VinFast's earnings report reveals mixed results

Growth but also high debt as it continues construction of Moncure plant


VinFast's second earnings report showcased both promising and concerning elements as the Vietnamese firm continues construction on its $4 billion plant in Chatham County, North Carolina.

North Carolina made a significant investment to bring VinFast to Chatham County, including a $450 million state appropriation for site preparation and water and sewer infrastructure. VinFast's latest earnings report demonstrated why this investment could be worthwhile.

The company boosted its revenue by 159.3% from Q3 2022 to Q3 2023. A surge in electric vehicles and e-scooters sales contributed to VinFast's year-over-year revenue growth. Meanwhile, the company reduced its year-over-year gross loss by 28.4%. Its gross loss is down by 9.1% from the previous quarter.

"We see strong momentum in our business, supported by growing delivery volumes, increased revenues, and an improved path to profitability," VinFast CFO David Mansfield said in the Q3 earnings report.

However, VinFast's current assets are approximately half the value of its current debt, with just over half of its assets in inventory. This underlines the importance of boosting sales to convert inventory into cash for debt repayment.

VinFast's earnings report indicated efforts to increase sales, particularly in the U.S. The report showed that VinFast received 27 applications or letters of intent from third-party car dealerships across 12 states, including North Carolina.

"VinFast is on track to meet its deliveries guidance and is well-positioned to expand in strategic markets," Mansfield said.

Nonetheless, the company's spending still exceeds its earnings. Its Q3 revenue was only 77% of its cost of sales value, and its vehicle sales cost accounted for 94% of the cost of sales.

The introduction of the VF 6, an electric vehicle aimed at young families, to Vietnamese dealerships and increased U.S. dealership presence are key strategies for boosting revenues to offset VinFast's operational costs.

The company's earnings report also noted an "optimized capital expenditure plan for global manufacturing in 2024 and 2025," expected to save $400 million in expenses.

"We are focused on our cost-cutting initiatives, optimizing return on capital invested, and switching towards a capital-light distribution model," Mansfield said.

The report also revealed that the company will receive $1.2 billion in funding over the next six months from the sale of around 46 million ordinary stock shares by two key shareholders, Vingroup's chairman and its parent company, Vingroup.