GoTo exits tough Vietnam market to focus on reaching profit
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RIDE-HAILING provider GoTo Group is exiting Vietnam, abandoning a country where it’s been struggling to focus on reaching profitability in its main operations in Indonesia and Singapore.
The company’s Gojek brand will close its Vietnam business effective Sep 16, GoTo said on Wednesday (Sep 4) in a statement. The unit, which offers ride-hailing, food delivery and courier services, accounted for less than 1 per cent of GoTo’s gross transactions in the second quarter and the exit won’t hurt the company’s financials, it said.
The unprofitable company, which battles stiff competition from Singapore’s Grab Holdings in markets including Vietnam, has slashed spending as user growth cools. It exited Thailand in 2021 and late last year relinquished control of loss-making e-commerce arm Tokopedia to ByteDance’s TikTok in a US$1.5 billion deal.
Still, GoTo has yet to reach positive net income, despite thousands of job cuts and large reductions in marketing expenditure. Since Patrick Walujo took over as chief executive last year, the company has moved closer to profitability – yet its shares remain down more than 80 per cent since its 2022 initial public offering.
The company reiterated on Wednesday it expects to reach positive adjusted earnings before interest, taxes, depreciation and amortisation for the full year.
While the TikTok deal and the cost cuts have eased pressure on GoTo’s finances, the difficult market has prompted the company and its competitors to consider aggressive options. GoTo and Grab this year revived discussions about a merger of their core businesses, Bloomberg News reported, a union that could allow them to reduce spending to attract users.
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Besides market leader Grab, Vietnam’s ride-hailing contenders include local player Be Group. The upstart raised about US$30 million this year to accelerate its growth in markets from ride-hailing to deliveries. BLOOMBERG
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