Central Group Vietnam halts buying spree
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Thai retailer Central Group Vietnam is putting the brakes on its acquisition spree to focus on consolidating profit, according to media reports.
Deputy group CEO Prin Chirathivat says Vietnam is shaping up as a second home for the Central Group, with the company having established three Robins Department Stores there, acquired a 49 per cent stake in electronics retailer Nguyen Kim, taken over fashion eCommerce site Zalora Vietnam from Germany’s Rocket Internet, and bought out Big C Vietnam for $1.1 billion.
Prin has told The Nation that he realises it is time to reap profit from the businesses in Vietnam, with the depreciation of fixed assets putting pressure on profitability despite positive cash flow.
But while Central has decided to pull back on buying, he says it does not want to miss any interesting inorganic growth opportunities.
Its biggest equity investment has been taking over 30 Big C Vietnam supermarkets, for which it secured a bridging loan from Bangkok Bank, according to the Bangkok Post. Central will use Zalora to strengthen the channels of local partner Nguyen Kim as well as its Robins stores.
The Thai group still considers Vietnam as an important market, buoyed by a growing economy and high purchasing power. But it still has plans for Indonesia, including opening five more department stores in Jakarta and Surabaya by 2017.
Back in Thailand, Central Group no longer owns Big C SuperCentre, but has acquired the Zalora business there.
Questions & Answers
Q.What is the primary reason for Central Group Vietnam halting its acquisition spree?
What is the primary reason for Central Group Vietnam halting its acquisition spree?
Central Group is pausing its buying to concentrate on consolidating profit from its existing businesses in Vietnam. The depreciation of fixed assets is currently putting pressure on their profitability there, despite positive cash flow.
Q.Which companies has Central Group acquired or invested in within Vietnam?
Which companies has Central Group acquired or invested in within Vietnam?
In Vietnam, Central Group established three Robins Department Stores, acquired a 49% stake in Nguyen Kim, took over Zalora Vietnam, and bought Big C Vietnam for $1.1 billion, which included 30 supermarkets.
Q.How does Central Group intend to use Zalora Vietnam?
How does Central Group intend to use Zalora Vietnam?
Central Group plans to use Zalora Vietnam to strengthen the sales channels of its local partner, electronics retailer Nguyen Kim, as well as its Robins department stores in the country.
Q.Despite pausing acquisitions in Vietnam, is Central Group still expanding elsewhere?
Despite pausing acquisitions in Vietnam, is Central Group still expanding elsewhere?
Yes, Central Group still considers Vietnam an important market, but also has plans for Indonesia. This includes opening five more department stores in Jakarta and Surabaya by 2017.
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