Vietnam’s gaming firm profits fall 52 pct in 9 months
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Vietnamese online gaming giant VNG has reported Jan-Sept 2018 profits of VND152 billion ($6.5 million), a 52 percent year-on-year slump. The company has said in its third-quarter financial statement that higher expenditures have eaten into its profits.
Selling and administrative expenses of VND853 billion ($36.7 million) and VND382 billion ($16.44 million) respectively in the nine-month period marked a 72 percent and 27 percent year-on-year surge.
At its recent annual meeting, the company’s management board had predicted a sharp drop in profits compared to previous year as the company wanted to focus resources on investment in strategic products and diversify operations.
The company focuses in four main areas: e-wallet, mobile product development, ecosystem building, and e-commerce.
VNG has set a revenue target of over VND5 trillion (more than $215 million) for this year, 17 percent higher than in 2017.
However, after-tax profit is expected to only reach VND549 billion ($23.62 million) compared to VND938 billion ($40.36 million) in 2017.
VNG, which used to be known as VinaGame, also owns major news site Zing, popular music site Zing MP3, instant messaging app Zalo, and e-commerce site Tiki.
Tiki, VNG’s largest investment in e-commerce, continues to suffer increasing losses. In the first half of this year, Tiki’s losses of VND102 billion (nearly $4.39 million) were more than double the same period last year.
The cumulative loss of this e-commerce site has reached nearly VND600 billion (about $25.82 million) after seven years of operation, beginning in 2010.
Questions & Answers
Q.What is the primary reason for VNG's significant profit reduction?
What is the primary reason for VNG's significant profit reduction?
The company stated that higher expenditures significantly impacted its profits. Selling expenses surged by 72 percent and administrative expenses by 27 percent year-on-year during the nine-month period, contributing to the slump.
Q.Why did VNG's management anticipate a drop in profits this year?
Why did VNG's management anticipate a drop in profits this year?
The management board had predicted a sharp drop in profits because the company intended to focus resources on investing in strategic products. They also planned to diversify operations across their four main business areas.
Q.Which of VNG's investments is experiencing mounting losses?
Which of VNG's investments is experiencing mounting losses?
Tiki, the e-commerce site and VNG's largest investment in that sector, continues to suffer increasing losses. Its losses more than doubled in the first half of this year compared to the same period last year.
Q.What is VNG's expected after-tax profit for the current year?
What is VNG's expected after-tax profit for the current year?
VNG anticipates an after-tax profit of VND549 billion ($23.62 million) for this year. This is a considerable reduction compared to the VND938 billion ($40.36 million) achieved in the previous year.
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