Ho Chi Minh City (HAWA), Vietnam's wood and wood product exports are increasing due to favorable signals from markets such as the United States and the European Union. The United States is Vietnam's top export destination, accounting for 52% to 55% of total wood export value.

The HAWA Chairman also forecasted that at the present rate of development, when the globe enters the peak shopping season at the end of the year, Vietnam's wood and wood product exports might reach USD 1.6 - 1.8 billion per month. Thus, the overall export turnover for the year might exceed USD 17.5 billion.

Mr. Tran Ngoc Liem, Director of VCCI HCM, stated at the recent opening ceremony of the Vifa Asean 2024 Exhibition that in the first seven months of 2024, Vietnam's export value of wood, wood products, and furniture reached USD 10.7 billion, up 25% over the same time last year.

According to Mr. Liem, Vietnam's 45 primary markets for exporting wood, wood products, and furniture have largely had extremely substantial export growth in value. Specifically, the US market reached USD 4.9 billion, up 26%; the Chinese market reached USD 1.2 billion, up 38.6%; the Japanese market reached USD 961 million, up 1.5%; the Korean market reached USD 452 million, down 2.1%; the European market reached USD 439 million, up 25.8%; and the ASEAN market reached USD 206 million, up 26.2% from the same period the previous year.

However, Mr. Liem concluded that, despite big growth, Vietnam's export value of wood and wood products in the first seven months of 2024 was lower than in the same time last year.

According to Tran Ngoc Liem, Director of VCCI HCM, enterprises producing and trading wood, wood products, and furniture continue to face many difficulties and challenges, including the impact of conflicts in the Middle East, Red Sea, Russia-Ukraine, and long-term high shipping rates, which have caused the price of imported raw materials to rise sharply.

"Raw material costs, time, and transportation expenses have all increased, making price competition more challenging," said Mr. Tran Ngoc Liem, adding that there are tougher regulations for product quality, safety, friendliness, and clear provenance, as well as importer protection policies.