Transaction in a bank (Source: VNA)
Vietnam's foreign exchange rates fluctuated greatly in the third quarter, influenced by global currency volatility resulting in a negative impact on earnings of many listed companies.
According to data available on the financial website ndh.vn, the US dollar increased 3.1 percent against the Vietnamese dong in the third quarter while prices of the Japanese yen and euro went up 5.1 percent and 3.9 percent, respectively, during the period.
Around 385 companies have published the third-quarter earnings reports on the two stock exchanges as of October 28, accounting for 56 percent of total listed companies. Many posted lower profits due to forex losses.
"Foreign exchange rates were very volatile in the third quarter which adversely affected business results of many companies, particularly the ones which borrowed heavily in foreign currencies, or their businesses rely on imports," Thanh Thuy, a stock analyst was quoted on the ndh.vn.
With a majority of loans in the greenback, Century Synthetic Fiber Corporation (STK) saw their July-September financial expense rise almost ten times against the same quarter of last year to 21 billion VND (937,500 USD), thus trimming its profit to just 7 billion VND (312,500 USD), down 76 percent year-on-year.
Its nine-month profit reached nearly 62 billion VND (2.8 million USD), equivalent to just 41.4 percent of the company's yearly target.
Petroleum, transportation and rubber companies were also among the biggest losers.
Vietnam Tanker Co (VTO) incurred a forex loss of 24 billion VND (1.1 million USD) in the third quarter, pushing its financial expense up 400 percent compared year-on-year to 38.6 billion VND (1.7 million USD) while driving its profit down 82.3 percent to 3.3 billion VND (147,300 USD).
As of September 30, VTO incurred a US dollar-denominated debt of 856 billion VND (38.2 million USD) while its loans in Singaporean dollars was 40.5 billion VND (2.5 million USD).
Vietnam Petroleum Transport Co (VIP) and Vinaship (VNA) were doubly hit by both forex fluctuations and poor business performance.
VIP earned 1.4 billion VND (62,600 USD) in net profit in the last three months, significantly down from a 16.5 billion USD (737,000 USD) profit in the third quarter of last year. Meanwhile, VNA incurred a loss of 20 billion VND (893,000 USD) during the period and adjusted its plan from a profit of 2 billion VND (89,300 USD) to a loss of 60 billion VND (2.7 million USD) by year-end.
VNA posted a cumulative loss of 38 billion VND (1.7 million USD) in the previous two quarters.
Financial expense of the Southern Rubber Industry Co (CSM), one of the biggest listed rubber companies with a market cap of over 2 trillion VND (89.3 million USD), also increased by 62 percent against the same period of last year due to forex volatility. Its net profit thus was down 32.6 percent year-on-year to 53 billion VND (2.4 million USD).
Apart from borrowing heavily in foreign currency, the tyre manufacturer's business depends on imported raw material which accounts for 65 percent of its total material input.
Also seeing rises in financial expenses due to forex fluctuations were Dry Cell and Storage Battery Co (PAC) and Ha Tien 1 Cement Co (HT1), which posted impressive earnings with net profits rising 16 percent and 77 percent year-on-year, respectively. However, VicemBut Son Cement Co (BTS) incurred a loss of 24.5 billion VND (1.1 million USD) in the period.
Almost 300 companies have yet to report their financial statements, including large ones which attributed their delays in preparing lengthy consolidated financial reports. The number of companies which will likely suffer from forex fluctuations is expected to rise as many are borrowing in foreign currencies, particularly in the US dollar and euro.-VNA
