FPT lowers sales plan due to COVID-19 despite surging revenue

09:08 | 11/04/2020

At its recent annual general shareholders' meeting, the FPT Board of Managers announced that the technology giant is mulling over dropping this year’s sales plan by 15 per cent to better align with the economic fallout though it finished the first three months with rather upbeat performance.

FPT recorded net revenue rising by 16 per cent on-year to VND6.57 trillion ($285.65 million), while its net profit surged by 19 per cent on-year to VND945 billion ($41.1 million) at the end of 2020’s first quarter.

fpt lowers sales plan due to covid 19 despite surging revenue
FPT has decided to lower its expectations for the full year, despite encouraging performance in the first quarter

The technology giant also targets a 17.1 per cent rise in net revenue to reach VND32.45 trillion ($1.41 billion) and pre-tax profit increasing 18.1 per cent on-year to VND5.51 trillion ($239.57 million) at the end of 2020, according to VNDIRECT. However, its online advertising arm has been particularly vulnerable to the pandemic, since it has been hit hard due to shrinking demand for advertisements.

Specifically, some of FPT’s most important export markets such as Japan and the US have also been hit hard by the pandemic. Thus, weak growth might well persist in the forthcoming time.

Experts also raised concerns over potential risks to FPT, including intensified competition in the telecommunications segment. Accordingly, FPT could lose market share to Viettel and VNPT in fixed broadband, in addition to the firm’s software revenue (mostly from foreign markets) being exposed to foreign exchange challenges.

On the bright side, the firm’s strategy for the next five years, which revolves around digital transformation, is slated to boost its profit margins. For example, FPT invested in upgrading the optical infrastructure in the remaining areas and expanding its coverage to gain new subscribers (although average revenue per user, or ARPU, my decline), according to Yuanta Securities. The substantial demand for software solutions from enterprises across the globe is also a silver lining in the global recession.

The Board of Directors also approved the 2019 cash dividend payment of 20 per cent, which is VND2,000 per share (8.7 US cents). What is more, 10 per cent cash dividend was already paid last year, and the remainder will be paid in the second quarter of 2020.

On the other hand, the payment of 2019 dividend by shares (15 per cent of 678.3 million outstanding common stock) is also expected in the coming time.

This year, FPT will also maintain its dividend policy of 20 per cent cash dividend.

Minh Luu

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