Hanoi (VNS/VNA) - Some UPCOM-listed companies are enjoying stable earnings brought by joint ventures they established with foreign partners, but their core businesses remain insignificant.

These joint ventures are usually foreign direct investment (FDI) projects in which State-owned enterprises contribute capital and land use rights, while foreign companies contribute money and technology.

The Vietnam Engine and Agricultural Machinery Corporation (VEAM), which makes engines, agricultural machinery, automobiles and motorbikes, possesses major stakes in three joint ventures, namely Honda Vietnam (30 percent), Toyota Vietnam (20 percent) and Ford Vietnam (25 percent).

VEAM's profits mainly come from these three joint ventures.

The firm's plentiful revenue from financial activities was also thanks to the dividends collected from its joint ventures.

The 2018 financial statements showed net revenue from the main business activities of VEAM reached 7.07 trillion VND (304.2 million USD), but the company achieved 7.04 trillion VND in post-tax profit.

In 2019, VEAM achieved revenue of 685 billion VND and suffered a loss of 337 billion VND in its main business.

But thanks to the large volume of revenue from financial activities of 7.8 trillion VND, at the end of the year, the company still achieved a post-tax profit of 7.04 trillion VND.

When spare parts manufacturer PetroVietNam Machinery-Technology JSC (PVM) was a State-owned enterprise 25 years ago, it held 30 percent each in joint ventures with Japanese partners Nippon Seiki, Showa and FCC, all specialising in manufacturing auto and motorcycle parts.

After equitisation, PVM now only holds 10 percent capital in the joint venture with FCC, 10 percent with Nippon Seiki and 8.45 percent with Showa.

These all are leading enterprises in the spare parts industry, supplying spare parts for Honda, Yamaha, and Suzuki. These joint ventures earn trillions of VND of profits each year and produce profits up to 80-100 billion VND for PVM every year.

In 2016, PVM earned more than 100 billion VND of dividends and distributed profits collected from joint ventures. It earned nearly 84 billion VND in 2017, 80 billion VND in 2018 and 81.3 billion VND in 2019.

PVM’s core businesses only helped it achieve profits of 21 billion VND in 2019, 15.7 billion VND in 2018 and 27.8 billion VND in 2017.

Vietnam Forestry Corporation JSC (Vinafor or VIF) also enjoys earnings from joint ventures with Yamaha from Japan, Hong Leong Industry from Malaysia, Sojitz Corporation from Japan and JK Paper from India.

In 2018 and 2019, the profits Vinafor earned from these joint ventures accounted for about 90 percent of its profit structure.

Binh Duong Production and Trading Goods Corporation (PRT) is the Vietnamese partner in the FDI joint venture FrieslandCampina Vietnam Co Ltd, familiar to consumers with brands like Dutch Lady, Friso, YoMost, Fristi and Completa.

The main profit of the company comes from FrieslandCampina. PRT achieved dividends and distributed profits from this joint venture of 402.8 billion VND and 539.2 billion VND in 2018 and 2019, respectively.

Waiting for restructuring

Shareholders of these companies are looking forward to restructuring.

PVM has many conveniently-located land plots such as a 2,000sq.m land plot at Trang Thi Street, Hoan Kiem District in Hanoi; 23,600sq.m in Dong Anh District, Hanoi; 137sq.m in Thanh Xuan District, Hanoi; and 1,500sq.m at 25 Mong Cai Street in Quang Ninh City.

However, earning results from the main businesses remain poor. At general meetings of shareholders every year, shareholders question leaders about the use of those land plots and request company restructuring, streamlining apparatus and increasing business efficiency.

At this year's meeting, PVM shareholders questioned the efficiency of the Centre of International Labour Co-operation and Service.

This centre reported revenue of 790 million VND in 2019, only 13 percent of the yearly goal.

The shareholders even suggested PVM's leaders consider dissolving the centre.

The cumbersome apparatus, ineffective operation of many departments and divisions, consume two-thirds of the dividends collected from the company’s joint ventures every year, the shareholders said.

Similarly, at the Annual General Meeting of Shareholders of Vinafor, shareholders complained that three years after equitisation, Vinafor's profits still rely largely on joint ventures.

Shareholders requested the company improve the efficiency of the afforestation and wood processing segments to improve the profit structure and avoid relying too much on dividends from the joint venture./.